Doing Business in India

ACUMEN EXPERIENCE TRUST
Building Your INDIA Business
Doing Business in India:

Snapshot 2010
GDP Growth Trends – India and World

10 9
7.7
7.8
8 6.7
6.1 6.3
6
6
4.3
4 3.9
3
2.4
2.1 2.1
2 1.3
1
0.5
0
-1 2008 2009
-0.8 2010 E 2011 E
-2
-3.2
-4
Source: IMF
-4.8
-6
Italy India World Emerging Economies Advanced Economies
India - Inflation (99-00 prices WPI)

14.00%
12.82% Source:
12.00%
11.06%
9.89%
10.00%
8.86%
8.48% 8.56%
8.00%
7.48%
6.00%
5.55%
4.95%
4.45%
4.00%
3.50%
2.00%
1.38% 1.46%
0.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
-1.01%
-2.00%
2008 2009 2010
Source: Ministry of Commerce & Industry
Annual estimates of Sectoral GDP growth rates (%)

16.0% at constant (2004-05) prices
14.9%
14.5%
14.0% 13.9%
13.2%
12.0%
11.7%
10.6% 10.7%
10.0% 10.3% 10.1% 9.9%
10.0%
8.9%
8.7% 8.5% 8.7%
8.0% 8.3%
7.6% 8.2%
6.7% 6.5%
6.0% 5.9%
4.7%
4.0% 3.9%
3.7%
3.2%
2.6%
2.0%
1.6%
Source: CSO
0.0% -0.2%
2006-07 2007-08 2008-09 2009-10
-2.0%
agriculture, forestry & fishing mining & quarrying
manufacturing electricity, gas & water supply
construction trade, hotels, transport & communication
financing, insurance, real estate & bus. Services community, social & personal services
Annual estimates of Sectoral GDP growth rates

(%) at constant (2004-05) prices
2006-07 2007-08 2008-09 2009-10

Agriculture, forestry & fishing 3.7% 4.7% 1.6% -0.2%
Mining & quarrying 8.7% 3.9% 1.6% 8.7%
Manufacturing 14.9% 10.3% 3.2% 8.9%
Electricity, Gas & Water supply 10.0% 8.5% 3.9% 8.2%
Construction 10.6% 10.0% 5.9% 6.5%
Trade, Hotels, Transport &
Communication 11.7% 10.7% 7.6% 8.3%
Financing, Insurance, Real estate &
Business Services 14.5% 13.2% 10.1% 9.9%
Community, Social & Personal
services 2.6% 6.7% 13.9% 8.2%
GDP at factor cost (total 1 to 8) 9.7% 9.2% 6.7% 7.2%
Source: CSO
Exchange Rate for INR
Source: RBI
Employment Scenario
Top Employment generating sectors
Top 10 highest job generating sectors (Apr-Oct

2009-10) Job scenario in Indian cities - Organized
Growth in % as Sector
Sector Share in % compared to 08-09
IT/Enabled 30.02 -7.84 7.7
Academics 8.94 31.56
Banking 5.38 20.51 18.83
Tier 1
Manufacturing 4.96 -13.71 Tier 2
Insurance 4.83 2.92 Tier 3
Advertising/
Event 73.47
Management 3.69 115.03
Financial
Services 3.65 37.48
Engineering 3.31 -18.89
FMCG 3.16 3.11
Telecom 3.15 27.61
Salary Trends for 2010: Hewitt Survey

• Overall average salary increase in India to be around 10.6%
– Indian-owned companies - 11.4%,
– MNCs - 10.2%.
• Highest in Asia Pacific region

– China, Malaysia, Philippines and Thailand - salary hikes ranging between 4.7% and 6.7%.
• Sectors such as infrastructure, power, telecom, pharma, and automotives are expected to
give above average salary hikes in the 11.6%-12.8% range.
• Automotive sector - 11.6% average salary increase for 2010
• Knowledge segments such as IT, banking, financial services & insurance

(BFSI), engineering, procurement & construction (EPC) and the retail sector expected to show
strong recovery
International Trade trends

Country-wise Trade Trends
Year: 2009-2010 (Apr-Jun) in USD Million

Rank Country Export Import Total Trade
1 CHINA P RP 2,013.34 7,397.29 9,410.63
2 U ARAB EMTS 5,063.16 3,449.94 8,513.11
3 USA 4,109.25 3,844.51 7,953.75
4 SAUDI ARAB 955.04 3,432.42 4,387.46
5 SINGAPORE 1,951.08 1,790.31 3,741.39
6 GERMANY 1,156.30 2,285.15 3,441.44
7 AUSTRALIA 244.07 3,092.21 3,336.27
8 IRAN 582.36 2,650.59 3,232.94
9 INDONESIA 936.68 2,099.83 3,036.52
10 SWITZERLAND 109.84 2,580.35 2,690.19
20 ITALY 723.75 822.27 1,546.03
Total of Top 10 countries 17,121.12 32,622.59 49,743.71
India's Total 36,743.84 61,304.95 97,953.21

