Additional Chief Secretary to Government of Tamil Nadu

TAMIL NADU
GLOBAL INVESTORS MEET 2015
I N V E S T O R S’ PA R A D I S E
Industries Department
Phone: 91-44-25671383 Fax: 91-44-25670822
Email: [email protected], [email protected]

Nodal Agency
Tamil Nadu Industrial Guidance and Export Promotion Bureau
19-A, Rukmini Lakshmipathy Road, Egmore, Chennai-600 008
Phone: 91-44-2855 4421
Email: [email protected]

Visit us at www.tamilnadugim.com

TAMIL NADU
GLOBAL INVESTORS MEET 2015
Tamil Nadu
Global Investors Meet 2015
I N V E S T O R S’ PA R A D I S E
Investors' Handbook

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Glossary
GDP Gross Domestic Product
FDI Foreign Direct Investment
IMF International Monetary Fund
GoI Government of India
DIPP Department of Industrial Policy & Promotion
RBI Reserve Bank of India
SEZ Special Economic Zone
IT Information Technology
ITeS IT enabled services
FTWZ Free trade warehousing zone
VAT Value added tax
STCG Short term capital gains
LTCG Long term capital gains
GST Goods and services tax
CST Central sales tax
CVD Countervailing duty
EC Education cess
SHEC Secondary and higher education cess
CENVAT Central value added tax
PAN Permanent account number
MAT Minimum alternate tax
DDT Dividend distribution tax
JV Joint venture
CCEA Cabinet committee of external affairs
IFI Indirect Foreign Investments
MGI McKinsey Global Institute
STPI Software Technology Parks of India
CAGR Compound annual growth rate
FIPB Foreign Investment Promotion Board
LLP Limited liability partnership
FEMA Foreign Exchange Management Act
PCPIR Petroleum, Chemicals & Petrochemicals Investment Region

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Table of Contents
Glossary 1 G. Remittances by branch or project office 22
I. FOREIGN INVESTMENT IN INDIA – INVESTMENT PROCESS 5 IV. DIRECT TAXATION IN INDIA 23
A. Foreign direct investment into India 5 A. Corporate tax rates 23
1. Approval route 5 B. Dividend distribution tax 23
2. Automatic route 6 C. Tax on buyback of shares 23
3. Computation of FDI 6 D. Minimum alternate tax (MAT) 23
4. Foreign venture capital permitted to acquire securities under private arrangement 7 E. Alternate minimum tax on all persons other than companies 24
5. Foreign investment by qualified foreign investors 7 F. Capital gains 24
6. Foreign investment by qualified foreign investors 7 G. Computation of total income: General 25
7. Investment through share acquisition 8 H. Depreciation 25
8. Valuation norms 8 I. Investment allowance 26
9. Investment by foreign institutional investors (FIIs) 9 J. Taxation of the know-how fee in the hands of foreign companies 26
10. FDI in major sectors in India 10 K. Taxing dividends received from overseas group companies 26
II. ENTRY OPTIONS 18 L. Double tax avoidance agreements 26
A. Operating as an Indian company 18 M. Royalty payments 26
1. Wholly owned subsidiary company 18 N. Wealth tax 27
2. Joint venture with an Indian partner (equity participation) 18 O. Gift tax 27
3. Limited liability partnership (LLP) 18 V. INDIRECT TAXATION IN INDIA 28
B. Operating as a foreign company 19 A. Customs duty 28
1. Liaison office 19 B. CENVAT (excise duty) 29
2. Project office 19 C. Service tax 29
3. Branch office 19 D. Sales tax 30
III. EXCHANGE CONTROL REGULATIONS 20 E. Value Added Tax 30
A. Current account transactions 20 F. Octroi duty or entry tax 31
B. Capital account transactions 21 G. Goods and services tax (GST) 31
C. Miscellaneous repatriation of capital 22 H. Stamp duty 32
D. Acquisition of immovable property in India 22 I. Research and development cess 32
E. Royalties and technical know-how fees 22 VI. INDUSTRIAL INFRASTRUCTURE DEVELOPMENT INITIATIVES BY GOVERNMENT OF INDIA 33
F. Dividends 22 A. Special Economic Zones 33

2 3
Table of Contents
Glossary 1 G. Remittances by branch or project office 22
I. FOREIGN INVESTMENT IN INDIA – INVESTMENT PROCESS 5 IV. DIRECT TAXATION IN INDIA 23
A. Foreign direct investment into India 5 A. Corporate tax rates 23
1. Approval route 5 B. Dividend distribution tax 23
2. Automatic route 6 C. Tax on buyback of shares 23
3. Computation of FDI 6 D. Minimum alternate tax (MAT) 23
4. Foreign venture capital permitted to acquire securities under private arrangement 7 E. Alternate minimum tax on all persons other than companies 24
5. Foreign investment by qualified foreign investors 7 F. Capital gains 24
6. Foreign investment by qualified foreign investors 7 G. Computation of total income: General 25
7. Investment through share acquisition 8 H. Depreciation 25
8. Valuation norms 8 I. Investment allowance 26
9. Investment by foreign institutional investors (FIIs) 9 J. Taxation of the know-how fee in the hands of foreign companies 26
10. FDI in major sectors in India 10 K. Taxing dividends received from overseas group companies 26
II. ENTRY OPTIONS 18 L. Double tax avoidance agreements 26
A. Operating as an Indian company 18 M. Royalty payments 26
1. Wholly owned subsidiary company 18 N. Wealth tax 27
2. Joint venture with an Indian partner (equity participation) 18 O. Gift tax 27
3. Limited liability partnership (LLP) 18 V. INDIRECT TAXATION IN INDIA 28
B. Operating as a foreign company 19 A. Customs duty 28
1. Liaison office 19 B. CENVAT (excise duty) 29
2. Project office 19 C. Service tax 29
3. Branch office 19 D. Sales tax 30
III. EXCHANGE CONTROL REGULATIONS 20 E. Value Added Tax 30
A. Current account transactions 20 F. Octroi duty or entry tax 31
B. Capital account transactions 21 G. Goods and services tax (GST) 31
C. Miscellaneous repatriation of capital 22 H. Stamp duty 32
D. Acquisition of immovable property in India 22 I. Research and development cess 32
E. Royalties and technical know-how fees 22 VI. INDUSTRIAL INFRASTRUCTURE DEVELOPMENT INITIATIVES BY GOVERNMENT OF INDIA 33
F. Dividends 22 A. Special Economic Zones 33

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 Foreign investment in India –
investment process
1. Amendments to SEZ Rules, 2006 34
2. Fiscal benefits to the developer or co-developer 34
3. Who should set up an SEZ unit 35
4. FDI Policy and relevance to SEZ 35
5. No minimum export obligation 35
6. Fiscal benefits to an SEZ unit 35
A. Foreign direct investment into India
7. Liberal exchange control norms 35
B. Free trade and warehousing zone (FTWZ) 36 Under the current Government of India framework, FDI is permitted by all categories (of investors) and in all sectors
except the following:
1. How to set up an FTWZ 36
2. Activities permitted within an FTWZ 36 • Activities and sectors not open to private sector investment e.g. Atomic energy and Railway Transport [except mass
rapid transport systems (MRTSs)]
C. Industrial Corridors 37
D. Other tax incentive schemes 37 • Lotteries, gambling and betting
E. PCPIR 38 • Agriculture (excluding floriculture, horticulture, apiculture, seed development, animal husbandry, pisciculture,
VII. REGULATORY PROCESS 40 aquaculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro
A. Setting up an entity 40 and allied sectors)
B. Industrial Entrepreneurs’ Memorandum and Industrial License – eBiz project by Government of India 43 • Plantations (excluding tea plantations)
C. Tax compliance 44 • Real estate business (except construction development projects) or construction of farmhouses
D. Investment facilitation framework in Tamil Nadu 46
• Chit funds, nidhi companies or trading in transferable development rights
1. Selection of the Land 46
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, tobacco and tobacco substitutes
2. Setting up a Factory - Single window mechanism 50
E. Labor Law compliance 60 FIs can be made in other sectors under the following:
VIII. INSTITUTIONAL SUPPORT FOR INVESTORS 61 • Approval route, i.e. by the government through the Foreign Investment Promotion Board (FIPB) under the Ministry
A. Key investment facilitators 61 of Finance or Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry or
B. Institutional framework 65 both
• Automatic route, i.e. no prior approvals from regulatory authorities but only post facto intimations to RBI through
Authorized Bankers

1. Approval route
A prior approval from the FIPB or the DIPP is required in cases of FI where the project does not qualify for the automatic
route. The following cases will fall under this category:
• Specified sectors which require FIPB approval for FDI or for FDI beyond a prescribed sectoral cap

4 5
 Foreign investment in India –
investment process
1. Amendments to SEZ Rules, 2006 34
2. Fiscal benefits to the developer or co-developer 34
3. Who should set up an SEZ unit 35
4. FDI Policy and relevance to SEZ 35
5. No minimum export obligation 35
6. Fiscal benefits to an SEZ unit 35
A. Foreign direct investment into India
7. Liberal exchange control norms 35
B. Free trade and warehousing zone (FTWZ) 36 Under the current Government of India framework, FDI is permitted by all categories (of investors) and in all sectors
except the following:
1. How to set up an FTWZ 36
2. Activities permitted within an FTWZ 36 • Activities and sectors not open to private sector investment e.g. Atomic energy and Railway Transport [except mass
rapid transport systems (MRTSs)]
C. Industrial Corridors 37
D. Other tax incentive schemes 37 • Lotteries, gambling and betting
E. PCPIR 38 • Agriculture (excluding floriculture, horticulture, apiculture, seed development, animal husbandry, pisciculture,
VII. REGULATORY PROCESS 40 aquaculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro
A. Setting up an entity 40 and allied sectors)
B. Industrial Entrepreneurs’ Memorandum and Industrial License – eBiz project by Government of India 43 • Plantations (excluding tea plantations)
C. Tax compliance 44 • Real estate business (except construction development projects) or construction of farmhouses
D. Investment facilitation framework in Tamil Nadu 46
• Chit funds, nidhi companies or trading in transferable development rights
1. Selection of the Land 46
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, tobacco and tobacco substitutes
2. Setting up a Factory - Single window mechanism 50
E. Labor Law compliance 60 FIs can be made in other sectors under the following:
VIII. INSTITUTIONAL SUPPORT FOR INVESTORS 61 • Approval route, i.e. by the government through the Foreign Investment Promotion Board (FIPB) under the Ministry
A. Key investment facilitators 61 of Finance or Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry or
B. Institutional framework 65 both
• Automatic route, i.e. no prior approvals from regulatory authorities but only post facto intimations to RBI through
Authorized Bankers

1. Approval route
A prior approval from the FIPB or the DIPP is required in cases of FI where the project does not qualify for the automatic
route. The following cases will fall under this category:
• Specified sectors which require FIPB approval for FDI or for FDI beyond a prescribed sectoral cap

4 5
• Issue of shares for consideration other than cash i.e. issue of shares against import of capital goods/machinery directors or to control the management or policy decisions including by virtue of their shareholding or management
/equipment and pre-operative/pre-incorporation expenses subject to compliance with certain stated conditions rights or shareholders agreements or voting agreements. Further, for the computation of IFI, ‘FI will include all types
[except for capitalization of an external commercial borrowing (ECB) due for repayment and interest on such an of investments, i.e., FDI, investment by FIIs (holding as on 31 March), NRIs, ADRs, GDRs, foreign currency convertible
ECB, as well as technical knowhow fee or royalties due for payment] bonds (FCCBs), convertible preference shares and convertible currency debentures regardless of whether the said
• Investments by citizens and companies of Bangladesh or Pakistan investments have been made under Schedule 1, 2, 3 or 6 of FEMA (Transfer or Issue of Security by Persons Resident
Outside India) Regulations.
• Investments in warrants and partly paid shares
Broadly, the principle emerging under this policy aspect is that in case an Indian company is owned and controlled
• Investment in an Indian company engaged only in downstream investment activities for holding purposes or which beneficially by resident Indian citizens (RICs), any downstream investment made will be considered as domestic
does not have any operations or any downstream investments. Additionally, a company which fulfils the criteria investment and not counted towards foreign investment caps. Further, any downstream investments made by an Indian
prescribed under the core investment companies (CICs) guidelines issued by the RBI will have to comply with the company owned or controlled by non-residents would also be required to comply with sectoral caps and
norms prescribed therein conditionalities. In this regard, RBI has issued circular incorporating the downstream investment policy guidelines issued
The decision of the FIPB or DIPP is normally conveyed within four to six weeks from the date of submission of an by DIPP in 2009. Further, a statutory auditor would need to certify whether downstream investment is in compliance
application. A proposal for foreign investment is decided on a case-to-case basis on the merits of the case and according with the FDI Policy and FEMA provisions.
to the prescribed sectoral policy. Generally, preference is given to projects in high-priority industries and the
infrastructure sector, those with export potential, large-scale employment opportunities, links with the agro sector, social 4. Foreign venture capital permitted to acquire securities under private arrangement
relevance, or those relating to the infusion of capital and induction of technology. Foreign investment proposals under Foreign Venture Capital Investors (FVCIs) can invest in eligible securities (equity, equity linked instruments, debt, debt
the FIPB route involving a total foreign equity inflow of more than 12 billion INR must be placed before the Cabinet instruments, debentures of an IVCU or VCF, units of schemes or funds set up by a VCF) by private arrangement or
Committee of External Affairs (CCEA) for further consideration. Where an entity has an earlier FIPB or CCEA approval for purchase from a third party subject to compliance with certain conditions.
an activity/ sector or sectoral caps, additional foreign investment in such an entity does not require prior approval from
the FIPB or the CCEA, where subsequent to the earlier approval: 5. Foreign investment by qualified foreign investors
• Either the activity or the sector, had been placed under the automatic route; or Qualified foreign investors (QFIs) are non- resident investors other than SEBI-registered FIIs and SEBI-registered FVCIs
who meet the KYC requirements of SEBI.
• Sectoral caps had been removed or increased (provided that such additional investment along with the original
investment is within the current sectoral caps QFIs from FATF compliant jurisdictions and resident in a country that is a signatory to IOSCO’s MoU or a signatory of a
bilateral MoU with SEBI have been permitted to invest in equity shares of listed Indian companies or equity shares of
2. Automatic route Indian companies offered to the public in India through SEBI-registered depository participants (DPs) or SEBI-registered
Generally, except in the cases mentioned above, all other cases of foreign investment fall under the automatic route and brokers within an individual cap of 5 and 10% in aggregate of the paid-up capital of listed companies or both. Further,
do not require prior approval of the FIPB or DIPP QFIs can also purchase rupee denominated units of equity schemes of domestic mutual funds (MFs) on a repatriation
basis and eligible corporate debt instruments, viz. listed non-convertible debentures (NCDs), listed bonds of Indian
3. Computation of FDI companies, listed units of MF debt schemes and ’to be listed’ corporate bonds directly from the issuer or through a
registered stockbroker on a recognized stock exchange in India. QFIs are also permitted to acquire non-convertible
The Indian government had issued guidelines to calculate total FDI in an Indian company where sectoral caps apply. As
debentures or bonds issued by NBFCs categorized as infrastructure finance companies (IFCs).
per this policy, the total FDI in an Indian company will comprise the following:
• Direct investment by a foreign investor 6. Foreign investment by qualified foreign investors
• Indirect Foreign Investments (IFIs) through an Indian company owned or controlled by non-residents. Here FDI up to 100% is permitted with prior government approval in limited liability partnerships engaged in
‘owned’ means more than 50% shareholding and ‘control’ means right to appoint a majority of the sectors or activities currently eligible for 100% FDI under the automatic route. Such sectors/activities should

6 7
• Issue of shares for consideration other than cash i.e. issue of shares against import of capital goods/machinery directors or to control the management or policy decisions including by virtue of their shareholding or management
/equipment and pre-operative/pre-incorporation expenses subject to compliance with certain stated conditions rights or shareholders agreements or voting agreements. Further, for the computation of IFI, ‘FI will include all types
[except for capitalization of an external commercial borrowing (ECB) due for repayment and interest on such an of investments, i.e., FDI, investment by FIIs (holding as on 31 March), NRIs, ADRs, GDRs, foreign currency convertible
ECB, as well as technical knowhow fee or royalties due for payment] bonds (FCCBs), convertible preference shares and convertible currency debentures regardless of whether the said
• Investments by citizens and companies of Bangladesh or Pakistan investments have been made under Schedule 1, 2, 3 or 6 of FEMA (Transfer or Issue of Security by Persons Resident
Outside India) Regulations.
• Investments in warrants and partly paid shares
Broadly, the principle emerging under this policy aspect is that in case an Indian company is owned and controlled
• Investment in an Indian company engaged only in downstream investment activities for holding purposes or which beneficially by resident Indian citizens (RICs), any downstream investment made will be considered as domestic
does not have any operations or any downstream investments. Additionally, a company which fulfils the criteria investment and not counted towards foreign investment caps. Further, any downstream investments made by an Indian
prescribed under the core investment companies (CICs) guidelines issued by the RBI will have to comply with the company owned or controlled by non-residents would also be required to comply with sectoral caps and
norms prescribed therein conditionalities. In this regard, RBI has issued circular incorporating the downstream investment policy guidelines issued
The decision of the FIPB or DIPP is normally conveyed within four to six weeks from the date of submission of an by DIPP in 2009. Further, a statutory auditor would need to certify whether downstream investment is in compliance
application. A proposal for foreign investment is decided on a case-to-case basis on the merits of the case and according with the FDI Policy and FEMA provisions.
to the prescribed sectoral policy. Generally, preference is given to projects in high-priority industries and the
infrastructure sector, those with export potential, large-scale employment opportunities, links with the agro sector, social 4. Foreign venture capital permitted to acquire securities under private arrangement
relevance, or those relating to the infusion of capital and induction of technology. Foreign investment proposals under Foreign Venture Capital Investors (FVCIs) can invest in eligible securities (equity, equity linked instruments, debt, debt
the FIPB route involving a total foreign equity inflow of more than 12 billion INR must be placed before the Cabinet instruments, debentures of an IVCU or VCF, units of schemes or funds set up by a VCF) by private arrangement or
Committee of External Affairs (CCEA) for further consideration. Where an entity has an earlier FIPB or CCEA approval for purchase from a third party subject to compliance with certain conditions.
an activity/ sector or sectoral caps, additional foreign investment in such an entity does not require prior approval from
the FIPB or the CCEA, where subsequent to the earlier approval: 5. Foreign investment by qualified foreign investors
• Either the activity or the sector, had been placed under the automatic route; or Qualified foreign investors (QFIs) are non- resident investors other than SEBI-registered FIIs and SEBI-registered FVCIs
who meet the KYC requirements of SEBI.
• Sectoral caps had been removed or increased (provided that such additional investment along with the original
investment is within the current sectoral caps QFIs from FATF compliant jurisdictions and resident in a country that is a signatory to IOSCO’s MoU or a signatory of a
bilateral MoU with SEBI have been permitted to invest in equity shares of listed Indian companies or equity shares of
2. Automatic route Indian companies offered to the public in India through SEBI-registered depository participants (DPs) or SEBI-registered
Generally, except in the cases mentioned above, all other cases of foreign investment fall under the automatic route and brokers within an individual cap of 5 and 10% in aggregate of the paid-up capital of listed companies or both. Further,
do not require prior approval of the FIPB or DIPP QFIs can also purchase rupee denominated units of equity schemes of domestic mutual funds (MFs) on a repatriation
basis and eligible corporate debt instruments, viz. listed non-convertible debentures (NCDs), listed bonds of Indian
3. Computation of FDI companies, listed units of MF debt schemes and ’to be listed’ corporate bonds directly from the issuer or through a
registered stockbroker on a recognized stock exchange in India. QFIs are also permitted to acquire non-convertible
The Indian government had issued guidelines to calculate total FDI in an Indian company where sectoral caps apply. As
debentures or bonds issued by NBFCs categorized as infrastructure finance companies (IFCs).
per this policy, the total FDI in an Indian company will comprise the following:
• Direct investment by a foreign investor 6. Foreign investment by qualified foreign investors
• Indirect Foreign Investments (IFIs) through an Indian company owned or controlled by non-residents. Here FDI up to 100% is permitted with prior government approval in limited liability partnerships engaged in
‘owned’ means more than 50% shareholding and ‘control’ means right to appoint a majority of the sectors or activities currently eligible for 100% FDI under the automatic route. Such sectors/activities should

6 7
not have any sectoral or other FDI linked conditions. Some of the conditions, subject to which FDI in LLP would be • Where non-residents (including NRIs) are making investments in an Indian company, by way of subscription to its
permitted, are as follows: Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under
• Only cash contribution is permissible for FDI in LLPs the FDI scheme.

