17702156 factors affecting mnc in india

8/14/2019 17702156 Factors Affecting MNC in INDIA

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FACTORS

ATTRACTING MNCs

IN INDIA


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OTHER FACTORS:

Economic Liberalization

The Economic Policy Reforms

The Indian Innovation System after 1991

Government Support for Technological Innovation

Geographical Clustering


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GOVERNMENT SUPPORT:

Both revenue and capital expenditure on R&D are 100%deductible from taxable income under the Income TaxAct.

A weighted tax deduction of 125% is allowed for

sponsored research in approved national laboratoriesand institutions of higher technical education. A weighted tax deduction of 150% is allowed on R&D

expenditure by companies in government-approved in-house R&D centres in selected industries.

A company whose principal objective is research and

development is exempt from income tax for ten yearsfrom its inception. Accelerated depreciation is allowedfor investment in plant and machinery made on the basisof indigenous technology.


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Customs and excise duty exemptions for capital equipments and

consumables required for R&D.

Excise duty exemption for three years on goods designed and

developed by a wholly owned Indian company and patented in any

two countries out of: India, the United States, Japan and any country

of the European Union.


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Horizontally integrated multinational corporations

Vertically integrated multinational corporations

Diversified multinational corporations

Multinationals have played an important role in globalization.

Given their international reach and mobility, many countries,

and sometimes regions within countries, sometimes compete

with each other to have MNCs locate their facilities (and

subsequent tax revenue, employment, and economic activity)

within.


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Facts on India

WHAT INDIA OFFERS One billion plus population

India ranked 10th largest economy, 4th largest in terms ofPurchasing Power Parity

250-300 million middle class

Gross Domestic Product (GDP) growing at over 8-9 %, makesit one of the fastest growing economies in the world

Lucrative and diverse opportunities for U.S. exporters with theright products or services

Easier access to capital


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Facts on India

WHAT INDIA OFFERS One billion plus population

India ranked 10th largest economy, 4th largest in terms ofPurchasing Power Parity

250-300 million middle class

Gross Domestic Product (GDP) growing at over 8-9 %, makesit one of the fastest growing economies in the world

Lucrative and diverse opportunities for U.S. exporters with theright products or services

Easier access to capital


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POLICIES THAT HELPED MNCs GROW IN

INDIA

FDI Policy: Most sectors including manufacturing activitiespermitted 100% FDI underautomatic route (No prior approvalrequired)

Industrial Licensing : Licensing limited to only 5 sectors

(security, public health & safety considerations) Exchange Control: All investments are on repatriation basis. Original investment, profits and dividend can be freely

repatriated

Taxation: Companies incorporated in India treated as Indiancompanies for taxation

Convention on Avoidance of Double Taxation with 71 countriesincluding Korea


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CONCLUSION:

The first Vice Chairman of TCS, while delivering aspeech at the CII symposium in 1974 said,Unfortunately India could never participate in

the industrial revolution because it lackedfinancial capital. But, 20 years from now, therewill be a knowledge revolution in the world andIndia will participate in it because India has thehighest knowledge density in the world and it is

for companies to harness this knowledgecapital and make Indians leaders in theknowledge revolution.


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Oil companies, Infrastructure builders fromMiddle East are also flocking in India to catchthe boom. South Korean electronics giants

Samsung and LG Electronics and small andmid-segment car major Hyundai Motors aredoing excellent business and using India as ahub for global delivery. Japan is also not farbehind with host of electronics and automobiles

shops. Companies like Singtel of Singaporeand Malaysian giant Salem Group are showinghuge interest for investment.

17702156 factors affecting mnc in india

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