Source: DGFT
Year: 2008-2009 in USD Million

1 U ARAB EMTS 24,477.48 23,791.25 48,268.72
2 CHINA P RP 9,353.50 32,497.02 41,850.52
3 USA 21,149.53 18,561.42 39,710.95

4 SAUDI ARAB 5,110.38 19,972.74 25,083.12
5 GERMANY 6,388.54 12,006.02 18,394.56

6 SINGAPORE 8,444.93 7,654.86 16,099.79
7 IRAN 2,534.01 12,376.77 14,910.78

8 HONG KONG 6,655.00 6,451.89 13,106.89
9 SWITZERLAND 769.24 11,869.50 12,638.74
10 KOREA RP 3,952.29 8,676.78 12,629.07

20 ITALY 3,824.58 4,428.19 8,252.77
Source: DGFT India's Total 185,295.35 303,696.26 488,981.25

1 USA 20,731.34 21,067.24 41,798.58
2 CHINA P RP 10,871.34 27,146.41 38,017.74
3 U ARAB EMTS 15,636.91 13,482.61 29,119.52
4 SAUDI ARAB 3,711.16 19,470.30 23,181.46
5 SINGAPORE 7,379.20 8,122.63 15,501.83
6 GERMANY 5,121.53 9,884.83 15,006.36

7 IRAN 1,943.92 10,943.61 12,887.52
8 UK 6,705.50 4,953.68 11,659.18
9 SWITZERLAND 614.4 9,758.28 10,372.68
10 JAPAN 3,858.48 6,325.92 10,184.40

19 ITALY 3,914.02 3,906.72 7,820.73
Source: DGFT
India's Total 163,132.17 251,654.00 414,751.34

1 USA 18,863.47 11,738.24 30,601.71
2 CHINA P RP 8,321.86 17,475.03 25,796.89
3 U ARAB EMTS 12,021.77 8,655.28 20,677.05
4 SAUDI ARAB 2,590.77 13,355.33 15,946.10

5 SINGAPORE 6,053.84 5,484.32 11,538.15
6 GERMANY 3,984.81 7,552.64 11,537.45
7 UK 5,622.93 4,177.87 9,800.80
8 SWITZERLAND 467.72 9,143.85 9,611.56
9 IRAN 1,446.48 7,618.55 9,065.03

10 AUSTRALIA 925.2 6,999.59 7,924.78
19 ITALY 3,584.65 2,676.03 6,260.67

1 USA 17,353.06 9,454.74 26,807.80
2 UNSPECIFIED 191.85 24,807.23 24,999.08
3 CHINA P RP 6,759.10 10,868.05 17,627.15

4 U ARAB EMTS 8,591.79 4,354.08 12,945.87
5 GERMANY 3,586.12 6,023.63 9,609.75

6 UK 5,059.28 3,930.30 8,989.58
7 SINGAPORE 5,425.29 3,353.77 8,779.06
8 BELGIUM 2,871.23 4,725.14 7,596.37
9 SWITZERLAND 479.52 6,555.80 7,035.32
10 HONG KONG 4,471.32 2,206.98 6,678.30