• LLPs with FDI are not allowed to make downstream investments In relation to a transfer of shares of an Indian company (listed or unlisted) from a non- resident to resident, the price
may not be more than the minimum price at which the transfer of shares can be made.
• LLP cannot raise ECB
• FIIs and FVCIs cannot invest in LLPs 9. Investment by foreign institutional investors (FIIs)
A registered FII may, through the SEBI, apply to the RBI for permission to purchase the shares and convertible debentures
7. Investment through share acquisition of an Indian company under the portfolio investment scheme. FIIs are permitted by the RBI to purchase the shares or
Non-resident investors can acquire shares of an existing Indian company subject to compliance with sectoral conditions. convertible debentures of an Indian company through registered brokers on recognized stock exchanges in India. They
Stock acquisition is permitted after a resolution to this effect has been passed by the board of directors of the company are also permitted to purchase the shares or convertible debentures of an Indian company through private placement or
whose shares are being acquired. The acquisition will need to comply with valuation guidelines prescribed by RBI or SEBI arrangement. The total holding by each FII and SEBI approved sub-account of FII cannot exceed 10% of the total paid-up
from time to time. Prior FIPB approval is required in all cases where either the control or ownership of the Indian equity capital or 10% of the paid-up value of each series of convertible debentures issued by an Indian company. Further,
company, engaged in a sector where FDI caps apply, is transferred to or acquired by a nonresident entity. the total holdings of all FIIs or sub-accounts of FIIs added together cannot exceed 24% of the paid-up equity capital or
the paid-up value of each series of convertible debentures. The limit of 24% may be increased to the specified sectoral
Acquisition by way of share swap is also permitted with prior FIPB approval and is subject to valuation guidelines. Prior
cap or statutory ceiling, as applicable, by the concerned Indian company by passing a board of directors’ resolution,
approval of the RBI is no longer required for the following cases of share acquisitions:
followed by the permission of the shareholders through a special resolution to that effect and immediate intimation to
• Acquisition of existing equity by residents from non-residents where the share price falls outside the prescribed the RBI.
valuation norms but complies with the pricing prescribed under SEBI regulations or guidelines
FIIs can now invest in the primary issues of NCDs or bonds only if their listing is committed to be done within 15 days of
• Acquisition of equity by non-residents from residents under the following cases: such an investment. FIIs can also subscribe to unlisted bonds or NCDs in case the issuing company is an infrastructure
– Where the requisite approval of the FIPB has been obtained company.

– Where prescribed pricing guidelines are not met but comply with SEBI pricing guidelines
– Where the investee company is in the financial services sector

8. Valuation norms
Issue of shares to non-residents or transfers from resident to nonresidents is subject to valuation guidelines as set out
below:
• In case of transfer of shares from resident to non-resident, the consideration cannot be less than the amount
determined as per discounted cash flow method in case of unlisted shares. However, if shares are listed, then the
consideration price cannot be less than the price at which preferential allotment of shares can be made under SEBI
guidelines
• In relation to a transfer of shares of an Indian company (listed or unlisted) from a non-resident to
resident, the price cannot exceed the above mentioned price

8 9
not have any sectoral or other FDI linked conditions. Some of the conditions, subject to which FDI in LLP would be • Where non-residents (including NRIs) are making investments in an Indian company, by way of subscription to its
permitted, are as follows: Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under
• Only cash contribution is permissible for FDI in LLPs the FDI scheme.

• LLPs with FDI are not allowed to make downstream investments In relation to a transfer of shares of an Indian company (listed or unlisted) from a non- resident to resident, the price
may not be more than the minimum price at which the transfer of shares can be made.
• LLP cannot raise ECB
• FIIs and FVCIs cannot invest in LLPs 9. Investment by foreign institutional investors (FIIs)
A registered FII may, through the SEBI, apply to the RBI for permission to purchase the shares and convertible debentures
7. Investment through share acquisition of an Indian company under the portfolio investment scheme. FIIs are permitted by the RBI to purchase the shares or
Non-resident investors can acquire shares of an existing Indian company subject to compliance with sectoral conditions. convertible debentures of an Indian company through registered brokers on recognized stock exchanges in India. They
Stock acquisition is permitted after a resolution to this effect has been passed by the board of directors of the company are also permitted to purchase the shares or convertible debentures of an Indian company through private placement or
whose shares are being acquired. The acquisition will need to comply with valuation guidelines prescribed by RBI or SEBI arrangement. The total holding by each FII and SEBI approved sub-account of FII cannot exceed 10% of the total paid-up
from time to time. Prior FIPB approval is required in all cases where either the control or ownership of the Indian equity capital or 10% of the paid-up value of each series of convertible debentures issued by an Indian company. Further,
company, engaged in a sector where FDI caps apply, is transferred to or acquired by a nonresident entity. the total holdings of all FIIs or sub-accounts of FIIs added together cannot exceed 24% of the paid-up equity capital or
the paid-up value of each series of convertible debentures. The limit of 24% may be increased to the specified sectoral
Acquisition by way of share swap is also permitted with prior FIPB approval and is subject to valuation guidelines. Prior
cap or statutory ceiling, as applicable, by the concerned Indian company by passing a board of directors’ resolution,
approval of the RBI is no longer required for the following cases of share acquisitions:
followed by the permission of the shareholders through a special resolution to that effect and immediate intimation to
• Acquisition of existing equity by residents from non-residents where the share price falls outside the prescribed the RBI.
valuation norms but complies with the pricing prescribed under SEBI regulations or guidelines
FIIs can now invest in the primary issues of NCDs or bonds only if their listing is committed to be done within 15 days of
• Acquisition of equity by non-residents from residents under the following cases: such an investment. FIIs can also subscribe to unlisted bonds or NCDs in case the issuing company is an infrastructure
– Where the requisite approval of the FIPB has been obtained company.

– Where prescribed pricing guidelines are not met but comply with SEBI pricing guidelines
– Where the investee company is in the financial services sector

8. Valuation norms
Issue of shares to non-residents or transfers from resident to nonresidents is subject to valuation guidelines as set out
below:
• In case of transfer of shares from resident to non-resident, the consideration cannot be less than the amount
determined as per discounted cash flow method in case of unlisted shares. However, if shares are listed, then the
consideration price cannot be less than the price at which preferential allotment of shares can be made under SEBI
guidelines
• In relation to a transfer of shares of an Indian company (listed or unlisted) from a non-resident to
resident, the price cannot exceed the above mentioned price

8 9
10. FDI in major sectors in India o A branch or branches
India ranks among the most attractive destinations for FDI in the world. Indian markets have the potential and offer o A wholly-owned subsidiary
prospects of higher profitability and a favorable regulatory regime to attract investors. A summary of FDI in key sectors is
o A subsidiary with an aggregate FI of maximum 74%
as follows:
Broadcasting • Teleports (setting-up of up-linking hubs or teleports), direct to-home, cable networks [Multi
Sector FDI summary System Operators (MSOs) operating at a national, State or district level and undertaking up-
Agriculture and Not permitted, except under following circumstances: gradation of networks towards digitalization and addressability], mobile TV and head end-
allied activities • FDI up to 100% under automatic route is permitted in floriculture, horticulture, in-the-sky(HITS) broadcasting services: FDI is permitted up to 74% (up to 49% under
development and production of seeds and planting material, animal husbandry, pisciculture, automatic route and beyond 49% and up to 74% under approval route).
aquaculture, cultivation of vegetables and mushrooms under controlled conditions and • Cable network [other MSOs not undertaking up-gradation of networks towards
services related to agro and allied sectors. Certain conditions apply for companies dealing digitalization and addressability and local cable operators (LCOs)]: FI is permitted up to 49%
with development of transgenic seeds and vegetables under the automatic route.
• In tea sector (including tea plantations), FDI up to 100% is permitted under the approval • Terrestrial broadcasting FM (FM radio): FDI is permitted up to 26% under the approval route.
route • Up-linking TV channels: FDI up to 26% is permitted under the approval route for the up-
• FDI up to 100% is permitted under automatic route for coffee and rubber processing and linking of a news and current affairs TV channel. 100% FDI is permitted under the approval
warehousing route for up-linking a non-news or current affairs TV channel.
Asset • Foreign investment by way of FDI and FII is permitted up to 100% (up to 49% under • Downlinking of TV channels: 100% FDI is permitted with prior Government approval
reconstruction automatic route and beyond 49% with prior FIPB approval) in an ARC registered with the Civil aviation and • FDI up to 49% is permitted for scheduled air transport services and domestic scheduled
companies RBI. While FIIs can invest in ARCs, total shareholding of an individual FII shall not exceed 10% airports passenger airlines under the automatic route. NRI investment is permitted up to 100% under
of the paid-up capital. Further, SEBI registered FIIs can invest in security receipts (SRs) issued the automatic route
by RBI registered ARCs up to 74% of each tranche of scheme of SRs. All investments in ARCs • For non-scheduled air transport services, non-scheduled airlines and cargo airlines, FDI is
will be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of permitted up to 74% (up to 49% under the automatic route and beyond that with FIPB
Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) approval). NRI investment is permitted up to 100% under the automatic route
Banking • Public sector banks: FDI and portfolio investment is restricted to 20% with a prior FIPB • Foreign airlines have been permitted to invest in the capital of Indian companies operating
approval scheduled and non-scheduled air transport services to the limit of 49% of their paid-up
• Private sector banks: FDI up to 74% allowed (up to 49% under the automatic route, and capital, subject to specified conditions
beyond 49% and up to 74% under the FIPB approval route). Voting rights per shareholder • 100% FDI is permitted under the automatic route for maintenance and repair organizations,
are restricted to 26%. Please note that within the permissible FDI ceiling, there are separate flying training institutes and technical training institutions
limits for FII or NRI investment under the portfolio investment scheme. A foreign bank may • FDI up to 74% is permitted for ground-handling services subject to sectoral regulations and
operate in India only through one of the following three channels: security clearances
• FDI up to 49% is permitted under the automatic route and between 49 and 74% under the
approval route. However, NRI investment up to 100% is permitted under the automatic
route.

10 11
10. FDI in major sectors in India o A branch or branches
India ranks among the most attractive destinations for FDI in the world. Indian markets have the potential and offer o A wholly-owned subsidiary
prospects of higher profitability and a favorable regulatory regime to attract investors. A summary of FDI in key sectors is
o A subsidiary with an aggregate FI of maximum 74%
as follows:
Broadcasting • Teleports (setting-up of up-linking hubs or teleports), direct to-home, cable networks [Multi
Sector FDI summary System Operators (MSOs) operating at a national, State or district level and undertaking up-
Agriculture and Not permitted, except under following circumstances: gradation of networks towards digitalization and addressability], mobile TV and head end-
allied activities • FDI up to 100% under automatic route is permitted in floriculture, horticulture, in-the-sky(HITS) broadcasting services: FDI is permitted up to 74% (up to 49% under
development and production of seeds and planting material, animal husbandry, pisciculture, automatic route and beyond 49% and up to 74% under approval route).
aquaculture, cultivation of vegetables and mushrooms under controlled conditions and • Cable network [other MSOs not undertaking up-gradation of networks towards
services related to agro and allied sectors. Certain conditions apply for companies dealing digitalization and addressability and local cable operators (LCOs)]: FI is permitted up to 49%
with development of transgenic seeds and vegetables under the automatic route.
• In tea sector (including tea plantations), FDI up to 100% is permitted under the approval • Terrestrial broadcasting FM (FM radio): FDI is permitted up to 26% under the approval route.
route • Up-linking TV channels: FDI up to 26% is permitted under the approval route for the up-
• FDI up to 100% is permitted under automatic route for coffee and rubber processing and linking of a news and current affairs TV channel. 100% FDI is permitted under the approval
warehousing route for up-linking a non-news or current affairs TV channel.
Asset • Foreign investment by way of FDI and FII is permitted up to 100% (up to 49% under • Downlinking of TV channels: 100% FDI is permitted with prior Government approval
reconstruction automatic route and beyond 49% with prior FIPB approval) in an ARC registered with the Civil aviation and • FDI up to 49% is permitted for scheduled air transport services and domestic scheduled
companies RBI. While FIIs can invest in ARCs, total shareholding of an individual FII shall not exceed 10% airports passenger airlines under the automatic route. NRI investment is permitted up to 100% under
of the paid-up capital. Further, SEBI registered FIIs can invest in security receipts (SRs) issued the automatic route
by RBI registered ARCs up to 74% of each tranche of scheme of SRs. All investments in ARCs • For non-scheduled air transport services, non-scheduled airlines and cargo airlines, FDI is
will be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of permitted up to 74% (up to 49% under the automatic route and beyond that with FIPB
Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) approval). NRI investment is permitted up to 100% under the automatic route
Banking • Public sector banks: FDI and portfolio investment is restricted to 20% with a prior FIPB • Foreign airlines have been permitted to invest in the capital of Indian companies operating
approval scheduled and non-scheduled air transport services to the limit of 49% of their paid-up
• Private sector banks: FDI up to 74% allowed (up to 49% under the automatic route, and capital, subject to specified conditions
beyond 49% and up to 74% under the FIPB approval route). Voting rights per shareholder • 100% FDI is permitted under the automatic route for maintenance and repair organizations,
are restricted to 26%. Please note that within the permissible FDI ceiling, there are separate flying training institutes and technical training institutions
limits for FII or NRI investment under the portfolio investment scheme. A foreign bank may • FDI up to 74% is permitted for ground-handling services subject to sectoral regulations and
operate in India only through one of the following three channels: security clearances
• FDI up to 49% is permitted under the automatic route and between 49 and 74% under the
approval route. However, NRI investment up to 100% is permitted under the automatic
route.

10 11
 • FDI up to 100% is permitted under the automatic route for helicopter and sea-plane services. Defense FDI in this sector is permitted up to 26% subject to prior FIPB approval and compliance with
• Foreign airlines can participate in the equity of companies operating cargo airlines, helicopter security and licensing requirements and guidelines issued by the Ministry of Defense. However,
services and seaplane services. proposals beyond 26% may be considered on case-to case basis by the Cabinet Committee on
Security. One of the basis for approval for such cases will be to see if the proposal brings in
• 100% FDI is permitted under the automatic route for green field investments in airports. State of the art and technology. These are likely to result in increased access to modern and
With respect to existing airports, FDI up to 100% is permitted, up to 74% under the state-of-the-art technology in the country. Additionally, the Indian company will need to comply
automatic route and up to 100% with prior FIPB approval. with the condition that the largest Indian shareholder will hold at least 51% of its share capital.
Coal and lignite • FDI is permitted up to 100% under the automatic route in coal and lignite mining for the According to the guidelines for the production of arms and ammunition, the management of
captive consumption by power projects, iron and steel, cement units and other eligible the Applicant Company or partnership should be in Indian hands, and the majority of the board
activities, subject to the provisions of the Coal Mines (Nationalization Act), 1973 as well as the chief executive should be a resident Indian. Further, there is a three-year lock-in
• A company setting up coal processing plants FDI up to 100% is permitted under the period for the transfer of equity from one foreign investor to another.
automatic route subject to the condition that it will not conduct coal mining and will supply Insurance FDI in the insurance sector is permitted up to 49% under the automatic route, subject to
the washed or sized coal to parties supplying raw coal or coal processing plants, instead of obtaining a license from the Insurance Regulatory and Development Authority (IRDA)
selling it in the open market.
Micro and small FDI in an MSE for the manufacture of items reserved under the small-scale sector is permitted,
Commodity Composite foreign investment (CFI) (FDI plus FII) up to 49% is permitted with prior FIPB enterprises subject to compliance with the applicable sectoral policy.
exchanges approval. However, any industrial undertaking which is not an MSE and is engaged in manufacturing items
However, FIIs are permitted to invest up to 23% without government approval and restricted to reserved for the MSE sector, will require FIPB approval when FI is more than 24%. Such an
secondary market purchases. FDI investment is capped at 26%. No foreign investor or entity undertaking will also require an industrial license under the Industries (Development and
including those acting in concert may hold more than 5% equity. Regulation) Act, 1951. This license prescribes the export of a minimum of 50% of the new or
The Union Cabinet has approved the proposal to permit FI in this sector under the automatic additional annual production of the MSE reserved items to be achieved within a maximum
route However, an official press note implementing the decision is awaited. period of three years.

