LABOUR LAWS AND LEGAL ENVIRONMENT IN INDIA FOR EUROPEAN INVESTORS

09/05/2011PARIS STAR BUSINESS SCHOOLMuppala Sekhar reddySaha RajkumarRachakonda raghavendra rao

Introduction

This project explains about the foreign direct investments and legal environments in India. It also focuses on the policy of the Indian government and European Union which attracts the companies of either sides to start and run business in Europe and India vise-versa. It also contains the progress of Free Trade Agreement between India and European Union and point out the obstacles of this agreement .

What is it about

Labour Laws and Social Security SystemLegal EnvironmentsBusiness RegulationsFDI PolicyIndia for European InvestorsFree Trade Agreement between EU and India

Labour Laws and Social Security System

Labour Laws – For the sake of the employees interest,India has several acts which are applicable in all sectors.Labour Laws fall under the following acts:

1. Trade Unions Act2. Wages Regulation Act3. Act for Payments4. Working Conditions Acts5. Temporary,Permanent and Contract Employees

Legal Environment in India

The legal environment in India is as follows the rules of WTO –TRIPS(trade related aspects of intellectual property rights). Intellectual property protection follow under the following

PatentsTrade Marks Copy rights

Business Regulation

The business regulatory environment covers all aspects of trade, industrial activity, taxes, foreign exchange, intellectual property and social security.Business regulation broadly applies to the following aspects:Foreign exchange regulationsIndustrial licensing regulations Trade regulations Import restrictionsExport restriction

FDI PolicyWhy invest in India

Impressive growth rate: 8 % p.a.Competitive manufacturing hubs Emerging knowledge industries – IT, Pharma, Biotech, R&DImproving infrastructure – an area of opportunity Good Banking & Financial Infrastructure.

FDI Policy

Progressive Trade and investment policy

Strong democratic set up

Independent judiciary

Technical education and infrastructure

Good law & order

English widely understood

FDI PolicyInvesting in India

Automatic Route Prior Permission

General rule Inform RBI within 30 days of inflow/issue of shares Pricing: FEMA Regulations Unlisted – CCI Listed – SEBICap of Rs. 1200 Crore (Approx : USD $268 million)

By exceptionApproval of Foreign Investment Promotion Board needed.Decision generally within 4-6 weeks

FDI Policy

Liaison Office Promotion of business interest; spreading awareness of company’s products; explore opportunities; work as channel of communication etc.Cannot carry on any commercial, trading or industrial activity or earn any income in India Is required to maintain itself out of inward remittances received from abroad through normal banking channels.

FDI Policy

Branch officeRepresent the business interest of foreign companyFor the purpose of execution of the Project

Permissible activities for a Branch OfficeExport/Import of goodsProfessional or Consultancy ServicesCarrying out research work in which the parent company is engagedPromoting technical or financial collaborations between Indian Companies and parent or overseas group companies

FDI PolicyForeign investment is not permitted in the following areas:

Atomic energy

Agriculture

Postal services

Plantation

Retail trading (except single brand)

Mining services

Real estate business

FDI Policy Exit issues

Transfer of shares from non-resident to non-resident does not require RBI approval for pricingTransfer of shares from non-resident to resident does not require any FIPB Approval, though RBI approval is required for pricing

Pricing as per FEMA – listed and unlisted securitiesRBI permission not required if sale through Stock Exchange

•Mauritius Route: Capital Gain Advantage

European Investors in IndiaIndia is the 9th largest import partner of EU and 8th largest partner of export and trade partner.

EU is the largest trade partner of India with 20% of it’s trade with world.

Europe exported €26 billions euro of goods and services in 2009. and imports were €25 billions euro.

U.K

NETHER

LANDS

GERMANY

FRANCE

ITALY

SPAIN

SWED

EN

BELGIUM

LUXEM

BOUR

DENMARK

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

Amount (in USD)

Amount (in USD)

Top European Investors in India

EU and India – Free Trade Agreement

Why is it necessary?•Increase in bilateral trade•Enhance the Investment•Eliminate the tariffs•Provide opportunities for potential exporters•Promote sustainable development•Bringing people together

EU and India – Free Trade Agreement

Facts & Figures :•EU-India Summit launched a High Level Trade Group (HLTG) in 2005•Start Negotiation in 2007•Biggest Indian Partner(20% shares)•Big Indian Investor(10.9 bn €)•FDI Flows to India ( About 65% of all)•FDI Flows to EU (9.5 bn €)

EU and India – Free Trade Agreement

Main Obstacles in FTA between EU and India :•Intellectual Property Rights•DATA Exclusivity in Pharamaceutical Sector•Domestic Political Hassles•Unbridgeable Expectation Gap•Challenges in area of comparative advantages

Conclusion Efforts should be made by both side:•Better bilateral & strategic relation with EU & India•Should remove obstacles as soon as possible•Allow strategic partnership in infrastructure from both sides•Liberalize more Financial policy •Review FDI Policy towards Agricultural & Industrial sector

Conclusion

•Need to conduct internal consultations•Negotiations should be based on trade & financial matter•More focus on sustainable development

Thank you