| India: US firms’ business destination |
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| World Affairs Talk | |
| Wednesday, 16 May 2007 | |
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Earlier this month (February 2007), India and the US have agreed to increase inter-agency cooperation and identify opportunities for strategic alliances between US small businesses and Indian small and medium enterprises (SME). The signing took place at the American Chamber of Commerce international summit in New Delhi with the theme "Emerging India-Opportunities for SME's". It focused on the opportunities India offers for businesses globally because of structural changes in its economy and the sheer size of its market - more than one billion people. “There is sort of a stampede thing. India is very much on everyone's radar scope now,” said Michael Taylor of the US-India Business Alliance that helped organise the earlier missions. Taylor, has been in contact with at least a dozen states about possible trips to identify possible areas of business cooperation. “It's just a question of when they decide to go and how they decide to go. I think they feel a necessity to do it. The China mission was something you had to tick off. India has now become that”. Minnesota's Republican governor Tim Pawlenty is planning to lead a 30-member trade mission to India on October 20-27 with stops in New Delhi, Bangalore and Mumbai. “We view this as a tremendous opportunity to better acquaint Minnesota with India and better acquaint India with Minnesota,” said Pawlenty announcing the trip to a country that now makes up a tiny fraction of Minnesota's roughly $14 billion in annual manufactured exports. The agenda will include market and industry presentations, networking events, business roundtable discussions, customised one-on-one business matchmaking meetings, and other similar events. With a population of more than one billion, India is the world's fastest growing, free-market democracy. India's GDP is growing at about eight percent annually. US ‘manufactured exports’ to India reached $6.8 billion in 2005, an increase of 111 percent since 2000. Over the next several years, India's transportation, energy, environmental, health care, high-tech, and defence sectors are expected to undergo major refurbish, which will create greater demand for products and services. Additionally, India possesses a tremendous consumer demand with a 200 million middle class. More than 58 percent of its population is under age 20; that's more than 564 million people, nearly twice the total population of the United States. This younger population has an increasing desire for high-tech products and services which the US is capable to provide. India has a effective investment friendly ‘three-tier tax structure’, wherein the constitution empowers the union government to levy income tax, tax on capital transactions (wealth tax, inheritance tax, gift tax), sales tax, service tax, customs and excise duties and the state governments to levy sales tax on intra-state sale of goods, tax on entertainment and professions, excise duties on manufacture of alcohol, stamp duties on transfer of property and collect land revenue (levy on land owned). The local governments on the other hand are empowered to levy property tax, Octroi and charge users for public utilities like water supply, sewage. Foreign corporations have a basic tax rate of 40% and a 2.5% surcharge. Corporate houses are subject to wealth tax at the rate of 1%, if the net wealth exceeds Rs.1.5 million. A surcharge of 10% of the income tax is levied if the taxable income exceeds Rs. 1 million. USA is in a good position to take full advantage of India’s such tax structures and launch their products in this vast country with mutual understanding which would be economically beneficial for both the countries. One can therefore reasonably expect that the volume of trade between these two countries shall reach a remarkable height within next few years. India and America have been heading forward to a new era of friendship and cooperation. Both are interested to move forward in an equally beneficial manner and are taking the steps accordingly. Existing barriers need to be removed and disincentives should be cleared away, so that strategic partnership could take place between the world’s two largest democracies. Share & Bookmark             |
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