Credit information CFI in credit information companies is permitted up to 49%, subject to the following conditions: Mining • FDI is allowed up to 100% under the automatic route for activities such as the exploration
companies • Prior approval of the Indian government and regulatory clearance from the RBI and mining of metals and non-metal ores, including gold and silver, minerals, diamonds and
• Investment by registered FIIs permitted up to 24% (within the overall limit of 49%) only in precious stones
listed credit information companies • FDI up to 100% is permitted with prior government approval for the mining and mineral
• Foreign investment subject to the Credit Information Companies (Regulation) Act, 2005 separation of titanium-bearing minerals and ores, its value addition and integrated activities.
It is subject to sectoral regulations and the conditions of the Mines and Minerals
The Union Cabinet has approved the proposal to permit FI (FDI+FII) up to 74% in this sector
(Development and Regulation) Act, 1957
under the automatic route
Non-banking 100% FDI is only allowed in the following activities under the automatic route subject to the
Courier services FDI up to 100% is permitted under the automatic route in companies undertaking courier
financial services minimum capitalization norms indicated below:
business
• Merchant banking
• Underwriting

12 13
 • FDI up to 100% is permitted under the automatic route for helicopter and sea-plane services. Defense FDI in this sector is permitted up to 26% subject to prior FIPB approval and compliance with
• Foreign airlines can participate in the equity of companies operating cargo airlines, helicopter security and licensing requirements and guidelines issued by the Ministry of Defense. However,
services and seaplane services. proposals beyond 26% may be considered on case-to case basis by the Cabinet Committee on
Security. One of the basis for approval for such cases will be to see if the proposal brings in
• 100% FDI is permitted under the automatic route for green field investments in airports. State of the art and technology. These are likely to result in increased access to modern and
With respect to existing airports, FDI up to 100% is permitted, up to 74% under the state-of-the-art technology in the country. Additionally, the Indian company will need to comply
automatic route and up to 100% with prior FIPB approval. with the condition that the largest Indian shareholder will hold at least 51% of its share capital.
Coal and lignite • FDI is permitted up to 100% under the automatic route in coal and lignite mining for the According to the guidelines for the production of arms and ammunition, the management of
captive consumption by power projects, iron and steel, cement units and other eligible the Applicant Company or partnership should be in Indian hands, and the majority of the board
activities, subject to the provisions of the Coal Mines (Nationalization Act), 1973 as well as the chief executive should be a resident Indian. Further, there is a three-year lock-in
• A company setting up coal processing plants FDI up to 100% is permitted under the period for the transfer of equity from one foreign investor to another.
automatic route subject to the condition that it will not conduct coal mining and will supply Insurance FDI in the insurance sector is permitted up to 49% under the automatic route, subject to
the washed or sized coal to parties supplying raw coal or coal processing plants, instead of obtaining a license from the Insurance Regulatory and Development Authority (IRDA)
selling it in the open market.
Micro and small FDI in an MSE for the manufacture of items reserved under the small-scale sector is permitted,
Commodity Composite foreign investment (CFI) (FDI plus FII) up to 49% is permitted with prior FIPB enterprises subject to compliance with the applicable sectoral policy.
exchanges approval. However, any industrial undertaking which is not an MSE and is engaged in manufacturing items
However, FIIs are permitted to invest up to 23% without government approval and restricted to reserved for the MSE sector, will require FIPB approval when FI is more than 24%. Such an
secondary market purchases. FDI investment is capped at 26%. No foreign investor or entity undertaking will also require an industrial license under the Industries (Development and
including those acting in concert may hold more than 5% equity. Regulation) Act, 1951. This license prescribes the export of a minimum of 50% of the new or
The Union Cabinet has approved the proposal to permit FI in this sector under the automatic additional annual production of the MSE reserved items to be achieved within a maximum
route However, an official press note implementing the decision is awaited. period of three years.

Credit information CFI in credit information companies is permitted up to 49%, subject to the following conditions: Mining • FDI is allowed up to 100% under the automatic route for activities such as the exploration
companies • Prior approval of the Indian government and regulatory clearance from the RBI and mining of metals and non-metal ores, including gold and silver, minerals, diamonds and
• Investment by registered FIIs permitted up to 24% (within the overall limit of 49%) only in precious stones
listed credit information companies • FDI up to 100% is permitted with prior government approval for the mining and mineral
• Foreign investment subject to the Credit Information Companies (Regulation) Act, 2005 separation of titanium-bearing minerals and ores, its value addition and integrated activities.
It is subject to sectoral regulations and the conditions of the Mines and Minerals
The Union Cabinet has approved the proposal to permit FI (FDI+FII) up to 74% in this sector
(Development and Regulation) Act, 1957
under the automatic route
Non-banking 100% FDI is only allowed in the following activities under the automatic route subject to the
Courier services FDI up to 100% is permitted under the automatic route in companies undertaking courier
financial services minimum capitalization norms indicated below:
business
• Merchant banking
• Underwriting

12 13
 • Portfolio management services Petroleum Other than refining
• Investment advisory services 100% FDI is permitted under the automatic route in the following, subject to the existing policy
• Financial consultancy and regulatory framework in the petroleum sector:
• Stock broking • Exploration activities of oil and natural gas fields
• Asset management • Infrastructure related to marketing of petroleum products and natural gas
• Venture capital • Petroleum products and natural gas marketing
• Custodian services • Petroleum product and natural gas pipelines
• Factoring • LNG re-gasification infrastructure
• Credit rating agencies • Market studies and formulation in the petroleum sector
• Leasing and finance (this will cover only finance lease) Refining
• Housing finance In the case of PSUs, FDI is permitted up to a maximum of 49% with automatic route. In the case
• Forex broking of private Indian companies, FDI up to 100% is permitted under the automatic route.
• Credit card business
Power exchange FDI up to 49% is permissible in power exchange under the automatic route (with FDI up to 26%
• Money changing business
and FII investment up to 23%). FII investment is restricted to the secondary market. No non-
• Micro credit
resident investor or entity including the persons acting in concert can hold more than 5% of the
• Rural credit
equity.
Minimum For Non-Banking Financial Companies (NBFCs), investment would be subject to following the
Print media • Publication of newspapers, periodicals and Indian editions of foreign magazines in news and
capitalization norms minimum capitalization norms.
current affairs: Foreign investment including FDI, NRI, PIO and FII investment, is permitted up
(foreign equity): • USD 0.5 million for foreign capital up to 51% to be brought upfront
to 26% with prior FIPB approval.
Fund-based activities • USD 5 million for foreign capital more than 51% and up to 75% to be brought upfront
• USD 50 million for foreign capital more than 75% out of which US$ 7.5 million to be brought • Publishing and printing of scientific and technical magazines, specialty journals and
up front and the balance in 24 months periodicals: FDI is permitted up to 100% with prior FIPB approval.
• Publication of facsimile editions of foreign newspapers: FDI up to 100% with prior FIPB
Minimum For non-banking financial companies (NBFCS) the minimum capitalization norm has been fixed
approval is permitted, provided it is by the owner of the original newspapers whose facsimile
capitalization norms at 0.5 million USD. The prescribed minimum capital is required to be brought upfront.
edition is proposed to be published in India. These sub-sectors need to comply with terms
(foreign equity): The following activities are classified as non-fund-based activities:
and conditions as may be prescribed by the Ministry of Information and Broadcasting. In
Non-fund based • Investment advisory services
addition, in the above sub-sectors where FDI is limited to 49%, the Indian company needs to
activities • Financial consultancy
comply with the single largest Indian shareholder condition
• Forex broking
• Money changing Construction FDI up to 100% under the automatic route is permitted in the following:
• Credit rating development • Construction-development projects (including but not restricted to housing, commercial
A non-fund based NBFC is prohibited from setting up subsidiary for any other activity and projects premises, resorts, educational institutions, recreational facilities, city and regional level
neither can it participate in the equity of an NBFC holding or operating company. infrastructure, and townships) subject to certain conditions:
– minimum area to be developed

14 15
 • Portfolio management services Petroleum Other than refining
• Investment advisory services 100% FDI is permitted under the automatic route in the following, subject to the existing policy
• Financial consultancy and regulatory framework in the petroleum sector:
• Stock broking • Exploration activities of oil and natural gas fields
• Asset management • Infrastructure related to marketing of petroleum products and natural gas
• Venture capital • Petroleum products and natural gas marketing
• Custodian services • Petroleum product and natural gas pipelines
• Factoring • LNG re-gasification infrastructure
• Credit rating agencies • Market studies and formulation in the petroleum sector
• Leasing and finance (this will cover only finance lease) Refining
• Housing finance In the case of PSUs, FDI is permitted up to a maximum of 49% with automatic route. In the case
• Forex broking of private Indian companies, FDI up to 100% is permitted under the automatic route.
• Credit card business
Power exchange FDI up to 49% is permissible in power exchange under the automatic route (with FDI up to 26%
• Money changing business
and FII investment up to 23%). FII investment is restricted to the secondary market. No non-
• Micro credit
resident investor or entity including the persons acting in concert can hold more than 5% of the
• Rural credit
equity.
Minimum For Non-Banking Financial Companies (NBFCs), investment would be subject to following the
Print media • Publication of newspapers, periodicals and Indian editions of foreign magazines in news and
capitalization norms minimum capitalization norms.
current affairs: Foreign investment including FDI, NRI, PIO and FII investment, is permitted up
(foreign equity): • USD 0.5 million for foreign capital up to 51% to be brought upfront
to 26% with prior FIPB approval.
Fund-based activities • USD 5 million for foreign capital more than 51% and up to 75% to be brought upfront
• USD 50 million for foreign capital more than 75% out of which US$ 7.5 million to be brought • Publishing and printing of scientific and technical magazines, specialty journals and
up front and the balance in 24 months periodicals: FDI is permitted up to 100% with prior FIPB approval.
• Publication of facsimile editions of foreign newspapers: FDI up to 100% with prior FIPB
Minimum For non-banking financial companies (NBFCS) the minimum capitalization norm has been fixed
approval is permitted, provided it is by the owner of the original newspapers whose facsimile
capitalization norms at 0.5 million USD. The prescribed minimum capital is required to be brought upfront.
edition is proposed to be published in India. These sub-sectors need to comply with terms
(foreign equity): The following activities are classified as non-fund-based activities:
and conditions as may be prescribed by the Ministry of Information and Broadcasting. In
Non-fund based • Investment advisory services
addition, in the above sub-sectors where FDI is limited to 49%, the Indian company needs to
activities • Financial consultancy
comply with the single largest Indian shareholder condition
• Forex broking
• Money changing Construction FDI up to 100% under the automatic route is permitted in the following:
• Credit rating development • Construction-development projects (including but not restricted to housing, commercial
A non-fund based NBFC is prohibited from setting up subsidiary for any other activity and projects premises, resorts, educational institutions, recreational facilities, city and regional level
neither can it participate in the equity of an NBFC holding or operating company. infrastructure, and townships) subject to certain conditions:
– minimum area to be developed

14 15
 – minimum capitalization of 10 million USD for a wholly owned subsidiary and 5 million Pharmaceuticals 100% FDI is permitted in existing pharmaceutical companies with prior FIPB approval. With
USD for a JV with an Indian partner respect to the green field investments, 100% FDI is permitted under the automatic route
– original investment i.e. the entire amount brought in as FDI with a minimum three-year Telecommunications FDI up to 100% is permitted. FDI up to 49% is under automatic route, and beyond 49% on a
lock-in from the date of receipt of each FDI instalment or from the date of completion of prior FIPB approval in the telecom services including Telecom infrastructure Providers Category-I,
minimum capitalization, whichever is later viz. Basic, Cellular, United Access Services, Unified License (Access services), Unified License,
– development of at least 50% of each project must be completed within 5 years of National/International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked services,
obtaining all statutory clearances Global Mobile Personal Communications Services, All types of ISP licenses, Voice
Investment by NRIs is not subject to the conditions applicable in the case of construction Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability services, Infrastructure Provider
development projects. Category I (providing dark fibre, right of way, duct space, tower) except other Service Providers F
Investment in SEZs, hotels, hospitals, industrial parks (satisfying prescribed conditions), the subject to observance of licensing and security conditions by licensee as well as investors as
education sector and old-age homes is also exempt from the above requirement. notified by the Department of Telecommunication from time to time.
Industrial parks FDI up to 100% is permitted under the automatic route subject to the fulfillment of prescribed Trading 100% FDI is permitted under the automatic route for trading companies engaged in the
conditions. “Industrial activity” has been defined to mean manufacturing; electricity; gas and following activities:
water supply; post and telecommunications; software publishing, consultancy and supply; data • Cash-and-carry wholesale trading and wholesale trading subject to operational guidelines
processing, database activities and distribution of electronic content; other computer related • Operational guidelines for wholesale trading
activities; basic and applied R&D on biotechnology, pharmaceutical sciences and life sciences,
• Single brand retail trading
natural sciences and engineering; business and management consultancy activities; and
architectural, engineering and other technical activities. Further, the conditions applicable to • Multi brand retail trading
construction development activities would not be applicable provided the following conditions
are complied with:
• Industrial park comprises of at least 10 units and no single unit occupies more than 50% of
allocable area
• At least 66% of the total allocable area is allocated to industrial activity
Satellites: FDI up to 74% is permitted with prior FIPB approval subject to sectoral guidelines of the
establishment and Department of Space or the Indian Space Research Organization (ISRO)
operations
Security exchanges FDI up to 49% is permitted under approval route
in private sector
Stock exchanges, Foreign investment up to 49% (FDI cap at 26% and FII cap at 23%) is permitted under automatic
depositories, route. FIIs are allowed only through purchases in the secondary market
clearing corporations

16 17
 – minimum capitalization of 10 million USD for a wholly owned subsidiary and 5 million Pharmaceuticals 100% FDI is permitted in existing pharmaceutical companies with prior FIPB approval. With
USD for a JV with an Indian partner respect to the green field investments, 100% FDI is permitted under the automatic route
– original investment i.e. the entire amount brought in as FDI with a minimum three-year Telecommunications FDI up to 100% is permitted. FDI up to 49% is under automatic route, and beyond 49% on a
lock-in from the date of receipt of each FDI instalment or from the date of completion of prior FIPB approval in the telecom services including Telecom infrastructure Providers Category-I,
minimum capitalization, whichever is later viz. Basic, Cellular, United Access Services, Unified License (Access services), Unified License,
– development of at least 50% of each project must be completed within 5 years of National/International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked services,
obtaining all statutory clearances Global Mobile Personal Communications Services, All types of ISP licenses, Voice
Investment by NRIs is not subject to the conditions applicable in the case of construction Mail/Audiotex/UMS, Resale of IPLC, Mobile Number Portability services, Infrastructure Provider
development projects. Category I (providing dark fibre, right of way, duct space, tower) except other Service Providers F
Investment in SEZs, hotels, hospitals, industrial parks (satisfying prescribed conditions), the subject to observance of licensing and security conditions by licensee as well as investors as
education sector and old-age homes is also exempt from the above requirement. notified by the Department of Telecommunication from time to time.
Industrial parks FDI up to 100% is permitted under the automatic route subject to the fulfillment of prescribed Trading 100% FDI is permitted under the automatic route for trading companies engaged in the
conditions. “Industrial activity” has been defined to mean manufacturing; electricity; gas and following activities:
water supply; post and telecommunications; software publishing, consultancy and supply; data • Cash-and-carry wholesale trading and wholesale trading subject to operational guidelines
processing, database activities and distribution of electronic content; other computer related • Operational guidelines for wholesale trading
activities; basic and applied R&D on biotechnology, pharmaceutical sciences and life sciences,
• Single brand retail trading
natural sciences and engineering; business and management consultancy activities; and
architectural, engineering and other technical activities. Further, the conditions applicable to • Multi brand retail trading
construction development activities would not be applicable provided the following conditions
are complied with:
• Industrial park comprises of at least 10 units and no single unit occupies more than 50% of
allocable area
• At least 66% of the total allocable area is allocated to industrial activity
Satellites: FDI up to 74% is permitted with prior FIPB approval subject to sectoral guidelines of the
establishment and Department of Space or the Indian Space Research Organization (ISRO)
operations
Security exchanges FDI up to 49% is permitted under approval route
in private sector
Stock exchanges, Foreign investment up to 49% (FDI cap at 26% and FII cap at 23%) is permitted under automatic
depositories, route. FIIs are allowed only through purchases in the secondary market
clearing corporations

16 17
Entry options B. Operating as a foreign company
A foreign company looking to set up operations in India can consider the following options: 1. Liaison office
A. Operating as an Indian company Setting up a liaison or representative office is a common practice for foreign companies seeking to enter the Indian
market. The role of these offices is limited to collecting information about the market and providing information
1. Wholly owned subsidiary company about the company and its products to prospective Indian customers. These offices act as listening and transmission
posts and provide information between the foreign company and its Indian customers. A liaison office is not allowed
A foreign company can set up a wholly owned subsidiary company in India to carry out its activities. Such a to undertake anything other than liaison activities in India and cannot, therefore, earn any income in India, under the
subsidiary is treated as an Indian resident and an Indian company for all Indian regulations (including income tax, terms of approval granted by the RBI. Additionally, one would need registration with Registrar of companies and
Foreign Exchange Management Act,1999 and the Companies Act), despite being 100% foreign-owned. At least two reporting of details of Liaison office is required with Director General of Police under whose jurisdiction the LO is
members, for a private limited company, and seven members, for a public limited company, are mandatory. Activities established.
of such a company need to comply with the provisions of the FDI policy.
2. Project office
2. Joint venture with an Indian partner (equity participation)
Foreign companies planning to execute specific projects in India can set up temporary project and site offices here
Although a wholly owned subsidiary has proven to be the preferred option, foreign companies have also begun for this purpose. The RBI has granted general permission to a foreign entity for setting up a project office in India,
operations in India by forming strategic alliances with Indian partners. The trend is to choose a partner in the same subject to the fulfillment of conditions. The foreign entity needs only to provide a report to the jurisdictional regional
area of activity or who brings synergy to the foreign investor’s plans for India. Sometimes joint ventures are also office of the RBI giving the particulars of the project or contract. Additionally, one would need to report the details
necessitated due to restrictions on foreign ownership in certain sectors. The FI guidelines for investment in an Indian of project office with Director General of Police under whose jurisdiction the PO is established.
company have already been discussed in the previous section.
3. Branch office
3. Limited liability partnership (LLP)
Foreign companies engaged in manufacturing and trading activities abroad can set up branch offices in India for the
LLP is a new form of business structure in India. It combines the advantages of a company, such as being a separate following purposes, with the prior approval of the RBI:
legal entity having perpetual succession, with the benefits of organizational flexibility associated with a partnership.
At least two partners are required to form an LLP and they have limited liability. An LLP, with less compliance levels is • Export and import of goods
comparatively easier to manage than a company form of organization. Further, an LLP is not subject to mandatory • Professional or consultancy services
requirements applicable to a company with regard to provision of depreciation and transfer to reserves prior to
• Research work in which the parent company is engaged to promote technical or financial collaboration between
distribution of profits (though Companies Act 2013 makes it voluntary for a company to transfer to reserves prior to
Indian companies and the parent company
distribution of profits, this would be applicable once it gets notified). As mentioned in the previous section, the FDI
policy for LLPs has been notified making this a possible viable entity form for Indian business operations of foreign • Representing the parent company in India and acting as a buying or selling agent in India
investors. • IT and software development services in India
The operational guidelines with respect to compliances to be undertaken with respect to FDI in an LLP are likely to • Technical support for products supplied by the parent or group companies
be notified soon by the RBI.
• Acting as a foreign airline or shipping company
In general, manufacturing activity cannot be undertaken through a branch office. However, foreign
companies can establish a branch office or unit for manufacturing in an SEZ subject to the fulfilment of
certain conditions.

