China-India Business Update: May 18

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May 18 – Welcome to our biweekly China-India round up in which we examine the latest bilateral news and commentary affecting foreign investment in the two countries.

Reserve Bank of India Liberalizes Opening of Escrow Accounts for FDI Transactions
The Reserve Bank of India has liberalized the opening of escrow accounts for foreign direct investment transactions. Previously, the opening of escrow/special bank accounts by non-resident corporates for the use of acquisitions, share transfers, or convertible debentures of an Indian company was allowed only in cases of open offers, delistings, or exit offers subject to compliance with Securities and Exchange Board of India Regulations.

Developing Your Business from China to India and Vietnam
Our new, complimentary 25-page PDF report detailing cost analysis, labor and factory overheads comparisons between Dongguan, Chennai and Ho Chi Minh City, as well as an overview of other emerging Asian markets such as Cambodia and Laos. It includes full factory cost analysis, descriptions of the legal establishment differences and options, the tax implications in these markets, as well as business and cultural differences. This is a must read for all executives interested in expanding into Asia.

China’s Huawei Kicks off Manufacturing Initiative in India
Huawei, the China-based multinational networking and telecommunications equipment supplier, is making attempts to expand its presence in India. According to Justin Chen, CEO of Huawei Technologies India Pvt. Limited, the company had recently started manufacturing network transmission equipment in its plant located in Chennai, South India.

India’s Advance Tax Rulings Benefit Non-Resident Investors
Differences of opinions between the tax payers and the tax administration are a universal phenomenon. Advance tax is a mechanism by which such problems would be settled in advance and tax payers are aware of their liability. Therefore, the Indian government has set up an authority to provide advance tax ruling.

India, China Contribute to Growing Number of Global Products
Over 87 percent of companies worldwide have actually increased their product portfolio over the last three years in order to exploit the potential needs of their current customers. Emerging markets, led by India and China, are turning into the regions where those companies impose most of their sales and production focus.

Establishing a Joint Venture in India
In sectors where 100 percent FDI is not allowed in India, a joint venture is the best medium, offering a low risk option for companies wanting to enter into the vibrant Indian market.

IMF Releases Latest Regional Economic Outlook For Asia
According to the latest Regional Economic Outlook published by the International Monetary Fund, growth is expected to continue and will average about 8 percent in emerging Asia. The outlook, released in Hong Kong, said that both exports and domestic demand has been ensuring robust growth. India and China, who will lead the region, are expected to expand by 8 percent and 9.5 percent respectively.

Chinese, Indians Leave U.S. to Pursue Opportunities Back Home
Despite difficulties in their home countries, skilled entrepreneurs from Asia are leaving the United States and returning to countries such as China and India in droves, according to a recent study published by researchers from Harvard, Duke and UC-Berkeley.

Dezan Shira & Associates provide foreign direct investment advice and services to clients in both China and India. The firm provides due diligence, incorporation, tax, accounting and other business services from ten China offices and five in India. Please contact the practice at china@dezshira.com or india@dezshira.com as appropriate, visit the firm’s web site here, or download the firm’s brochure here.

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