16 ITALY 2,519.04 1,855.63 4,374.67

1 UNSPECIFIED 373.82 25,978.91 26,352.73
2 USA 13,765.75 7,001.35 20,767.10
3 CHINA P RP 5,615.88 7,097.98 12,713.86
4 U ARAB EMTS 7,347.88 4,641.10 11,988.98
5 UK 3,681.09 3,566.20 7,247.29
6 BELGIUM 2,509.71 4,588.91 7,098.61
7 GERMANY 2,826.25 4,015.35 6,841.60
8 SINGAPORE 4,000.61 2,651.40 6,652.01
9 SWITZERLAND 540.89 5,939.93 6,480.81
10 HONG KONG 3,691.82 1,730.13 5,421.95
15 ITALY 2,285.99 1,373.10 3,659.09
Source: DGFT
India's Total 83,535.93 107,134.53 190,646.40
HS % 2009-2010 (Apr- %
ACUMEN Commodity
EXPERIENCE TRUST 2008-09
Code Share Jun) Share
India's Total Import 303,696 61,305
27 Mineral Fuels, Mineral Oils and Products of their 103,934 34.2 18,913 30.8
Distillation; Bituminous Substances; Mineral
Waxes.
71 Natural or Cultured Pearls, precious Or 43,926 14.5 8,984 14.6
Semiprecious Stones, pre. metals, clad with pre.
metal; imitation Jewlery; coins.
84 Nuclear Reactors, Boilers, Machinery And 26,641 8.8 5,989 9.8
Mechanical Appliances
85 Electrical Machinery and Equipment 25,205 8.3 5,549 9.1
29 Organic Chemicals 8,608 2.8 2,193 3.6
72 Iron And Steel 10,266 3.4 2,094 3.4
31 Fertilizers. 12,011 3.9 1,406 2.3
39 Plastic And Articles Thereof. 4,482 1.5 1,393 2.3
15 Animal or Vegetable Fats and Oils and their 3,458 1.1 1,239 2.0
products
98 Project Goods 3,204 1.1 1,158 1.9
90 Optical, Photographic Cinematographic 4,858 1.6 1,065 1.7
Measuring, Checking Precision, Medical Or
Surgical Inst. and Apparatus
Source: DGFT
Commodity–wise Imports (Top 10) in USD Million

HS Code Commodity 2006-2007 %Share 2007-2008 %Share %Growth
ACUMEN India's EXPERIENCE
Total Import TRUST 185,735.24 251,654.01 35.49
27 Mineral Fuels, Mineral Oils And 61,778.90 33.2618 86,384.07 34.3265 39.83
Products Of Their Distillation;
Bituminous Substances;
Mineral Waxes.
71 Natural Or Cultured 22,614.84 12.1758 26,291.48 10.4475 16.26
Pearls,precious Or
Semiprecious
Stones,pre.Metals,clad With
Pre.Metal And Artcls
Thereof;imit.Jewlry;coin.
84 Nuclear Reactors, Boilers, 18,627.77 10.0292 25,343.65 10.0708 36.05
Machinery And Mechanical
Appliances; Parts Thereof.
85 Electrical Machinery And 14,575.15 7.8473 20,091.40 7.9837 37.85
Equipment And Parts Thereof;
Sound Recorders And
Reproducers, Television Image
And Sound Recorders And
Reproducers,and Parts.
72 Iron And Steel 6,142.66 3.3072 9,089.59 3.6119 47.97
29 Organic Chemicals 6,036.70 3.2502 8,115.57 3.2249 34.44
26 Ores, Slag And Ash. 5,748.17 3.0948 4,634.71 1.8417 -19.37
88 Aircraft, Spacecraft, And Parts 5,265.10 2.8347 13,350.87 5.3052 153.57
Thereof.
90 Optical, Photographic 3,113.73 1.6764 4,232.52 1.6819 35.93
Cinematographic Measuring,
HSCode Commodity 2005-2006 %Share
India's Total Import 149,165.73
27 Mineral Fuels, Mineral Oils And Products Of Their 50,310.06 33.7276
Distillation; Bituminous Substances; Mineral
Waxes.
71 Natural Or Cultured Pearls,precious Or 20,690.51 13.8708
Semiprecious Stones,pre.Metals,clad With
Pre.Metal And Artcls Thereof;imit.Jewlry;coin.
84 Nuclear Reactors, Boilers, Machinery And 13,914.99 9.3285
Mechanical Appliances; Parts Thereof.
85 Electrical Machinery And Equipment And Parts 11,898.82 7.9769
Thereof; Sound Recorders And Reproducers,
Television Image And Sound Recorders And
Reproducers,and Parts.
72 Iron And Steel 5,446.43 3.6513
29 Organic Chemicals 5,144.18 3.4486
26 Ores, Slag And Ash. 1,544.46 1.0354
88 Aircraft, Spacecraft, And Parts Thereof. 4,979.41 3.3382
90 Optical, Photographic Cinematographic 2,656.05 1.7806
Measuring, Checking Precision, Medical Or
Surgical Inst. And Apparatus Parts And Accessories
Thereof;
39 Plastic And Articles Thereof. 2,556.44 1.7138
Source: DGFT
Commodity–wise Imports (Top 10) in USD Million

Foreign investment
INFLOWS Year–wise FII Inflows in USD Million

25,000
20,000 20,328
18,186
15,000
Period Cumulative FDI Inflows 10,918
10,000 9,926
(USD million) 8,686
5,000
3,225
April 2009 – Oct 1,847 1,505
377
US$ 17,644 million 0
2009
-5,000
April 2000 - Oct -10,000