18 19
Entry options B. Operating as a foreign company
A foreign company looking to set up operations in India can consider the following options: 1. Liaison office
A. Operating as an Indian company Setting up a liaison or representative office is a common practice for foreign companies seeking to enter the Indian
market. The role of these offices is limited to collecting information about the market and providing information
1. Wholly owned subsidiary company about the company and its products to prospective Indian customers. These offices act as listening and transmission
posts and provide information between the foreign company and its Indian customers. A liaison office is not allowed
A foreign company can set up a wholly owned subsidiary company in India to carry out its activities. Such a to undertake anything other than liaison activities in India and cannot, therefore, earn any income in India, under the
subsidiary is treated as an Indian resident and an Indian company for all Indian regulations (including income tax, terms of approval granted by the RBI. Additionally, one would need registration with Registrar of companies and
Foreign Exchange Management Act,1999 and the Companies Act), despite being 100% foreign-owned. At least two reporting of details of Liaison office is required with Director General of Police under whose jurisdiction the LO is
members, for a private limited company, and seven members, for a public limited company, are mandatory. Activities established.
of such a company need to comply with the provisions of the FDI policy.
2. Project office
2. Joint venture with an Indian partner (equity participation)
Foreign companies planning to execute specific projects in India can set up temporary project and site offices here
Although a wholly owned subsidiary has proven to be the preferred option, foreign companies have also begun for this purpose. The RBI has granted general permission to a foreign entity for setting up a project office in India,
operations in India by forming strategic alliances with Indian partners. The trend is to choose a partner in the same subject to the fulfillment of conditions. The foreign entity needs only to provide a report to the jurisdictional regional
area of activity or who brings synergy to the foreign investor’s plans for India. Sometimes joint ventures are also office of the RBI giving the particulars of the project or contract. Additionally, one would need to report the details
necessitated due to restrictions on foreign ownership in certain sectors. The FI guidelines for investment in an Indian of project office with Director General of Police under whose jurisdiction the PO is established.
company have already been discussed in the previous section.
3. Branch office
3. Limited liability partnership (LLP)
Foreign companies engaged in manufacturing and trading activities abroad can set up branch offices in India for the
LLP is a new form of business structure in India. It combines the advantages of a company, such as being a separate following purposes, with the prior approval of the RBI:
legal entity having perpetual succession, with the benefits of organizational flexibility associated with a partnership.
At least two partners are required to form an LLP and they have limited liability. An LLP, with less compliance levels is • Export and import of goods
comparatively easier to manage than a company form of organization. Further, an LLP is not subject to mandatory • Professional or consultancy services
requirements applicable to a company with regard to provision of depreciation and transfer to reserves prior to
• Research work in which the parent company is engaged to promote technical or financial collaboration between
distribution of profits (though Companies Act 2013 makes it voluntary for a company to transfer to reserves prior to
Indian companies and the parent company
distribution of profits, this would be applicable once it gets notified). As mentioned in the previous section, the FDI
policy for LLPs has been notified making this a possible viable entity form for Indian business operations of foreign • Representing the parent company in India and acting as a buying or selling agent in India
investors. • IT and software development services in India
The operational guidelines with respect to compliances to be undertaken with respect to FDI in an LLP are likely to • Technical support for products supplied by the parent or group companies
be notified soon by the RBI.
• Acting as a foreign airline or shipping company
In general, manufacturing activity cannot be undertaken through a branch office. However, foreign
companies can establish a branch office or unit for manufacturing in an SEZ subject to the fulfilment of
certain conditions.

18 19
Exchange control regulations • Payment of commission on exports made towards equity investments in joint ventures or wholly owned subsidiaries
abroad of Indian companies
Foreign exchange transactions are regulated under the Foreign Exchange Management Act, 1999 (FEMA). Under the • Payment of commission on exports under the rupee state credit route except commission up to 10% of invoice value
FEMA, foreign exchange transactions are divided into two broad categories: current account transactions and capital of exports of tea and tobacco
account transactions. Transactions that alter the assets or liabilities outside India of a person resident in India or, in India,
of a person resident outside India, are classified as capital account transactions. All other transactions are considered • Payment related to ’call back services’ of telephones
current account transactions. The Indian rupee is fully convertible for current account transactions, subject to a negative • Remittance of dividend by any company to which the requirement of dividend balancing is applicable
list of transactions which are either prohibited or which require prior approval. An Indian company with FI is treated
• Remittances of interest income of funds held in a nonresident special rupee (account) scheme
equally with other locally incorporated companies. Similarly, a foreign-invested Indian company is also treated equally
with other locally incorporated companies. Accordingly, the exchange control laws and regulations for residents apply to B. Capital account transactions
Indian companies with FI.
Capital account transactions can be undertaken only to the extent permitted. The RBI has prescribed a list of capital
A. Current account transactions account transactions, which include the following:

Foreign nationals or Indian citizens who are not permanently residing in India and have been deputed by a foreign • Investments overseas by residents
company to its office, branch, subsidiary or JV in India are allowed to make recurring remittances abroad for family • Borrowing or lending in foreign exchange
maintenance of up to 100% of their net salary. Further, up to 100% of the salary of a foreign national or Indian citizen
• Export or import of currency
deputed by a foreign company to its Indian office, branch, subsidiary or JV can be paid abroad by the foreign company,
subject to the foreign national or Indian citizen paying applicable taxes in India. Prior approval of the RBI is required for • Transfer or acquisition of immovable property in or outside India liberalized remittance scheme for resident
acquiring foreign currency for the following purposes: individuals

• Holiday travel over 10,000 USD per person p.a. Under the regulations of the Foreign Exchange Management Act, 1999, resident individuals are permitted to remit up to
75,000 USD per financial year for any permitted current or capital account transaction, or a combination of both, subject
• Gift over 5,000 USD or donation over 5,000 USD per remitter or donor p.a.
to specified terms and conditions under the LRS Scheme in addition to specific limits provided under current account
• Business travel over 25,000 USD per person per visit transaction rules. Acquisition of immovable property outside India (directly or indirectly) under LRS scheme would not be
• Foreign studies as per the estimate of the institution or 100,000 USD per academic year, whichever is higher allowed.

• Consultancy services procured from abroad of over 1,000,000 USD per project (10,000,000 USD in case of In addition to above, the RBI has permitted eligible resident individuals to access the LRS window to acquire/set up
infrastructure projects) overseas JV/WOS (which is an operating company) outside India for bona fide business activities by making remittance
under the LRS within the limit of USD 75,000 with effect from August 5, 2013.
• Reimbursement of pre-incorporation expenses over the higher of 100,000 USD and 5% of investment brought into
India In addition, with respect to overseas investments in a joint venture, the limit of financial commitment is now 100% of
net worth of the Indian entity as on the last audited balance sheet date. Investment beyond this cap requires prior
Certain specified remittances are prohibited:
permission from Reserve Bank of India.
• Remittances out of lottery winnings
All other transactions otherwise not permissible under FEMA and those in the nature of remittances for margins or
• Remittance of income from racing, riding, etc. or any other hobby margin calls to overseas exchanges or overseas counterparties are not allowed under the scheme.
• Remittance for the purchase of lottery tickets, banned or prescribed magazines, football pools,
sweepstakes, etc

20 21
Exchange control regulations • Payment of commission on exports made towards equity investments in joint ventures or wholly owned subsidiaries
abroad of Indian companies
Foreign exchange transactions are regulated under the Foreign Exchange Management Act, 1999 (FEMA). Under the • Payment of commission on exports under the rupee state credit route except commission up to 10% of invoice value
FEMA, foreign exchange transactions are divided into two broad categories: current account transactions and capital of exports of tea and tobacco
account transactions. Transactions that alter the assets or liabilities outside India of a person resident in India or, in India,
of a person resident outside India, are classified as capital account transactions. All other transactions are considered • Payment related to ’call back services’ of telephones
current account transactions. The Indian rupee is fully convertible for current account transactions, subject to a negative • Remittance of dividend by any company to which the requirement of dividend balancing is applicable
list of transactions which are either prohibited or which require prior approval. An Indian company with FI is treated
• Remittances of interest income of funds held in a nonresident special rupee (account) scheme
equally with other locally incorporated companies. Similarly, a foreign-invested Indian company is also treated equally
with other locally incorporated companies. Accordingly, the exchange control laws and regulations for residents apply to B. Capital account transactions
Indian companies with FI.
Capital account transactions can be undertaken only to the extent permitted. The RBI has prescribed a list of capital
A. Current account transactions account transactions, which include the following:

Foreign nationals or Indian citizens who are not permanently residing in India and have been deputed by a foreign • Investments overseas by residents
company to its office, branch, subsidiary or JV in India are allowed to make recurring remittances abroad for family • Borrowing or lending in foreign exchange
maintenance of up to 100% of their net salary. Further, up to 100% of the salary of a foreign national or Indian citizen
• Export or import of currency
deputed by a foreign company to its Indian office, branch, subsidiary or JV can be paid abroad by the foreign company,
subject to the foreign national or Indian citizen paying applicable taxes in India. Prior approval of the RBI is required for • Transfer or acquisition of immovable property in or outside India liberalized remittance scheme for resident
acquiring foreign currency for the following purposes: individuals

• Holiday travel over 10,000 USD per person p.a. Under the regulations of the Foreign Exchange Management Act, 1999, resident individuals are permitted to remit up to
75,000 USD per financial year for any permitted current or capital account transaction, or a combination of both, subject
• Gift over 5,000 USD or donation over 5,000 USD per remitter or donor p.a.
to specified terms and conditions under the LRS Scheme in addition to specific limits provided under current account
• Business travel over 25,000 USD per person per visit transaction rules. Acquisition of immovable property outside India (directly or indirectly) under LRS scheme would not be
• Foreign studies as per the estimate of the institution or 100,000 USD per academic year, whichever is higher allowed.

• Consultancy services procured from abroad of over 1,000,000 USD per project (10,000,000 USD in case of In addition to above, the RBI has permitted eligible resident individuals to access the LRS window to acquire/set up
infrastructure projects) overseas JV/WOS (which is an operating company) outside India for bona fide business activities by making remittance
under the LRS within the limit of USD 75,000 with effect from August 5, 2013.
• Reimbursement of pre-incorporation expenses over the higher of 100,000 USD and 5% of investment brought into
India In addition, with respect to overseas investments in a joint venture, the limit of financial commitment is now 100% of
net worth of the Indian entity as on the last audited balance sheet date. Investment beyond this cap requires prior
Certain specified remittances are prohibited:
permission from Reserve Bank of India.
• Remittances out of lottery winnings
All other transactions otherwise not permissible under FEMA and those in the nature of remittances for margins or
• Remittance of income from racing, riding, etc. or any other hobby margin calls to overseas exchanges or overseas counterparties are not allowed under the scheme.
• Remittance for the purchase of lottery tickets, banned or prescribed magazines, football pools,
sweepstakes, etc

20 21
C. Miscellaneous repatriation of capital
Direct Taxation in India
Foreign capital invested in India is generally repatriable, along with capital appreciation, if any, after the payment of
taxes due, provided the investment was on a repatriation basis. A. Corporate tax rates
Company Rate
D. Acquisition of immovable property in India
Domestic company 30%
Generally, foreigners are not permitted to acquire immovable property except in cases of inheritance, acquisition on lease
(plus applicable surcharge and cess)
for period not exceeding 5 years and, where the property is required for the business of the Indian branch, office or
subsidiary of the foreign entity. NRIs or PIOs are permitted to acquire immovable properties (except agricultural land, Foreign company 40%
plantation property and farmhouse. (plus applicable surcharge and cess)

E. Royalties and technical know-how fees

Indian companies can make payment for trademark or technology royalties without any restrictions under the automatic B. Dividend distribution tax
route. Indian companies distributing or declaring dividends are liable to pay DDT at 15% (plus 10% surcharge, 2% education
cess, and 1% secondary and higher education cess). This tax is payable on declaration, distribution, or payment,
F. Dividends whichever is earlier, and it is in addition to the income-tax payable on business profits. Special economic zone (SEZ)
developers and units in an SEZ are liable to pay DDT at 15% (plus 10% surcharge, 2% education cess, and 1% secondary
Dividends are freely repatriable after the payment of dividend distribution tax by the Indian company declaring the
and higher education cess) with effect from 1 June 2011. A holding company does not have to pay DDT on dividends
dividend. RBI permission is not necessary for a dividend affecting a remittance, subject to specified compliance paid to its shareholders to the extent that it has received dividends from its Indian or foreign subsidiary company on
requirements. which DDT has been paid by the respective subsidiary. However, the benefit will not be available if the holding company
is itself a subsidiary of another company
G. Remittances by branch or project office
No prior approval is required for remitting profits earned by the Indian branches of foreign companies (other than C. Tax on buyback of shares
banks) to their head offices outside India. Remittances of the winding up proceeds of a branch office of a foreign An additional tax is payable on transaction involving the buyback of shares by unlisted companies from its shareholders.
company in India are permitted subject to the authorized dealer’s approval. Remittances of winding-up proceeds of a A tax at 20% (plus 10% surcharge, 2% education cess and 1% secondary and higher secondary education cess) is payable
project office of a foreign company in India are permitted under the automatic route subject to the fulfillment of the by the company on the difference between consideration paid on buyback and the issue price of shares. The buyback
compliance requirements. consideration received would be tax-exempt in the hands of the receiver. No tax credit would be allowed in case of such
taxes paid either to the company or to the shareholder.

D. Minimum alternate tax (MAT)

To bring zero tax companies under the tax net, MAT at 18.5%, plus applicable surcharge and education cess, of the book
profits is levied on companies whose tax payable under normal income tax provisions is less than 18.5% of adjusted
book profits. MAT is also applicable to SEZ developers and units in a SEZ with effect from financial year (FY) 2011-12.
The current effective rates are as follows:

22 23
C. Miscellaneous repatriation of capital
Direct Taxation in India
Foreign capital invested in India is generally repatriable, along with capital appreciation, if any, after the payment of
taxes due, provided the investment was on a repatriation basis. A. Corporate tax rates
Company Rate
D. Acquisition of immovable property in India
Domestic company 30%
Generally, foreigners are not permitted to acquire immovable property except in cases of inheritance, acquisition on lease
(plus applicable surcharge and cess)
for period not exceeding 5 years and, where the property is required for the business of the Indian branch, office or
subsidiary of the foreign entity. NRIs or PIOs are permitted to acquire immovable properties (except agricultural land, Foreign company 40%
plantation property and farmhouse. (plus applicable surcharge and cess)

E. Royalties and technical know-how fees

Indian companies can make payment for trademark or technology royalties without any restrictions under the automatic B. Dividend distribution tax
route. Indian companies distributing or declaring dividends are liable to pay DDT at 15% (plus 10% surcharge, 2% education
cess, and 1% secondary and higher education cess). This tax is payable on declaration, distribution, or payment,
F. Dividends whichever is earlier, and it is in addition to the income-tax payable on business profits. Special economic zone (SEZ)
developers and units in an SEZ are liable to pay DDT at 15% (plus 10% surcharge, 2% education cess, and 1% secondary
Dividends are freely repatriable after the payment of dividend distribution tax by the Indian company declaring the
and higher education cess) with effect from 1 June 2011. A holding company does not have to pay DDT on dividends
dividend. RBI permission is not necessary for a dividend affecting a remittance, subject to specified compliance paid to its shareholders to the extent that it has received dividends from its Indian or foreign subsidiary company on
requirements. which DDT has been paid by the respective subsidiary. However, the benefit will not be available if the holding company
is itself a subsidiary of another company
G. Remittances by branch or project office
No prior approval is required for remitting profits earned by the Indian branches of foreign companies (other than C. Tax on buyback of shares
banks) to their head offices outside India. Remittances of the winding up proceeds of a branch office of a foreign An additional tax is payable on transaction involving the buyback of shares by unlisted companies from its shareholders.
company in India are permitted subject to the authorized dealer’s approval. Remittances of winding-up proceeds of a A tax at 20% (plus 10% surcharge, 2% education cess and 1% secondary and higher secondary education cess) is payable
project office of a foreign company in India are permitted under the automatic route subject to the fulfillment of the by the company on the difference between consideration paid on buyback and the issue price of shares. The buyback
compliance requirements. consideration received would be tax-exempt in the hands of the receiver. No tax credit would be allowed in case of such
taxes paid either to the company or to the shareholder.

