What are the challenges?
Challenges when doing business with India
Be aware that you will need to negotiate on the prices of your goods and you may need to include discounts as India has a very price-competitive market.
Once additional taxes are included, the import duty on your products is likely to be a minimum of 35%.
Make sure when doing business with India you are aware of:
holiday timings when planning business trips
trade and investment barriers including regulatory constraints, local sourcing requirements and import tariffs
Intellectual Property (IP) protection
administrative requirements that can cause delays
land acquisition can be difficult
the local workforce may not have the necessary skills
infrastructure challenges, e.g. distribution and logistics
there is a risk of bribery and corruption
Intellectual Property (IP)
Make sure you understand how to use, guard and enforce your Intellectual Property rights in India. Intellectual Property refers to a brand, invention, design or creation, which you or your business has legal rights to.
All WTO member nations must have standard IP protection in their national laws. India’s IP law has incorporated these standards, therefore India and other developed countries have very few differences between their laws.
India protects IP in the form of copyright, patents, designs and trademarks.
India’s accession to the WTO in 1995 has meant that IP protection laws have been amended and reissued.
There are still concerns over the enforcement of IP laws in India, even though they are generally thorough and comparable to those in Europe. Major concerns lie in bureaucratic delay, as cases have become backlogged in both the civil and criminal courts, with some cases running for over five years. Another concern lies in the lack of transparency, especially at local level.
However, India’s legal system is similar to that of the UK, so processes will be familiar.
IP rights must be registered in India for them to be enforced in India, as protection is jurisdiction specific. Be aware that this can take several months. Visit the Government of India’s Ministry of Commerce and Industry pages at: http://www.ipindia.nic.in/patents.htm, and their Copyright Office: http://copyright.gov.in/, for more information.
Appoint a legal practitioner who understands India’s legal system if you are faced with piracy or infringement regarding your Intellectual Property.
If faced with infringement or piracy, businesses should appoint a good legal practitioner who understands the local context and has the necessary experience to initiate civil or criminal proceedings.
Additional information is provided on the UK Government’s Intellectual Property page at: https://www.gov.uk/intellectual-property-an-overview, and at the Intellectual Property Office – the UK Government agency providing free and impartial advice on protecting and registering your IP in the UK and abroad. See: https://www.gov.uk/government/organisations/intellectual-property-office.
Bribery and corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
Bribery poses a serious threat to economic progress, particularly in developing or emerging countries. In order to protect such countries against bribery, the United Kingdom's Bribery Act of 2010 was established. The Act applies to both UK companies operating abroad and foreign companies operating in the UK. It established four major offences including:
offering, promising or giving an advantage, and requesting, agreeing to receive or accepting an advantage
bribery of a foreign public official
a commercial organisation’s failure to prevent a bribe being paid to obtain or retain business or a business advantage (should an offence be committed, it will be a defence that the organisation has adequate procedures in place to prevent bribery)
The Bribery Act understands that it is impossible to prevent all bribery. A company will have a full defence if it can prove that there were adequate preventative measures in place. You should therefore ensure you have a strong, effective and up-to-date anti-bribery policy in place to prevent bribery by persons associated with your company.
Corruption is a major problem in India, and is cited as a barrier to the country’s private sector development. Regular due diligence and up-to-date risk strategies are required in order to reduce the business risk posed by bribery. Procurement practices are often not particularly transparent and come with significant bureaucratic burden.
There have been several notable abuses of power in recent years by politicians, bureaucrats and law enforcement officials. Their ultimate prosecutions have highlighted that a system for fighting corruption does exist, although it can be weaker in some states than others and enforcement is inconsistent.
There has been an increase in anti-corruption activism due to large scandals that have been recently unearthed.
Companies who are known to offer bribes are banned from bidding for defence contracts by the Indian Government. In order to ensure transparency, many companies already set up in India aim to have strong checks in their systems to rule out corruption. There are a number of government departments and public sector procurement teams migrating to online platforms in order to further reduce corruption.
India has several laws in place in order to deal with corruption. The Right to Information Act (RTI) gives citizens the right to request information from any government agency. Many of India’s other anti-corruption laws are enforced weakly and inconsistently.
In Transparency International's latest 2019 Corruption Perceptions Index (announced January 2020) India is ranked 80th out of 180 countries (the UK ranks 12th): https://www.transparency.org/en/countries/india.
You should visit the Business Anti-Corruption Portal page at: https://www.ganintegrity.com/portal/country-profiles/india/, if you require further advice or guidance on corruption in India, or contact DIT if you are a company concerned about corruption: https://www.gov.uk/world/organisations/department-for-international-trade-india#contact-us.
Visit the Department for International Trade’s bribery and corruption page at: https://www.gov.uk/anti-bribery-policy.
Several British companies have been offered seemingly lucrative business deals in India which have been revealed as fraudulent. These were carried out using private data subsequently shared between the British and Indian companies.
Rogue call centres in India have also been known to take legitimately-acquired financial data and use it inappropriately. You should, therefore, ensure that you research the market to your best abilities in order to understand any possible differences to the business market in the UK. You should also conduct basic due diligence before making any financial decisions or commitments.
Make sure you are vigilant when receiving offers that appear ‘too good to be true’. Verify the data of any business partners, carry out appropriate due diligence checks and use secure payment instruments when making purchases. When selling, you should secure the payment before delivery of the product and increase your vigilance if using e-commerce.
You should contact the Department for International Trade in London or the nearest British High Commission in India or Pakistan if you are a British company interested in projects in the former princely state of Jammu and Kashmir. The UK Government can provide advice on regional sensitivities as well as potential risks when doing business in these areas.
It is ultimately your decision whether you do business overseas, although you should follow advice from lawyers should you wish to. The UK Government does not provide legal advice to private companies and individuals in relation to their commercial activities. If your company is considering operating in either Pakistan or India, you should also consult FCDO Foreign travel advice.
Protective security advice
See the UK Government’s advice on crime and fraud prevention in international trade, at: https://www.gov.uk/guidance/crime-and-fraud-prevention-for-businesses-in-international-trade.
[Source – DIT Overseas Business Risk: India]
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