US$ 107,484 million
2009 -15,000
-15,017
Aug 1991 – Oct 2009 -20,000
US$ 124,184 million
(P) Provisional figures
27,329
Year-wise FDI Equity inflows in USD million 24,579
15,726 17,644
3,682 4,222 5,546

2,141 2,770 3,083 2,908 3,134 2,634 3,754
393 654 1,374 2,439

Top Investing Countries (USD million)

0 2000 4000 6000 8000 10000 12000
Mauritius FDI in 2009-10(April-Oct)
Singapore
Others
UAE 18%
USA 3%
UK
France
1%
Netherlands Mauritius
Germany 43%
2%
Japan
Cyprus
7%
Cyprus
Japan
Germany 5%
France
Netherlands USA Singapore
4% UK 7% 8%
UAE 2%
2009-10(April-Oct) 2008-09 2007-08 2006-07

Sectors attracting Highest FDI Equity (USD million)

0 1000 2000 3000 4000 5000 6000 7000
Services Sector
2009-10 (April-Oct)
Computer Software & Hardware
Petroleum &
Telecommunications Metallurgical Natural Gas
Chemicals Industries Computer
1%
1% 1% Software &
Housing & Real Estate Hardware
3%
Automobile
Construction Activities others Power Industry
31% 7% 5%
Power Construction
Activities
9%
Automobile Industry
Housing &
Metallurgical Industries Real Estate
12%
Services
Sector
Petroleum & Natural Gas 18% Telecommunic
ations
12%
Chemicals
2009-10 (April-Oct) 2008-09 2007-08 2006-07

Foreign Exchange Reserves

(in USD millions)
350,000
309,723
300,000
279,199
250,000 251,985
200,000 199,179
150,000 151,622
141,514
100,000
50,000
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (Apr-
Feb)
Source: RBI
Doing Business in India

India - a brief profile
Geography
• Total Area : 3.28 million sq km

• Land Boundaries : 14,103 km
• Coast Line : 7,000 km
• 29 States & 6 Union Territories
Population & Demographics
• 1.17 billion people

• Population growth rate : 1.548%
• Young country - 31.5% population under 15
yrs, 63.3% between 15-64 yrs.
• National Language : Hindi, spoken by 33%
population; 14 officially recognized languages
• English: widely used in business and everyday
life
• Literacy: overall 59.5%; male: 70.2%; female:
48.3%
Why India
• Stable 6-8% economic growth, led by private sector- among

fastest growing economies, steady economic reforms
• A continent-sized market, driven by rising disposable incomes
• Increasingly open market for international goods, with
steadily reducing tariffs
• Brand ‘ITALY’ is already well established and accepted in India
in many sectors
• Liberal trade and investment policies allow flexibility in
business structure (subsidiary, joint venture, branch
office, liaison office…)
Household Incomes
Household 2005 2015 2025

income Number of Households, (in million)
brackets
9.5
Globals 1.2 3.3
33.1
Strivers 2.4 5.5
94.9
Seekers 10.9 55.1
93.1
Aspirers 91.3 106
49.9
Deprived 101.1 74.1
Aggregate disposable income–2000 (in INR trillion)
Globals 6.3 21.7

2
Strivers 3.8 20.9

1.6
Seekers 30.6
3.1 15.2
11.4 13.7
Aspirers 14.6
Deprived 5.4 3.8 2.6
Middle Class
Definition of household income brackets based on annual household income: Globals (more than INR
1,000,000), Strivers (INR 500,000 to 1,000,000), Seekers (200,000 to 500,000), Aspirers (90,000 to
200,000), Deprived (less than 90,000) Source: McKinsey Global Institute
Business Structure Options

• Flexibility to operate in India as an incorporated entity (Joint Ventures; or Wholly
Owned Subsidiaries) or through unincorporated entities (Liaison
Office/Representative Office, Project Office or a Branch Office).
• Business models
– Franchise / Licensing agreements with manufacturers/importers in India for
marketing of products in India, with the Indian partners being responsible for
market promotion, brand building, distribution and retailing in India.
– Joint Venture / technology tie ups with Indian manufacturers for production in
India for supply in the domestic as well as overseas markets, under the Italian
brands.
– Establishment of own subsidiary in India (green-field investment or
acquisition) - could also be 100% EOU
– Supply of raw materials and semi-finished fabrics to Indian manufacturers /
retailers.
– Sourcing tie-ups for sales in Europe and other overseas markets.
Benetton
- Entered India in 1989 through

licensing agreement with
Dalmia group
- In 1991-92 entered a 50:50 JV
with DCM group , converted to
a subsidiary in 2004
- Introduced brand Sisley through
franchise route
Source: Images Yearbook