D. Minimum alternate tax (MAT)

To bring zero tax companies under the tax net, MAT at 18.5%, plus applicable surcharge and education cess, of the book
profits is levied on companies whose tax payable under normal income tax provisions is less than 18.5% of adjusted
book profits. MAT is also applicable to SEZ developers and units in a SEZ with effect from financial year (FY) 2011-12.
The current effective rates are as follows:

22 23
 Company Where taxable income exceeds INR 10 million (USD 170,000)* Other cases* G. Computation of total income: General
Domestic company 18.5% 18.5% All income that accrues or arises or is deemed to accrue or arise or is received or deemed to be received in India is
Foreign company 18.5% 18.5% taxable in the hands of a non-resident taxpayer subject to the benefit of the double taxation avoidance agreement
* Applicable surcharge and education cess will also be levied on the above tax rates.
(DTAA) with the taxpayer’s country of residence.
The credit of tax paid under MAT provisions is allowed against the tax liability which arises in the subsequent 10 years • Taxable income is computed for a uniform accounting year, i.e., the fiscal year from 1 April to 31 March
under the normal provisions of the Income-tax Act. Unadjusted MAT credit can be carried forward till the 10th year, • The taxable income is called ‘total income’, computed after adding certain disallowances, such as loss on the sale of
following the year in which the credit arises. assets and the reduction of certain allowances or benefits from the profits

E. Alternate minimum tax on all persons other than companies H. Depreciation

MAT provisions (which were applicable only to companies) were extended to limited liability partnerships (LLPs) with Depreciation is allowed separately at the following rates for computing taxable income:
effect from FY 2011-12 in the modified form of alternate minimum tax (AMT). AMT provisions have now been further In the case of a new asset, depreciation for the whole year is allowed only if the asset is put to use for 180 days or more
extended to all other assessees with effect from FY 2012-13. AMT will be applicable at the rate of 18.5% on the adjusted during the fiscal year. Otherwise, depreciation is allowed at only half the prescribed rate.
total income (as per income-tax provisions) rather than the adjusted book profits as is the case for companies. Like
companies, AMT credit will be available to LLPs and other assessees for the period of 10 years. Particulars Rate
Factory building 10%
F. Capital gains
Furniture and fittings 10%
Particulars Tax rates*
Resident Non-resident Plant and machinery (general) 15%
a. Short-term capital assets-listed equity shares and units of 15% 15% Computers (including software) 60%
equity-oriented funds which have been charged to securities
Motorcars, other than those used in a business of running them on hire 15%
transaction tax (STT)
b. Long-term capital assets-listed equity shares in a company or Exempt Exempt Intangible assets (such as know-how, patents, copyrights, trademarks, licences,
unit of an equity-oriented fund which have been charged to STT franchises or any other business or commercial rights of a similar nature) 25%
c. Long-term capital assets-listed securities (other than (b) above 10% 10% Windmill 15%
1
d. Other long term capital assets 20% 20% For certain priority items, such as energy-saving devices and pollution control The rates vary
e. Long-term capital gains arising to a non-resident NA 10% (No equipment, depreciation is allowed at higher rates. Undertakings engaged in the from 1.95 to
(not being a company) or a foreign company – indexation business of generation or generation and distribution of power have the option of 33.40%.
from transfer of unlisted securities benefit) claiming tax depreciation at the above rates or on a straight line basis at rates
prescribed in the Income-tax Rules, 1962.
* Applicable surcharge and education cess will also be levied on the above tax rates.

In addition, 20% depreciation on the actual cost of a new plant or machinery acquired and installed after 31 March 2005
1
Indexation of cost of acquisition and improvement of a long-term capital asset of any nature (other than debentures or bond other than capital indexed is allowed to a taxpayer engaged in the manufacture or production of any product or generation or distribution of
bonds issued by the government) is available to residents. However, the benefit of indexation will not be available to non-residents on long term power in the year in which such a new plant or machinery is acquired and installed. Undertakings engaged in the
capital assets being shares or debentures of an Indian company acquired in foreign currency. Securities, including equity shares in a company or unit
generation and distribution of power can be claimed as tax depreciation at the above rates or on a straight-
of an equity-oriented fund, which have not been charged to STT, may be taxed at 10% (plus applicable surcharge and education cess)
without providing indexation benefit to the taxpayer line basis at rates prescribed in the Income-tax Rules, 1962. The rates vary from 1.95 to 33.40%.

24 25
 Company Where taxable income exceeds INR 10 million (USD 170,000)* Other cases* G. Computation of total income: General
Domestic company 18.5% 18.5% All income that accrues or arises or is deemed to accrue or arise or is received or deemed to be received in India is
Foreign company 18.5% 18.5% taxable in the hands of a non-resident taxpayer subject to the benefit of the double taxation avoidance agreement
* Applicable surcharge and education cess will also be levied on the above tax rates.
(DTAA) with the taxpayer’s country of residence.
The credit of tax paid under MAT provisions is allowed against the tax liability which arises in the subsequent 10 years • Taxable income is computed for a uniform accounting year, i.e., the fiscal year from 1 April to 31 March
under the normal provisions of the Income-tax Act. Unadjusted MAT credit can be carried forward till the 10th year, • The taxable income is called ‘total income’, computed after adding certain disallowances, such as loss on the sale of
following the year in which the credit arises. assets and the reduction of certain allowances or benefits from the profits

E. Alternate minimum tax on all persons other than companies H. Depreciation

MAT provisions (which were applicable only to companies) were extended to limited liability partnerships (LLPs) with Depreciation is allowed separately at the following rates for computing taxable income:
effect from FY 2011-12 in the modified form of alternate minimum tax (AMT). AMT provisions have now been further In the case of a new asset, depreciation for the whole year is allowed only if the asset is put to use for 180 days or more
extended to all other assessees with effect from FY 2012-13. AMT will be applicable at the rate of 18.5% on the adjusted during the fiscal year. Otherwise, depreciation is allowed at only half the prescribed rate.
total income (as per income-tax provisions) rather than the adjusted book profits as is the case for companies. Like
companies, AMT credit will be available to LLPs and other assessees for the period of 10 years. Particulars Rate
Factory building 10%
F. Capital gains
Furniture and fittings 10%
Particulars Tax rates*
Resident Non-resident Plant and machinery (general) 15%
a. Short-term capital assets-listed equity shares and units of 15% 15% Computers (including software) 60%
equity-oriented funds which have been charged to securities
Motorcars, other than those used in a business of running them on hire 15%
transaction tax (STT)
b. Long-term capital assets-listed equity shares in a company or Exempt Exempt Intangible assets (such as know-how, patents, copyrights, trademarks, licences,
unit of an equity-oriented fund which have been charged to STT franchises or any other business or commercial rights of a similar nature) 25%
c. Long-term capital assets-listed securities (other than (b) above 10% 10% Windmill 15%
1
d. Other long term capital assets 20% 20% For certain priority items, such as energy-saving devices and pollution control The rates vary
e. Long-term capital gains arising to a non-resident NA 10% (No equipment, depreciation is allowed at higher rates. Undertakings engaged in the from 1.95 to
(not being a company) or a foreign company – indexation business of generation or generation and distribution of power have the option of 33.40%.
from transfer of unlisted securities benefit) claiming tax depreciation at the above rates or on a straight line basis at rates
prescribed in the Income-tax Rules, 1962.
* Applicable surcharge and education cess will also be levied on the above tax rates.

In addition, 20% depreciation on the actual cost of a new plant or machinery acquired and installed after 31 March 2005
1
Indexation of cost of acquisition and improvement of a long-term capital asset of any nature (other than debentures or bond other than capital indexed is allowed to a taxpayer engaged in the manufacture or production of any product or generation or distribution of
bonds issued by the government) is available to residents. However, the benefit of indexation will not be available to non-residents on long term power in the year in which such a new plant or machinery is acquired and installed. Undertakings engaged in the
capital assets being shares or debentures of an Indian company acquired in foreign currency. Securities, including equity shares in a company or unit
generation and distribution of power can be claimed as tax depreciation at the above rates or on a straight-
of an equity-oriented fund, which have not been charged to STT, may be taxed at 10% (plus applicable surcharge and education cess)
without providing indexation benefit to the taxpayer line basis at rates prescribed in the Income-tax Rules, 1962. The rates vary from 1.95 to 33.40%.

24 25
 certain property or information. However, there were the following controversies with regard to meaning,
I. Investment allowance characterization, scope and taxability of royalty:
Investment allowance benefit is allowed for companies engaged in the business of manufacture of any article. The • Whether consideration for use of computer software is royalty or not
benefit of deduction is allowed for investment made in the ‘new’ plant and machinery acquired and installed during FY • Whether the right, property or information has to be used directly by the payer or is to be located in India or control
2013-14 and 2014-15. The aggregate investment during these years should be more than 1 billion INR. A deduction of or possession of it has to be with the payer
15% of the value of the investment made is allowed. The assets have to be held for more than five years. If the asset is
sold before the period, the investment benefit claimed will be reversed in the year of sale. Investment in a new plant and • The meaning of the term process, etc.
machinery will not include assets such as plant or machinery used earlier in or outside India, any plant or machinery In order to eliminate the above controversies, the definition of royalty provided under the domestic tax laws has been
installed in any office premises or in residential accommodation (or guesthouse), any office appliances (including amended and clarified retrospectively with e effect from 01 June 1976. It has been clarified that the consideration for
computers or computer software), vehicle, ship or aircraft. use or right to use of computer software is ‘royalty’ and that transfer of all or any rights in respect of any right, property
or information includes transfer of all or any right for use or right to use a computer software (including granting of a
J. Taxation of the know-how fee in the hands of foreign companies license) irrespective of the medium through which such a right is transferred. It has also been clarified that royalty
includes consideration for any right, property or information, whether or not the following conditions apply:
Under domestic tax law, royalties or technical fees payable to non-residents with a permanent establishment in India are • The possession or control of such a right, property or information is with the payer
taxed on a net basis. In contrast, they are taxed on a gross basis in the case of non-residents without a permanent
• Such a right, property or information is used directly by the payer
establishment in the country. The following tax rates apply:
• The location of such a right, property or information is in India
• W.e.f, 1 April 2013, the applicable rate is 25% for royalty and fee for technical services
Further, it has also been clarified that the term ‘process’ includes transmission by satellite (including up-linking,
Surcharge and education cess, as applicable, will also be levied. If the applicable DTAA provides for a rate lower than the
amplification, conversion for down-linking of any signal), cable, optic fiber or by any other similar technology, whether
above, the same would become applicable.
or not such a process is secret.

K.Taxing dividends received from overseas group companies N. Wealth tax

From FY 2011-12, dividends received by Indian companies from specified foreign companies will be taxed at a
Wealth tax is charged on net wealth as on 31 March every year (referred to as the valuation date). It is charged both on
concessional rate of 15%, this has been further extended to FY 2013-14. However, no expenditure will be deductible
individuals as well as companies at the rate of 1% of the amount by which the ‘net wealth’ exceeds 3 million INR. The
while computing this income. ‘Specified foreign company’ refers to the Indian company that holds 26% or more in
term ‘net wealth’ broadly represents the excess value of certain assets over the debts concerned. Assets include guest
nominal value of the equity share capital.
houses and residences, motorcars, jewelry, bullion, utensils of gold and silver, yachts, boats, aircraft, urban land and
cash. A debt is an obligation to pay a certain sum of money incurred in relation to any assets that are included in ‘net
L. Double tax avoidance agreements wealth’.
The DTAAs override the provisions of the Indian Income-tax Act to the extent that they are more beneficial to the
assessee. India has signed DTAAs with 89 countries so far. O. Gift tax
For obtaining DTAA benefit, it will be necessary for a nonresident assessee to furnish a certificate of it being a resident of There is no gift tax liability in India. Any sum of money exceeding or immovable property whose stamp duty value
that country, obtained by the assessee from the government of that country. The government had earlier prescribed the exceeds or any immovable property whose fair market value exceeds 50,000 INR received without consideration by an
particulars to be contained in the TRC. However, the requirement of obtaining TRC containing prescribed particulars has individual from any person will be subject to tax as ‘income from other sources’. This will not apply to any sum of money
been removed with effect from FY 2012-13. Particulars as may be prescribed can be provided separately, through received from the following:
supporting documents. The 2013 Budget has amended the provisions to provide that the TRC produced by a resident of • Relative (spouse, brother, sister, brother or sister of the spouse or any lineal ascendants or descendants)
a contracting state will be accepted as his or her residential evidence.
• On the occasion of marriage of the individual

M. Royalty payments • Under a will or by way of inheritance

• In the death expectation of the donor
The expression ‘royalty’ is defined as consideration received or receivable for transfer of all or any right for

26 27
 certain property or information. However, there were the following controversies with regard to meaning,
I. Investment allowance characterization, scope and taxability of royalty:
Investment allowance benefit is allowed for companies engaged in the business of manufacture of any article. The • Whether consideration for use of computer software is royalty or not
benefit of deduction is allowed for investment made in the ‘new’ plant and machinery acquired and installed during FY • Whether the right, property or information has to be used directly by the payer or is to be located in India or control
2013-14 and 2014-15. The aggregate investment during these years should be more than 1 billion INR. A deduction of or possession of it has to be with the payer
15% of the value of the investment made is allowed. The assets have to be held for more than five years. If the asset is
sold before the period, the investment benefit claimed will be reversed in the year of sale. Investment in a new plant and • The meaning of the term process, etc.
machinery will not include assets such as plant or machinery used earlier in or outside India, any plant or machinery In order to eliminate the above controversies, the definition of royalty provided under the domestic tax laws has been
installed in any office premises or in residential accommodation (or guesthouse), any office appliances (including amended and clarified retrospectively with e effect from 01 June 1976. It has been clarified that the consideration for
computers or computer software), vehicle, ship or aircraft. use or right to use of computer software is ‘royalty’ and that transfer of all or any rights in respect of any right, property
or information includes transfer of all or any right for use or right to use a computer software (including granting of a
J. Taxation of the know-how fee in the hands of foreign companies license) irrespective of the medium through which such a right is transferred. It has also been clarified that royalty
includes consideration for any right, property or information, whether or not the following conditions apply:
Under domestic tax law, royalties or technical fees payable to non-residents with a permanent establishment in India are • The possession or control of such a right, property or information is with the payer
taxed on a net basis. In contrast, they are taxed on a gross basis in the case of non-residents without a permanent
• Such a right, property or information is used directly by the payer
establishment in the country. The following tax rates apply:
• The location of such a right, property or information is in India
• W.e.f, 1 April 2013, the applicable rate is 25% for royalty and fee for technical services
Further, it has also been clarified that the term ‘process’ includes transmission by satellite (including up-linking,
Surcharge and education cess, as applicable, will also be levied. If the applicable DTAA provides for a rate lower than the
amplification, conversion for down-linking of any signal), cable, optic fiber or by any other similar technology, whether
above, the same would become applicable.
or not such a process is secret.

K.Taxing dividends received from overseas group companies N. Wealth tax

From FY 2011-12, dividends received by Indian companies from specified foreign companies will be taxed at a
Wealth tax is charged on net wealth as on 31 March every year (referred to as the valuation date). It is charged both on
concessional rate of 15%, this has been further extended to FY 2013-14. However, no expenditure will be deductible
individuals as well as companies at the rate of 1% of the amount by which the ‘net wealth’ exceeds 3 million INR. The
while computing this income. ‘Specified foreign company’ refers to the Indian company that holds 26% or more in
term ‘net wealth’ broadly represents the excess value of certain assets over the debts concerned. Assets include guest
nominal value of the equity share capital.
houses and residences, motorcars, jewelry, bullion, utensils of gold and silver, yachts, boats, aircraft, urban land and
cash. A debt is an obligation to pay a certain sum of money incurred in relation to any assets that are included in ‘net
L. Double tax avoidance agreements wealth’.
The DTAAs override the provisions of the Indian Income-tax Act to the extent that they are more beneficial to the
assessee. India has signed DTAAs with 89 countries so far. O. Gift tax
For obtaining DTAA benefit, it will be necessary for a nonresident assessee to furnish a certificate of it being a resident of There is no gift tax liability in India. Any sum of money exceeding or immovable property whose stamp duty value
that country, obtained by the assessee from the government of that country. The government had earlier prescribed the exceeds or any immovable property whose fair market value exceeds 50,000 INR received without consideration by an
particulars to be contained in the TRC. However, the requirement of obtaining TRC containing prescribed particulars has individual from any person will be subject to tax as ‘income from other sources’. This will not apply to any sum of money
been removed with effect from FY 2012-13. Particulars as may be prescribed can be provided separately, through received from the following:
supporting documents. The 2013 Budget has amended the provisions to provide that the TRC produced by a resident of • Relative (spouse, brother, sister, brother or sister of the spouse or any lineal ascendants or descendants)
a contracting state will be accepted as his or her residential evidence.
• On the occasion of marriage of the individual

M. Royalty payments • Under a will or by way of inheritance

• In the death expectation of the donor
The expression ‘royalty’ is defined as consideration received or receivable for transfer of all or any right for

26 27
Indirect Taxation in India Similarly, the government allows a refund for the ADC paid on specified goods imported for the purpose of trading in
India, subject to the fulfillment of the conditions prescribed under the governing notifications and circulars issued in this
A. Customs duty regard.

Customs duty is levied by the central government on goods imported into and exported from India, though the list of B. CENVAT (excise duty)
goods on which export duty is levied is limited. The rate of customs duty applicable to a product to be imported or
exported depends on its classification under the Customs Tariff Act, 1975 (CTA). Central value added tax (CENVAT), commonly referred to as excise duty, is a tax levied by the central government on the
manufacture or production of movable and marketable goods in India.
The customs tariff of India is aligned up to a six-digit level with the internationally recognized Harmonized Commodity
Description and Coding System of tariff nomenclature (HSN) provided by the World Customs Organization. The rate of excise duty levied on the goods depends on the classification of the goods under the excise tariff, which is
primarily based on the HSN classification adopted so as to achieve conformity with the customs tariff. The standard rate
Customs duty is levied on the transaction value of the imported or exported goods. While the general principles adopted of excise duty for non-petroleum products is 12%. In addition, Education Cess (EC) at 2% and Secondary and higher
for the valuation of goods in India are in conformity with the World Trade Organization (WTO) agreement on customs education at 1% are applicable on aggregate excise duties. Thus, the effective rate of excise duty is 12.36%.
valuation, the central government has established independent customs valuation rules applicable to the export and
import of goods. The excise duty on most consumer goods intended for retail sale is chargeable on the basis of the MRP printed on the
goods packaging. However, abatements are admissible at rates ranging from 15 to 55% of the MRP for charging excise
India does not have one uniform element of customs duty, and the duty applicable to any product is composed of a duty. Goods other than those covered by an MRP-based assessment are generally chargeable to duty on the transaction
number of components. The types of customs duties applicable are as follows: value sold to an independent buyer. In addition, the central government has the power to fix tariff values for charging
• Basic customs duty (BCD) is the basic component of customs duty levied at the effective rate notified under the First ad valorem duties on goods.
Schedule to the CTA and applied to the landed value of the goods (i.e. the CIF value of the goods plus landing The excise duty operates as a pure value added tax (VAT), with full set-off of input tax credits in computing and
charges at 1%). The peak rate of BCD is currently set at 10% for all goods other than agricultural and other specified discharging the tax liabilities on the output side. The input tax credit comprises excise duty on indigenously sourced
products. However, the government has the power to exempt specific goods, wholly or in part, from the levy of inputs and capital goods, the CVD and ADC portion of customs duty on imported material and service tax on input
custom duties. In addition, preferential or concessional rates of duty are available under various bilateral and services, with the exception of certain exclusion that have been provided under CENVAT credit rules in this relation.
multilateral trade agreements that India has entered into with other countries
There are different product, industry and geographical area specific exemptions available under CENVAT, which present
• The countervailing duty (CVD) is equivalent to, and is charged in lieu of, the excise duty applicable on like goods excellent business opportunities to manufacturers in India.
manufactured in India. CVD is calculated on the landed value of goods and the applicable BCD. However, the CVD on
specific consumer goods intended for retail sale is calculated on the basis of the maximum retail price (MRP) printed
on their packs after allowing specified abatements. The general rate of excise duty is currently 12% and consequently
C. Service tax
so is the rate of CVD The service tax was first introduced in India in the year 1994 with a relatively limited number of services under its ambit.
• Education cess (EC) at 2% and secondary and higher education cess (SHEC) at 1% are also levied on the aggregate Since then, the list of services has been expanded year on year. In 2012, keeping in with the large number of different
customs duties service categories and the resultant classification issues, a new concept of service taxation based on a negative list of
services was introduced. In this new system of taxation, all services are taxable but for the services mentioned in the
• Additional duty of customs (ADC) at 4% is charged in addition to the above duties on imports, subject to certain negative list.
exceptions. ADC is calculated on the aggregate of the assessable value of imported goods, the total customs duties
(i.e. BCD and CVD) and the applicable EC and SHEC Generally, it is the service provider who is liable to pay the service tax. However, for some specified services, such as
transport of goods by road, sponsorship, import of services, etc. the obligation to pay service tax rests with the service
BCD, EC and SHEC levied on aggregate customs duties are a cost on any import transaction. The duty incidence arising receiver instead. In certain cases, this obligation has been divided between the receiver and the provider in a specified
on account of all other components may be set off or refunded, subject to prescribed conditions. Where goods are proportion.
imported for the purposes of manufacture, the Indian manufacturer may take credit for the CVD and
ADCpaid at the time of import to set it off against the output excise duty. In the case of service providers, The existing rate of service tax is 12%. In addition, EC of 2% and SHEC of 1% of the service tax are levied on
CVD credit is available to set off against the output service tax. The central government has exempted specific taxable services. Thus, the effective rate of service tax is 12.36%.
consumer goods imported for retail sale in India, from levy of ADC, subject to the fulfillment of conditions.

28 29
Indirect Taxation in India Similarly, the government allows a refund for the ADC paid on specified goods imported for the purpose of trading in
India, subject to the fulfillment of the conditions prescribed under the governing notifications and circulars issued in this
A. Customs duty regard.

Customs duty is levied by the central government on goods imported into and exported from India, though the list of B. CENVAT (excise duty)
goods on which export duty is levied is limited. The rate of customs duty applicable to a product to be imported or
exported depends on its classification under the Customs Tariff Act, 1975 (CTA). Central value added tax (CENVAT), commonly referred to as excise duty, is a tax levied by the central government on the
manufacture or production of movable and marketable goods in India.
The customs tariff of India is aligned up to a six-digit level with the internationally recognized Harmonized Commodity
Description and Coding System of tariff nomenclature (HSN) provided by the World Customs Organization. The rate of excise duty levied on the goods depends on the classification of the goods under the excise tariff, which is
primarily based on the HSN classification adopted so as to achieve conformity with the customs tariff. The standard rate
Customs duty is levied on the transaction value of the imported or exported goods. While the general principles adopted of excise duty for non-petroleum products is 12%. In addition, Education Cess (EC) at 2% and Secondary and higher
for the valuation of goods in India are in conformity with the World Trade Organization (WTO) agreement on customs education at 1% are applicable on aggregate excise duties. Thus, the effective rate of excise duty is 12.36%.
valuation, the central government has established independent customs valuation rules applicable to the export and
import of goods. The excise duty on most consumer goods intended for retail sale is chargeable on the basis of the MRP printed on the
goods packaging. However, abatements are admissible at rates ranging from 15 to 55% of the MRP for charging excise
India does not have one uniform element of customs duty, and the duty applicable to any product is composed of a duty. Goods other than those covered by an MRP-based assessment are generally chargeable to duty on the transaction
number of components. The types of customs duties applicable are as follows: value sold to an independent buyer. In addition, the central government has the power to fix tariff values for charging
• Basic customs duty (BCD) is the basic component of customs duty levied at the effective rate notified under the First ad valorem duties on goods.
Schedule to the CTA and applied to the landed value of the goods (i.e. the CIF value of the goods plus landing The excise duty operates as a pure value added tax (VAT), with full set-off of input tax credits in computing and
charges at 1%). The peak rate of BCD is currently set at 10% for all goods other than agricultural and other specified discharging the tax liabilities on the output side. The input tax credit comprises excise duty on indigenously sourced
products. However, the government has the power to exempt specific goods, wholly or in part, from the levy of inputs and capital goods, the CVD and ADC portion of customs duty on imported material and service tax on input
custom duties. In addition, preferential or concessional rates of duty are available under various bilateral and services, with the exception of certain exclusion that have been provided under CENVAT credit rules in this relation.
multilateral trade agreements that India has entered into with other countries
There are different product, industry and geographical area specific exemptions available under CENVAT, which present
• The countervailing duty (CVD) is equivalent to, and is charged in lieu of, the excise duty applicable on like goods excellent business opportunities to manufacturers in India.
manufactured in India. CVD is calculated on the landed value of goods and the applicable BCD. However, the CVD on
specific consumer goods intended for retail sale is calculated on the basis of the maximum retail price (MRP) printed
on their packs after allowing specified abatements. The general rate of excise duty is currently 12% and consequently
C. Service tax
so is the rate of CVD The service tax was first introduced in India in the year 1994 with a relatively limited number of services under its ambit.
• Education cess (EC) at 2% and secondary and higher education cess (SHEC) at 1% are also levied on the aggregate Since then, the list of services has been expanded year on year. In 2012, keeping in with the large number of different
customs duties service categories and the resultant classification issues, a new concept of service taxation based on a negative list of
services was introduced. In this new system of taxation, all services are taxable but for the services mentioned in the
• Additional duty of customs (ADC) at 4% is charged in addition to the above duties on imports, subject to certain negative list.
exceptions. ADC is calculated on the aggregate of the assessable value of imported goods, the total customs duties
(i.e. BCD and CVD) and the applicable EC and SHEC Generally, it is the service provider who is liable to pay the service tax. However, for some specified services, such as
transport of goods by road, sponsorship, import of services, etc. the obligation to pay service tax rests with the service
BCD, EC and SHEC levied on aggregate customs duties are a cost on any import transaction. The duty incidence arising receiver instead. In certain cases, this obligation has been divided between the receiver and the provider in a specified
on account of all other components may be set off or refunded, subject to prescribed conditions. Where goods are proportion.
imported for the purposes of manufacture, the Indian manufacturer may take credit for the CVD and
ADCpaid at the time of import to set it off against the output excise duty. In the case of service providers, The existing rate of service tax is 12%. In addition, EC of 2% and SHEC of 1% of the service tax are levied on
CVD credit is available to set off against the output service tax. The central government has exempted specific taxable services. Thus, the effective rate of service tax is 12.36%.
consumer goods imported for retail sale in India, from levy of ADC, subject to the fulfillment of conditions.

28 29
There is a simple online procedure prescribed for the service provider and receiver to register under service tax. The effect of taxes is avoided and that only the value addition is taxed. Currently, there is no VAT on goods imported into
service provider or receiver rendering services from multiple locations within India has been given an option to take India. Exports are zero rated. This means that while exports are not charged to VAT, the purchaser of inputs used in the
either a centralized registration for all locations or opt for separate registration for different locations. Similar to excise manufacture of export goods or goods purchased for exports can claim a refund of the VAT charged on the goods.
duty, service tax is also a pure value added tax. Since both service tax as well as excise duty are federal levies, cross input
In reference to the importance of each commodity with respect to the trade of goods in the State, varying tariff rates are
tax credit has also been allowed. The scheme of input tax credit under service tax has been integrated under CENVAT
assigned to different commodities. General tariff rates prevalent in the State VAT laws could vary from 1% to up to 20%.
credit rules and the benefits available to manufacturers have also being extended to the service provider.
Apart from this, all those goods which are not covered under any of the tariff rates would be chargeable to the residual
The valuation methodology adopted under service tax is based on the gross value charged by the service provider. In rate, which may vary from 12.5 to 15.5%.
certain circumstances, the value is derived as per specified valuation rules.
Turnover thresholds have been prescribed so as to keep small traders out of the ambit of VAT. Small traders can also opt
Service tax is a consumption-based tax. The peculiar nature of services makes it difficult sometimes to determine the to pay tax under composition scheme, at a lower rate, levied in lieu of VAT.
origin and place of consumption of services or the time of completion and rendition of services. This aspect of service
taxation in India has progressed tremendously in recent times. Introduction of Point of Taxation Rules, 2011, Place of F. Octroi duty or entry tax
Provision of Services Rules, 2012 along with the introduction of taxable or non-taxable territory under the negative list
based service taxation regime has simplified the process of determination of time and place of rendition and completion Entry tax is on entry of specified goods into the State from outside the State for use, consumption or sale therein. Entry
of service. tax continues to exist under the VAT regime, though in certain States it has been made Vatable and can be set off
against the output VAT liability in the State.
In addition to the negative list of services, there are certain services such as education, infrastructure projects like
development of roads and bridges, healthcare, sponsorship of sports events, etc. which are specifically made exempt Entry tax is levied on purchase value, which is defined as the amount of the valuable consideration paid or payable by a
from the levy of service tax. There is an abatement scheme for valuation of certain specific service such as transportation, person for the purchase of any goods. The value of the specified goods can be ascertained from the original invoice for
financial leasing, renting, etc. and the rate of exemption varies from 10 to 70% of the taxable value. Export of services purchase of such goods.
are completely tax neutral and benefits such as refund of input tax credit and rebate of duty payments are also available. Octroi is a municipal tax levied at the time of the entry of specified goods into the limits of the municipal corporation.
Thus, octroi can be levied if there is movement of goods from one city to another in the same state, in the event the
D. Sales tax cities fall under the jurisdiction of two different municipal corporations.
The sale of movable goods in India is chargeable to tax at the Federal or State level. The Indian regulatory framework has
granted power to State legislatures to levy tax on goods sold within that State. On the other hand, all goods sold in the G. Goods and services tax (GST)
course of interstate trade are subject to the federal sales tax i.e. central sales tax (CST). In 2006, the central government took a major step towards the transition to a national integrated GST. Implementation
CST is levied at the rate applicable on such goods under the VAT law of the originating state. Where goods are bought of the GST will be a historical reform in India as it will subsume CVD, excise duties, service tax, CST, State VAT and some
and sold by registered dealers for trading or for use as inputs in the manufacture of other goods or specified activities other State levies.
(such as mining or telecommunication networks), the rate of CST would be 2%, provided an appropriate declaration At present, a dual-rate GST model is envisaged whereby the tax rate will be converged to one standardized rate of 16%
form (Form C in this case) is issued by the purchasing dealer to the selling dealer. on goods and services within three years of implementation.
Inter-state procurement on which CST is charged in the originating State is not eligible for input tax credit in the Under the proposed dual GST model, a central GST as well as a State GST will be levied on the taxable value of a
destination State. transaction of supply of goods and services. Both the centre and the State will legislate, levy and administer the central
GST and the State GST, respectively.
E. Value Added Tax
Once implemented, GST will create a single, unified Indian market and will diminish the multiple layers of indirect
State-level sales tax was replaced by VAT with effect from 1 April, 2005 in most Indian States. At present, all the Indian taxation that prevail in India at present. GST is also seen as a reform in administration of indirect taxation and will
States have transitioned to the VAT regime. definitely be favorable for trade. Considering the various issues pending for discussion between State and
Central government, GST is not expected to be roll out before April 2015.
Under this regime, the VAT paid on goods purchased within the State is eligible for VAT credit. The input VAT
credit can be utilized against the VAT or CST payable on the sale of goods. This ensures that the cascading

30 31
There is a simple online procedure prescribed for the service provider and receiver to register under service tax. The effect of taxes is avoided and that only the value addition is taxed. Currently, there is no VAT on goods imported into
service provider or receiver rendering services from multiple locations within India has been given an option to take India. Exports are zero rated. This means that while exports are not charged to VAT, the purchaser of inputs used in the
either a centralized registration for all locations or opt for separate registration for different locations. Similar to excise manufacture of export goods or goods purchased for exports can claim a refund of the VAT charged on the goods.
duty, service tax is also a pure value added tax. Since both service tax as well as excise duty are federal levies, cross input
In reference to the importance of each commodity with respect to the trade of goods in the State, varying tariff rates are
tax credit has also been allowed. The scheme of input tax credit under service tax has been integrated under CENVAT
assigned to different commodities. General tariff rates prevalent in the State VAT laws could vary from 1% to up to 20%.
credit rules and the benefits available to manufacturers have also being extended to the service provider.
Apart from this, all those goods which are not covered under any of the tariff rates would be chargeable to the residual
The valuation methodology adopted under service tax is based on the gross value charged by the service provider. In rate, which may vary from 12.5 to 15.5%.
certain circumstances, the value is derived as per specified valuation rules.
Turnover thresholds have been prescribed so as to keep small traders out of the ambit of VAT. Small traders can also opt
Service tax is a consumption-based tax. The peculiar nature of services makes it difficult sometimes to determine the to pay tax under composition scheme, at a lower rate, levied in lieu of VAT.
origin and place of consumption of services or the time of completion and rendition of services. This aspect of service
taxation in India has progressed tremendously in recent times. Introduction of Point of Taxation Rules, 2011, Place of F. Octroi duty or entry tax
Provision of Services Rules, 2012 along with the introduction of taxable or non-taxable territory under the negative list
based service taxation regime has simplified the process of determination of time and place of rendition and completion Entry tax is on entry of specified goods into the State from outside the State for use, consumption or sale therein. Entry
of service. tax continues to exist under the VAT regime, though in certain States it has been made Vatable and can be set off
against the output VAT liability in the State.
In addition to the negative list of services, there are certain services such as education, infrastructure projects like
development of roads and bridges, healthcare, sponsorship of sports events, etc. which are specifically made exempt Entry tax is levied on purchase value, which is defined as the amount of the valuable consideration paid or payable by a
from the levy of service tax. There is an abatement scheme for valuation of certain specific service such as transportation, person for the purchase of any goods. The value of the specified goods can be ascertained from the original invoice for
financial leasing, renting, etc. and the rate of exemption varies from 10 to 70% of the taxable value. Export of services purchase of such goods.
are completely tax neutral and benefits such as refund of input tax credit and rebate of duty payments are also available. Octroi is a municipal tax levied at the time of the entry of specified goods into the limits of the municipal corporation.
Thus, octroi can be levied if there is movement of goods from one city to another in the same state, in the event the
D. Sales tax cities fall under the jurisdiction of two different municipal corporations.
The sale of movable goods in India is chargeable to tax at the Federal or State level. The Indian regulatory framework has
granted power to State legislatures to levy tax on goods sold within that State. On the other hand, all goods sold in the G. Goods and services tax (GST)
course of interstate trade are subject to the federal sales tax i.e. central sales tax (CST). In 2006, the central government took a major step towards the transition to a national integrated GST. Implementation
CST is levied at the rate applicable on such goods under the VAT law of the originating state. Where goods are bought of the GST will be a historical reform in India as it will subsume CVD, excise duties, service tax, CST, State VAT and some
and sold by registered dealers for trading or for use as inputs in the manufacture of other goods or specified activities other State levies.
(such as mining or telecommunication networks), the rate of CST would be 2%, provided an appropriate declaration At present, a dual-rate GST model is envisaged whereby the tax rate will be converged to one standardized rate of 16%
form (Form C in this case) is issued by the purchasing dealer to the selling dealer. on goods and services within three years of implementation.
Inter-state procurement on which CST is charged in the originating State is not eligible for input tax credit in the Under the proposed dual GST model, a central GST as well as a State GST will be levied on the taxable value of a
destination State. transaction of supply of goods and services. Both the centre and the State will legislate, levy and administer the central
GST and the State GST, respectively.
E. Value Added Tax
Once implemented, GST will create a single, unified Indian market and will diminish the multiple layers of indirect
State-level sales tax was replaced by VAT with effect from 1 April, 2005 in most Indian States. At present, all the Indian taxation that prevail in India at present. GST is also seen as a reform in administration of indirect taxation and will
States have transitioned to the VAT regime. definitely be favorable for trade. Considering the various issues pending for discussion between State and
Central government, GST is not expected to be roll out before April 2015.
Under this regime, the VAT paid on goods purchased within the State is eligible for VAT credit. The input VAT
credit can be utilized against the VAT or CST payable on the sale of goods. This ensures that the cascading

30 31
H. Stamp duty
Industrial infrastructure
Stamp duty is levied at various rates on documents such as bills of exchange, promissory notes, insurance policies,
contracts effecting transfer of shares, debentures and conveyances for transfer of immovable property.