Illustrative Business Costs
Euros Basis
Incorporation Costs 5000 - 6000 One time
Office rentals 250 to 300 per sq m per 6 months advance (Interest free
month deposit)
3 year lease
Interiors 250 – 300 per sq m
Work spaces 300 - 400 per seat
Residential Apartment 50 per sq m per month 6 months advance (Interest free
rentals unfurnished, bare walls deposit)
3 year lease
Industrial land 30 - 60 per sq m Buy / 33 yr lease
Staff, junior management 150 - 500 per month add 25% benefits
salary
Middle management 1000 – 2500 per month Performance based
Top management 3000 +/ month Performance based
Vehicle lease (Toyota Corolla) 450 per month 15% advance
5 year lease
How India compares…

Ease of…… in INDIA. 2008 Rank 2009 Change in Rank
Rank
Doing business 122 120 -2
Starting a business 121 114 -7
Dealing with construction permits 136 131 -5
Employing workers 89 89 0
Registering property 105 114 9
Getting credit 28 25 -3
Protecting investors 38 33 -5
Paying taxes 169 167 -2
Trading across borders 90 81 -9
Enforcing contracts 180 180 0
Closing a business 140 140 0
As per a World Bank study, covering 181 economies, India’s ranking has improved in 2009, on
various indicators of attractiveness as a business destination.
Significantly, India is ranked a respectable 33 on the parameter of protecting the interests of

the investors.
CONTACT US :
www.aceglobalconsulting.com
D-139 East of Kailash, New Delhi-110065, INDIA
Building Your INDIA Business
Thank You!

Doing Business in India

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ACUMEN EXPERIENCE TRUST

Building Your INDIA Business

Doing Business in India:

GDP Growth Trends – India and World

India - Inflation (99-00 prices WPI)

Annual estimates of Sectoral GDP growth rates (%)

Annual estimates of Sectoral GDP growth rates

2006-07 2007-08 2008-09 2009-10

Exchange Rate for INR

Top Employment generating sectors

Top 10 highest job generating sectors (Apr-Oct

Salary Trends for 2010: Hewitt Survey

• Highest in Asia Pacific region

• Automotive sector - 11.6% average salary increase for 2010

• Knowledge segments such as IT, banking, financial services & insurance

International Trade trends

Country-wise Trade Trends

Year: 2009-2010 (Apr-Jun) in USD Million

India's Total 36,743.84 61,304.95 97,953.21

Country-wise Trade Trends

Year: 2008-2009 in USD Million

2 CHINA P RP 9,353.50 32,497.02 41,850.52

3 USA 21,149.53 18,561.42 39,710.95

5 GERMANY 6,388.54 12,006.02 18,394.56

7 IRAN 2,534.01 12,376.77 14,910.78

9 SWITZERLAND 769.24 11,869.50 12,638.74

10 KOREA RP 3,952.29 8,676.78 12,629.07

Country-wise Trade Trends

Year: 2007-2008 in USD Million

3 U ARAB EMTS 15,636.91 13,482.61 29,119.52

4 SAUDI ARAB 3,711.16 19,470.30 23,181.46

5 SINGAPORE 7,379.20 8,122.63 15,501.83

6 GERMANY 5,121.53 9,884.83 15,006.36

10 JAPAN 3,858.48 6,325.92 10,184.40

Country-wise Trade Trends

Year: 2006-2007 in USD Million

4 SAUDI ARAB 2,590.77 13,355.33 15,946.10

9 IRAN 1,446.48 7,618.55 9,065.03

Country-wise Trade Trends

Year: 2005-2006 in USD Million

3 CHINA P RP 6,759.10 10,868.05 17,627.15

5 GERMANY 3,586.12 6,023.63 9,609.75

10 HONG KONG 4,471.32 2,206.98 6,678.30

Country-wise Trade Trends

Year: 2004-2005 in USD Million

Commodity–wise Imports (Top 10) in USD Million

Commodity–wise Imports (Top 10) in USD Million

INFLOWS Year–wise FII Inflows in USD Million

April 2000 - Oct -10,000

3,682 4,222 5,546

Source: Ministry of Commerce & Industry

Top Investing Countries (USD million)

Mauritius FDI in 2009-10(April-Oct)

2009-10(April-Oct) 2008-09 2007-08 2006-07

Source: Ministry of Commerce & Industry

Sectors attracting Highest FDI Equity (USD million)

2009-10 (April-Oct) 2008-09 2007-08 2006-07

Source: Ministry of Commerce & Industry

Foreign Exchange Reserves

Doing Business in India

India - a brief profile

• Total Area : 3.28 million sq km

Population & Demographics