I. Research and development cess

development initiatives
Research and redevelopment cess of 5% is levied on all payments made for the import of technology. The term
‘technology’ includes import of designs, drawings, publications and services of technical personnel. by Government of India
A. Special Economic Zones
“The objectives of SEZs include making available goods and services free of taxes and duties supported by
integrated infrastructure for export production, quick approval mechanisms, and a package of incentives to
attract foreign and domestic investments for promoting exports.”

An SEZ is a specifically delineated, duty-free area notified as such by the Ministry of Commerce and Industry under the
Special Economic Zones Act, 2005 (SEZ Act). The zone is considered to be outside the customs territory of India for the
purposes of carrying out authorised activities. An SEZ is deemed to be a port, ICD, land station and land customs station
under the provision of the Customs Act, 1962.
The SEZ Act, 2005 and SEZ Rules, 2006, which came into force with effect from 10 February 2006, govern the
development of SEZs. The SEZ Act provides the umbrella legal framework for all important legal and regulatory aspects
of SEZ development as well as for units operating in these SEZs. An important salient feature of the SEZ Act is that it has
an overriding effect over other laws. The scope of the SEZ Act includes the following:
• Establishment of SEZs and units
• Fiscal regime for developers and units
• Requirements, obligations and entitlements
• Single-window clearance mechanism
• Granting of license to industrial undertakings to be established in an SEZ
• Establishment of administrative authority for SEZs set up by the Government of India
• Special courts and single enforcement agency to ensure speedy trials
• According to the Ministry of Commerce and Industry, SEZs can be set up by private developers, central or
State Governments, or jointly by any two or more of the above on contiguous, vacant land

32 33
H. Stamp duty
Industrial infrastructure
Stamp duty is levied at various rates on documents such as bills of exchange, promissory notes, insurance policies,
contracts effecting transfer of shares, debentures and conveyances for transfer of immovable property.

I. Research and development cess

development initiatives
Research and redevelopment cess of 5% is levied on all payments made for the import of technology. The term
‘technology’ includes import of designs, drawings, publications and services of technical personnel. by Government of India
A. Special Economic Zones
“The objectives of SEZs include making available goods and services free of taxes and duties supported by
integrated infrastructure for export production, quick approval mechanisms, and a package of incentives to
attract foreign and domestic investments for promoting exports.”

An SEZ is a specifically delineated, duty-free area notified as such by the Ministry of Commerce and Industry under the
Special Economic Zones Act, 2005 (SEZ Act). The zone is considered to be outside the customs territory of India for the
purposes of carrying out authorised activities. An SEZ is deemed to be a port, ICD, land station and land customs station
under the provision of the Customs Act, 1962.
The SEZ Act, 2005 and SEZ Rules, 2006, which came into force with effect from 10 February 2006, govern the
development of SEZs. The SEZ Act provides the umbrella legal framework for all important legal and regulatory aspects
of SEZ development as well as for units operating in these SEZs. An important salient feature of the SEZ Act is that it has
an overriding effect over other laws. The scope of the SEZ Act includes the following:
• Establishment of SEZs and units
• Fiscal regime for developers and units
• Requirements, obligations and entitlements
• Single-window clearance mechanism
• Granting of license to industrial undertakings to be established in an SEZ
• Establishment of administrative authority for SEZs set up by the Government of India
• Special courts and single enforcement agency to ensure speedy trials
• According to the Ministry of Commerce and Industry, SEZs can be set up by private developers, central or
State Governments, or jointly by any two or more of the above on contiguous, vacant land

32 33
1. Amendments to SEZ Rules, 2006 3. Who should set up an SEZ unit
The Department of Commerce amended the SEZ Rules on 18 April 2013 and announced a series of measures in the Export-oriented entrepreneurs, manufacturers and service providers (including IT and ITeS providers, BPOs, contract
annual supplement (2013-14) to Foreign Trade Policy 2009-14. Key changes proposed include reduction in minimum manufacturers, etc.) have huge growth potential in Indian SEZs. Electronic hardware, software manufacturers and
land area requirements for multi-product and sector-specific SEZs, doing away with minimum area requirements for telecom equipment manufacturers/suppliers can also set up units in SEZs for supply to the domestic market.
IT/ITeS SEZs, graded scale for minimum land area criteria, sector broad-banding, issues on vacancy of land and exit policy
for SEZ units. 4. FDI Policy and relevance to SEZ
The SEZ Rules, 2006 (the Rules) were amended in August 2013. The key amendments carried out in the SEZ Rules were: Hundred per cent FDI is permitted under the automatic route for SEZ development. For units in SEZs, the FDI policy of
• Expansion of the definition of a ‘sector’ by addition of a provision the Government of India will apply. Approval to units proposing to avail FDI is granted by the Board of Approvals,
Ministry of Commerce and Industry in line with the FDI policy. No separate approval is required from FIPB.
• Reduction of minimum contiguous land area requirement by half
• Allowing addition of a ‘sector’ to a sector-specific SEZ or a service in a port/ airport subject to higher contiguous 5. No minimum export obligation
land parcel being available
• There is no obligation on units to export goods or services from an SEZ unit
• Extending duty benefits to cases where additions are proposed to existing non-operational structures; and
• However, SEZ units have to be positive net foreign exchange earners at the end of five years calculated cumulatively
• Introduction of new Rule 74A permitting transferring ownership of SEZ unit assets subject to a few conditions
• There is no limit on DTA sales provided full import duty is paid
2. Fiscal benefits to the developer or co-developer • The supply of IT hardware, software and telecom equipment to domestic markets, as well as the supply of goods
and services to other SEZ, EOU and STPI units are counted towards export earnings
a) Income tax incentives
• Hundred per cent tax deduction for 10 years out of 15 years, beginning with the year in which the SEZ is notified by 6. Fiscal benefits to an SEZ unit
the Government
• Fifteen-year graded income-tax deduction on export profits beginning with the year in which the unit begins to
• Exemption from dividend distribution tax discontinued with effect from 1 June 2011
manufacture, produce or provide services: Hundred per cent for the initial five years, fifty percent for the next five
• Exemption from minimum alternate tax discontinued from FY 2011-12. Accordingly, the SEZ developer or co- years and up to fifty percent for the remaining five years, equivalent to profits ploughed back for re-investment
developer will henceforth be required to pay MAT
• Tax deduction only for physical exports
b) Indirect tax incentives • Exemption from MAT has been discontinued with effect from FY 2011-12. Accordingly, SEZ units will henceforth be
• Exemption from customs duty on import of capital goods and raw material into the SEZ for authorized operations required to pay MAT.
• Exemption from excise duty on local procurement of capital goods and raw materials • Indirect tax benefits are similar to those applicable to a SEZ developer /co-developer
• Exemption from CST on inter-state purchases subject to submission of statutory declaration Form I • Exemption from payment of electricity duty
• Exemption from payment of service tax on the input services wholly consumed in the SEZ unit for authorized • Exemption from payment of stamp duty (as per State Government policy)
operations and refund mechanism for service tax paid wholly or partially consumed outside the SEZ for authorised
operations. 7. Liberal exchange control norms
In addition, goods sold from DTA units to the SEZ unit will attain the status of physical exports. In light of this, the sale • Hundred per cent export earnings maintainable in foreign exchange in special foreign currency account with minimal
of goods to an SEZ unit will be regarded as exports and the DTA unit will be eligible for export benefits: restrictions on business payments outside India
• Exemption from ADC in lieu of sales tax or VAT on goods supplied to an SEZ unit • Period for export realization is 12 months from the date of export
• Exemption from VAT as per VAT legislation • Branches of foreign company is eligible for carrying out manufacturing activities in SEZ
• Exemption from payment of stamp duty as per State Government policy

34 35
1. Amendments to SEZ Rules, 2006 3. Who should set up an SEZ unit
The Department of Commerce amended the SEZ Rules on 18 April 2013 and announced a series of measures in the Export-oriented entrepreneurs, manufacturers and service providers (including IT and ITeS providers, BPOs, contract
annual supplement (2013-14) to Foreign Trade Policy 2009-14. Key changes proposed include reduction in minimum manufacturers, etc.) have huge growth potential in Indian SEZs. Electronic hardware, software manufacturers and
land area requirements for multi-product and sector-specific SEZs, doing away with minimum area requirements for telecom equipment manufacturers/suppliers can also set up units in SEZs for supply to the domestic market.
IT/ITeS SEZs, graded scale for minimum land area criteria, sector broad-banding, issues on vacancy of land and exit policy
for SEZ units. 4. FDI Policy and relevance to SEZ
The SEZ Rules, 2006 (the Rules) were amended in August 2013. The key amendments carried out in the SEZ Rules were: Hundred per cent FDI is permitted under the automatic route for SEZ development. For units in SEZs, the FDI policy of
• Expansion of the definition of a ‘sector’ by addition of a provision the Government of India will apply. Approval to units proposing to avail FDI is granted by the Board of Approvals,
Ministry of Commerce and Industry in line with the FDI policy. No separate approval is required from FIPB.
• Reduction of minimum contiguous land area requirement by half
• Allowing addition of a ‘sector’ to a sector-specific SEZ or a service in a port/ airport subject to higher contiguous 5. No minimum export obligation
land parcel being available
• There is no obligation on units to export goods or services from an SEZ unit
• Extending duty benefits to cases where additions are proposed to existing non-operational structures; and
• However, SEZ units have to be positive net foreign exchange earners at the end of five years calculated cumulatively
• Introduction of new Rule 74A permitting transferring ownership of SEZ unit assets subject to a few conditions
• There is no limit on DTA sales provided full import duty is paid
2. Fiscal benefits to the developer or co-developer • The supply of IT hardware, software and telecom equipment to domestic markets, as well as the supply of goods
and services to other SEZ, EOU and STPI units are counted towards export earnings
a) Income tax incentives
• Hundred per cent tax deduction for 10 years out of 15 years, beginning with the year in which the SEZ is notified by 6. Fiscal benefits to an SEZ unit
the Government
• Fifteen-year graded income-tax deduction on export profits beginning with the year in which the unit begins to
• Exemption from dividend distribution tax discontinued with effect from 1 June 2011
manufacture, produce or provide services: Hundred per cent for the initial five years, fifty percent for the next five
• Exemption from minimum alternate tax discontinued from FY 2011-12. Accordingly, the SEZ developer or co- years and up to fifty percent for the remaining five years, equivalent to profits ploughed back for re-investment
developer will henceforth be required to pay MAT
• Tax deduction only for physical exports
b) Indirect tax incentives • Exemption from MAT has been discontinued with effect from FY 2011-12. Accordingly, SEZ units will henceforth be
• Exemption from customs duty on import of capital goods and raw material into the SEZ for authorized operations required to pay MAT.
• Exemption from excise duty on local procurement of capital goods and raw materials • Indirect tax benefits are similar to those applicable to a SEZ developer /co-developer
• Exemption from CST on inter-state purchases subject to submission of statutory declaration Form I • Exemption from payment of electricity duty
• Exemption from payment of service tax on the input services wholly consumed in the SEZ unit for authorized • Exemption from payment of stamp duty (as per State Government policy)
operations and refund mechanism for service tax paid wholly or partially consumed outside the SEZ for authorised
operations. 7. Liberal exchange control norms
In addition, goods sold from DTA units to the SEZ unit will attain the status of physical exports. In light of this, the sale • Hundred per cent export earnings maintainable in foreign exchange in special foreign currency account with minimal
of goods to an SEZ unit will be regarded as exports and the DTA unit will be eligible for export benefits: restrictions on business payments outside India
• Exemption from ADC in lieu of sales tax or VAT on goods supplied to an SEZ unit • Period for export realization is 12 months from the date of export
• Exemption from VAT as per VAT legislation • Branches of foreign company is eligible for carrying out manufacturing activities in SEZ
• Exemption from payment of stamp duty as per State Government policy

34 35
B. Free trade and warehousing zone (FTWZ) C. Industrial Corridors
• FTWZ is a special category of the SEZ governed by the SEZ Act, 2005 and SEZ Rules, 2006, mainly for trading, A major contributor to India’s fast-paced growth has been the Indian government’s increased emphasis on industrial
warehousing and other related activities thereto infrastructure and connectivity across the country. With an aim to promote enhanced and integrated economic
• To be used as ’international trading hubs’ development in India, the Government of India plans to develop several economic or industrial corridors.
• Deemed to be a foreign territory The “economic or industrial corridor” concept has been significantly instrumental in effectively promoting economic
• A key link in logistic and global supply chains, servicing both India and the globe integration of various regions across the world. The Industrial Corridors would comprise of a state of- the-art logistical
gateways which include modern port facilities and airports capable of facilitating rapid entry and exit of cargo through
• Fiscal benefits such as customs duty deferment: Imported goods can be stored for five years without payment of
the corridor along with efficient and effective transportation infrastructure network such as modern expressways, high
customs duty, interest or penalty
speed railway transportation networks and freight corridors that connect major industrial
• Administrative benefits such as reduction in customs clearance time, transportation facility, etc. agglomerations. High quality energy infrastructure to ensure good and regular power 1.1. Planned industrial
• Support facilities such as banking and information system for cargo tracking supply to industrial areas situated along the Corridor as well as other support corridors in India
• High quality infrastructure infrastructure like assured industrial water supply and Special Economic Zones and other
industrial infrastructure alongside the route is critical for the success of an industrial
1. How to set up an FTWZ corridor.

a) Trading unit Industrial Corridor is thus intended to facilitate development of a well-planned and
efficient industrial base served by world-class connectivity infrastructure. The availability
A company can become a trading unit in an FTWZ for the purposes of trading and warehousing and other of world class infrastructure along the Corridor shall also ensure increased private
authorized operations. The company will be required to obtain requisite approval from the jurisdictional investments in manufacturing and industrial activity in India. Attracting more private
Development Commissioner/ Unit Approval Committee for setting up a unit in a FTWZ. companies, in particular, 2nd or 3rd tier manufacturing companies of existing
b) Service unit manufacturing companies will be effective to strengthen global competitiveness of local
manufacturers, which may result in regional development. The exhibit indicates the
A company can avail the services of a third party which is a unit in an FTWZ for trading and warehousing and other current industrial corridors being developed in India.
authorized operations. Trading entities, importers and exporters, 3PLs, CHAs, freight forwarders, shipping lines,
manufacturers, etc. can become units in an FTWZ. Units are required to execute a bond cum- legal undertaking for D. Other tax incentive schemes
import and warehousing of goods inside the FTWZ.
Tax incentives provided by allowing a 100% deduction on any capital expenditure (other than on land, goodwill and
2. Activities permitted within an FTWZ financial instruments) is available to the following types of businesses:
The following activities are permitted in a FTWZ: • Setting up and operating a cold chain facility on or after 1 April 2009
• Unit can carry FTWZ to DTA and DTA to FTWZ transactions • Setting up and operating a warehousing facility for storage of agricultural produce on or after 1 April 2009
• Unit can hold goods on account of a foreign or a DTA supplier and buyer • Laying and operating a cross-country natural gas, crude, petroleum oil pipeline for distribution, including storage
facilities being an integral part of such a network commencing operations on or after 1 April 2007
• Warehousing can be undertaken on behalf of foreign or domestic clients
• Building and operating, anywhere in India, a two-star hotel or above category commencing operations on or after 1
• Can carry out trading, with or without labeling
April 2010
• Can carry out packaging and repacking without any processing
• Building and operating, anywhere in India, a hospital with at least 100 beds commencing operations on or after 1
• Re-sale, re-invoice or re-export of goods April 2010
• Other value optimization services • Developing and building a housing project under a scheme for slum redevelopment or rehabilitation
commencing operations on or after 1 April 2010

36 37
B. Free trade and warehousing zone (FTWZ) C. Industrial Corridors
• FTWZ is a special category of the SEZ governed by the SEZ Act, 2005 and SEZ Rules, 2006, mainly for trading, A major contributor to India’s fast-paced growth has been the Indian government’s increased emphasis on industrial
warehousing and other related activities thereto infrastructure and connectivity across the country. With an aim to promote enhanced and integrated economic
• To be used as ’international trading hubs’ development in India, the Government of India plans to develop several economic or industrial corridors.
• Deemed to be a foreign territory The “economic or industrial corridor” concept has been significantly instrumental in effectively promoting economic
• A key link in logistic and global supply chains, servicing both India and the globe integration of various regions across the world. The Industrial Corridors would comprise of a state of- the-art logistical
gateways which include modern port facilities and airports capable of facilitating rapid entry and exit of cargo through
• Fiscal benefits such as customs duty deferment: Imported goods can be stored for five years without payment of
the corridor along with efficient and effective transportation infrastructure network such as modern expressways, high
customs duty, interest or penalty
speed railway transportation networks and freight corridors that connect major industrial
• Administrative benefits such as reduction in customs clearance time, transportation facility, etc. agglomerations. High quality energy infrastructure to ensure good and regular power 1.1. Planned industrial
• Support facilities such as banking and information system for cargo tracking supply to industrial areas situated along the Corridor as well as other support corridors in India
• High quality infrastructure infrastructure like assured industrial water supply and Special Economic Zones and other
industrial infrastructure alongside the route is critical for the success of an industrial
1. How to set up an FTWZ corridor.

a) Trading unit Industrial Corridor is thus intended to facilitate development of a well-planned and
efficient industrial base served by world-class connectivity infrastructure. The availability
A company can become a trading unit in an FTWZ for the purposes of trading and warehousing and other of world class infrastructure along the Corridor shall also ensure increased private
authorized operations. The company will be required to obtain requisite approval from the jurisdictional investments in manufacturing and industrial activity in India. Attracting more private
Development Commissioner/ Unit Approval Committee for setting up a unit in a FTWZ. companies, in particular, 2nd or 3rd tier manufacturing companies of existing
b) Service unit manufacturing companies will be effective to strengthen global competitiveness of local
manufacturers, which may result in regional development. The exhibit indicates the
A company can avail the services of a third party which is a unit in an FTWZ for trading and warehousing and other current industrial corridors being developed in India.
authorized operations. Trading entities, importers and exporters, 3PLs, CHAs, freight forwarders, shipping lines,
manufacturers, etc. can become units in an FTWZ. Units are required to execute a bond cum- legal undertaking for D. Other tax incentive schemes
import and warehousing of goods inside the FTWZ.
Tax incentives provided by allowing a 100% deduction on any capital expenditure (other than on land, goodwill and
2. Activities permitted within an FTWZ financial instruments) is available to the following types of businesses:
The following activities are permitted in a FTWZ: • Setting up and operating a cold chain facility on or after 1 April 2009
• Unit can carry FTWZ to DTA and DTA to FTWZ transactions • Setting up and operating a warehousing facility for storage of agricultural produce on or after 1 April 2009
• Unit can hold goods on account of a foreign or a DTA supplier and buyer • Laying and operating a cross-country natural gas, crude, petroleum oil pipeline for distribution, including storage
facilities being an integral part of such a network commencing operations on or after 1 April 2007
• Warehousing can be undertaken on behalf of foreign or domestic clients
• Building and operating, anywhere in India, a two-star hotel or above category commencing operations on or after 1
• Can carry out trading, with or without labeling
April 2010
• Can carry out packaging and repacking without any processing
• Building and operating, anywhere in India, a hospital with at least 100 beds commencing operations on or after 1
• Re-sale, re-invoice or re-export of goods April 2010
• Other value optimization services • Developing and building a housing project under a scheme for slum redevelopment or rehabilitation
commencing operations on or after 1 April 2010

36 37
• Developing and building a housing project under a notified scheme of affordable housing framed by the central or a a) Features of PCPIR
State government commencing operations on or after 1 April 2011
• A specifically delineated investment region
• Fertilizer production in a new plant or in newly installed capacity in an existing plant commencing operations on or
after 1 April 2011 • Area of about 250 square kilometers
• Setting up and operating an inland container depot or a container freight station notified or approved under the • Planned for setting up of manufacturing facilities for domestic and export led production of petroleum, chemicals
customs act 1962, on or after 1 April 2012 & petrochemicals, along with the associated services and infrastructure
• Bee-keeping and production of honey and beeswax on or after 1 April 2012 • A combination of production units, public utilities, logistics, environmental protection mechanisms, residential
• Setting up and operating a warehouse facility for storage of sugar on or after 1 April 2012 areas and administrative services
In case of certain specified businesses commencing operations on or after 1 April 2012 such as cold chain facility, • It may include one or more Special Economic Zones (SEZ), Industrial Parks, Free Trade & Warehousing Zones, Export
warehousing for agricultural produce, hospital with at least 100 beds, a notified affordable housing project and Oriented Units, or Growth Centers
production of fertilizer, the deduction is 150% of capital expenditure incurred on or after 1 April 2012.
• The PCPIR could cover existing settlements/industries & estates/ services and would
therefore benefit from and be complementary to the region. The concerned State 1.2. Planned industrial
E. PCPIR government may not acquire the entire area comprising the PCPIR, but it will notify corridors in India
The petroleum, chemicals and petrochemicals sectors in India are well established and have recorded a steady growth the same.
over the years. These sectors are major contributors to India’s economic growth and regional development. Government • Each PCPIR would have a refinery/ petrochemical feedstock company as an anchor
of India has over the years taken many positive steps drive growth of the industry and put it on the global map. In a tenant
similar initiative, the Government of India notified the Petroleum, Chemicals and Petrochemical Investment Regions
(PCPIR) policy in 2007 to provide a major fillip to the refining, petrochemicals and chemical industries in the country. • Internal infrastructure will be built and managed by a Developer, or a group of Co-
developers
The PCPIR policy aims to ensure planned development of industrial hubs focused on the petroleum, chemical and
petrochemical sectors with an integrated and sustainable approach in order to extract synergies for world class • External linkages including Rail, Road (National Highways), Ports, Airports, and
manufacturing, research and development. It is envisaged that the PCPIRs will help in promoting investment in the sector Telecom, will be provided by Government of India and the concerned State
and making India a key hub for both domestic and international markets. Government intends to provide a transparent government
and investor friendly policy and facility regime in order to attract major investments from both Indian and foreign • The users of PCPIR infrastructure will pay for its use, except to the extent that the
investors. The PCPIRs would reap the benefits of co-siting, networking and greater efficiency through the use of common government supports the service through budgetary resources
infrastructure and support services. PCPIR would have high-class infrastructure and will provide a conducive environment
for setting up businesses. This would thus result in a boost to manufacturing, augmentation of exports and generation
of employment. PCPIR would help in paving way for inclusive growth in region, sector and economy. A PCPIR would be a
specifically delineated investment region with an area of around 250 square kilometres planned for the establishment of
manufacturing facilities for domestic and export led production of petroleum, chemicals & petrochemicals, along with
the associated services and infrastructure. A PCPIR consists of a processing and a non-processing area. The processing
area would occupy a minimum of 40% of the total area, i.e. about 100 square kilometers. It includes the manufacturing
facilities, along with associated logistics and other services, and required infrastructure. The non-processing area would
hence occupy a maximum of 60% of the total area, i.e. about 150 square kilometers and would include residential,
commercial and other social and institutional infrastructure.

38 39
• Developing and building a housing project under a notified scheme of affordable housing framed by the central or a a) Features of PCPIR
State government commencing operations on or after 1 April 2011
• A specifically delineated investment region
• Fertilizer production in a new plant or in newly installed capacity in an existing plant commencing operations on or
after 1 April 2011 • Area of about 250 square kilometers
• Setting up and operating an inland container depot or a container freight station notified or approved under the • Planned for setting up of manufacturing facilities for domestic and export led production of petroleum, chemicals
customs act 1962, on or after 1 April 2012 & petrochemicals, along with the associated services and infrastructure
• Bee-keeping and production of honey and beeswax on or after 1 April 2012 • A combination of production units, public utilities, logistics, environmental protection mechanisms, residential
• Setting up and operating a warehouse facility for storage of sugar on or after 1 April 2012 areas and administrative services
In case of certain specified businesses commencing operations on or after 1 April 2012 such as cold chain facility, • It may include one or more Special Economic Zones (SEZ), Industrial Parks, Free Trade & Warehousing Zones, Export
warehousing for agricultural produce, hospital with at least 100 beds, a notified affordable housing project and Oriented Units, or Growth Centers
production of fertilizer, the deduction is 150% of capital expenditure incurred on or after 1 April 2012.
• The PCPIR could cover existing settlements/industries & estates/ services and would
therefore benefit from and be complementary to the region. The concerned State 1.2. Planned industrial
E. PCPIR government may not acquire the entire area comprising the PCPIR, but it will notify corridors in India
The petroleum, chemicals and petrochemicals sectors in India are well established and have recorded a steady growth the same.
over the years. These sectors are major contributors to India’s economic growth and regional development. Government • Each PCPIR would have a refinery/ petrochemical feedstock company as an anchor
of India has over the years taken many positive steps drive growth of the industry and put it on the global map. In a tenant
similar initiative, the Government of India notified the Petroleum, Chemicals and Petrochemical Investment Regions
(PCPIR) policy in 2007 to provide a major fillip to the refining, petrochemicals and chemical industries in the country. • Internal infrastructure will be built and managed by a Developer, or a group of Co-
developers
The PCPIR policy aims to ensure planned development of industrial hubs focused on the petroleum, chemical and
petrochemical sectors with an integrated and sustainable approach in order to extract synergies for world class • External linkages including Rail, Road (National Highways), Ports, Airports, and
manufacturing, research and development. It is envisaged that the PCPIRs will help in promoting investment in the sector Telecom, will be provided by Government of India and the concerned State
and making India a key hub for both domestic and international markets. Government intends to provide a transparent government
and investor friendly policy and facility regime in order to attract major investments from both Indian and foreign • The users of PCPIR infrastructure will pay for its use, except to the extent that the
investors. The PCPIRs would reap the benefits of co-siting, networking and greater efficiency through the use of common government supports the service through budgetary resources
infrastructure and support services. PCPIR would have high-class infrastructure and will provide a conducive environment
for setting up businesses. This would thus result in a boost to manufacturing, augmentation of exports and generation
of employment. PCPIR would help in paving way for inclusive growth in region, sector and economy. A PCPIR would be a
specifically delineated investment region with an area of around 250 square kilometres planned for the establishment of
manufacturing facilities for domestic and export led production of petroleum, chemicals & petrochemicals, along with
the associated services and infrastructure. A PCPIR consists of a processing and a non-processing area. The processing
area would occupy a minimum of 40% of the total area, i.e. about 100 square kilometers. It includes the manufacturing
facilities, along with associated logistics and other services, and required infrastructure. The non-processing area would
hence occupy a maximum of 60% of the total area, i.e. about 150 square kilometers and would include residential,
commercial and other social and institutional infrastructure.

38 39
Regulatory process • Setting up an Indian Company
A snapshot of the regulatory process involved in establishing a factory/manufacturing unit and starting operation is The flow of incorporation of an Indian company and subsequent compliances for setting up a private limited is as below.
summarized in the exhibit below: Government of India has announced new Company Act, 2013. A newly incorporated company is required to follow
provisions as per the Act.
Step Process Flow* Time frame
Tax 1 Obtaining DIN (Director Identification Number) and DSC
compliance (Digital Signature Certificate) for Directors 10 days
2 Obtaining confirmation for Name of the new company 14 days
3 Filing of prescribed documents of share holders X
Setting up IEM registration Selection of Single Setting up
window 4 payment of duties and fees X
an entity Industrial License land clearance a factory
5 Obtaining Incorporation Certificate X + 14 days
6 Opening bank account 14 days
Labour law 7 Remittance of share capital by parents company Y
compliance 8 Report to RBI on recipient of share capital within 30 days Within 30 days from Y
9 Allotment of shares Z

A. Setting up an entity 10 Report to RBI on the allotment of shares Within 30 days from Z
Note* : in case of automatic route
The initial step to be taken is setting up an entity in Tamil Nadu. Investors may select the most suitable option to their
business. Basic documents Required
3 Form INC-1 (name approval)
Setting up an entity
3 Form INC-7 (incorporation)
3 Form INC-22 (Corporate Secretary registration)
3 Form DIR-12 (Director registration )
Indian Company Foreign Company
3 Form FC-GPR (report of share allotment to RBI)
3 Director's ID proof
Wholly owned Joint Liaision Branch Project 3 Director's resident proof
LLP
subsidiary venture office Office Office 3 Memorandum of Association & Article of Association of the new company
3 Memorandum of Association & Article of Association of the parent companies
Further details are available at http://www.mca.gov.in/

40 41
Regulatory process • Setting up an Indian Company
A snapshot of the regulatory process involved in establishing a factory/manufacturing unit and starting operation is The flow of incorporation of an Indian company and subsequent compliances for setting up a private limited is as below.
summarized in the exhibit below: Government of India has announced new Company Act, 2013. A newly incorporated company is required to follow
provisions as per the Act.
Step Process Flow* Time frame
Tax 1 Obtaining DIN (Director Identification Number) and DSC
compliance (Digital Signature Certificate) for Directors 10 days
2 Obtaining confirmation for Name of the new company 14 days
3 Filing of prescribed documents of share holders X
Setting up IEM registration Selection of Single Setting up
window 4 payment of duties and fees X
an entity Industrial License land clearance a factory
5 Obtaining Incorporation Certificate X + 14 days
6 Opening bank account 14 days
Labour law 7 Remittance of share capital by parents company Y
compliance 8 Report to RBI on recipient of share capital within 30 days Within 30 days from Y
9 Allotment of shares Z

A. Setting up an entity 10 Report to RBI on the allotment of shares Within 30 days from Z
Note* : in case of automatic route
The initial step to be taken is setting up an entity in Tamil Nadu. Investors may select the most suitable option to their
business. Basic documents Required
3 Form INC-1 (name approval)
Setting up an entity
3 Form INC-7 (incorporation)
3 Form INC-22 (Corporate Secretary registration)
3 Form DIR-12 (Director registration )
Indian Company Foreign Company
3 Form FC-GPR (report of share allotment to RBI)
3 Director's ID proof
Wholly owned Joint Liaision Branch Project 3 Director's resident proof
LLP
subsidiary venture office Office Office 3 Memorandum of Association & Article of Association of the new company
3 Memorandum of Association & Article of Association of the parent companies
Further details are available at http://www.mca.gov.in/

40 41
• Setting up a Foreign Company B. Industrial Entrepreneurs’ Memorandum and Industrial License – eBiz
Setting up Liaison Office, Branch Office, Project Office is followed by the similar process as below. project by Government of India
Step Process Flow* Time frame To start a business in India and set up an industrial unit, investors need to obtain industrial license or file IEM (Industrial
Entrepreneurs Memorandum).
1 Intimation to RBI 15 days
Through the eBiz initiative launched on 16 August, 2014, Process of applying for Industrial License (IL) and IEM has been
2 Filing Form FC-1 with RoC 7 days
made online and this service is now available to entrepreneurs on 24x7 basis at the eBiz website, without human
3 Obtaining Certificate of Establishment of Place of Business 10 days interface. This will lead to ease of filing applications and online payment of service charges and ensure that no
Note* : in case of automatic route entrepreneur has to come to the Ministry to file his/her application or make payment.

Basic documents required • Industrial license

3 Form FC-1 Licensing is done under Industries (Development & Regulation) Act 1951. Post 1991 de-licensing, presently only five
3 Memorandum of Association & Article of Association of HQ industries are under compulsory licensing:
3 Financial statements for the past 3 years - Electronic aerospace and defense equipment
3 Certificate of Incorporation of HQ - Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
3 List of details of Directors
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes (Fresh Licenses are not being granted for
Further details are available at http://www.rbi.org.in/home.aspx manufacture of this item on health grounds since 1999)
- Specified hazardous chemicals i.e (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii)
• Setting up LLP Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocyanate)
LLP is incorporated under LLP Act. The flow is as below. - Distillation and brewing of alcoholic drinks
Step Process Flow* Time frame - In addition to above, a non-MSME unit manufacturing items reserved for MSME needs an Industrial License
1 Name reservation 14 days
• IEM submission
2 Application for incorporation X
All industrial undertakings exempt from the requirements of industrial licensing, including existing units undertaking
3 Filing LLP agreement Within 30days from X
substantial expansion, are required to file information in the prescribed form for IEM, i.e. “Form IEM”(Part ‘A’), with the
Basic documents required Secretariat of Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP), Government of India, and
obtain an acknowledgement.
3 eForm1 (name reservation)
All Industrial undertakings also need to file information in Part 'B' of the Memorandum at the time of commencement of
3 eForm 2 (incorporation)
commercial production.
3 eForm 3 (LLP agreement)
Further details are available at http://www.mca.gov.in/LLP/

42 43
• Setting up a Foreign Company B. Industrial Entrepreneurs’ Memorandum and Industrial License – eBiz
Setting up Liaison Office, Branch Office, Project Office is followed by the similar process as below. project by Government of India
Step Process Flow* Time frame To start a business in India and set up an industrial unit, investors need to obtain industrial license or file IEM (Industrial
Entrepreneurs Memorandum).
1 Intimation to RBI 15 days
Through the eBiz initiative launched on 16 August, 2014, Process of applying for Industrial License (IL) and IEM has been
2 Filing Form FC-1 with RoC 7 days
made online and this service is now available to entrepreneurs on 24x7 basis at the eBiz website, without human
3 Obtaining Certificate of Establishment of Place of Business 10 days interface. This will lead to ease of filing applications and online payment of service charges and ensure that no
Note* : in case of automatic route entrepreneur has to come to the Ministry to file his/her application or make payment.

Basic documents required • Industrial license

3 Form FC-1 Licensing is done under Industries (Development & Regulation) Act 1951. Post 1991 de-licensing, presently only five
3 Memorandum of Association & Article of Association of HQ industries are under compulsory licensing:
3 Financial statements for the past 3 years - Electronic aerospace and defense equipment
3 Certificate of Incorporation of HQ - Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
3 List of details of Directors
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes (Fresh Licenses are not being granted for
Further details are available at http://www.rbi.org.in/home.aspx manufacture of this item on health grounds since 1999)
- Specified hazardous chemicals i.e (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii)
• Setting up LLP Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocyanate)
LLP is incorporated under LLP Act. The flow is as below. - Distillation and brewing of alcoholic drinks
Step Process Flow* Time frame - In addition to above, a non-MSME unit manufacturing items reserved for MSME needs an Industrial License
1 Name reservation 14 days
• IEM submission
2 Application for incorporation X
All industrial undertakings exempt from the requirements of industrial licensing, including existing units undertaking
3 Filing LLP agreement Within 30days from X
substantial expansion, are required to file information in the prescribed form for IEM, i.e. “Form IEM”(Part ‘A’), with the
Basic documents required Secretariat of Industrial Assistance (SIA), Department of Industrial Policy and Promotion (DIPP), Government of India, and
obtain an acknowledgement.
3 eForm1 (name reservation)
All Industrial undertakings also need to file information in Part 'B' of the Memorandum at the time of commencement of
3 eForm 2 (incorporation)
commercial production.
3 eForm 3 (LLP agreement)
Further details are available at http://www.mca.gov.in/LLP/

42 43
 Basic documents required Indirect Tax (as per business model) Time frame
Industrial License IEM • VAT/CST registration 15 days
3 Form FC-IL 3 Form IEM • Excise Duty registration 30 days
3 Certificate of Incorporation 3 Certificate of Incorporation
• IEC (Importer Exporter Code) registration 15 days
3 Memorandum of Association & Article of Association 3 Memorandum of Association & Article of Association
3 Board Resolution Certificate 3 Resolution from Board of Director • Service Tax registration 10 days

Further details are available at https://www.ebiz.gov.in/.

Basic documents required
C. Tax compliance VAT/CST registration

Once the entity has been established, tax related compliance needs to be completed to commence business. Below is the 3 Form A
list of registration required at the initial stage. 3 Form E
3 Form 5
Tax compliance 3 Certified copy of Certificate of establishment of place of business of the company
3 Certified copy of PAN card of the company
3 Certified copy of lease deed of the office space of the company

Other Tax compliance 3 Certified copy of list of directors of the company

Direct tax registration Direct tax registration
(property tax, profession tax etc.) 3 Certified copy of the address proofs of the directors of the company
3 Certified copy of Board resolution authorizing the person to sign and file the CST & VAT registration application with
its enclosures
Direct Tax Time frame
3 Certified copy of the address proof of authorized signatory
• obtaining PAN (Permanent Account Number) 10 days
3 Introduction letters from two existing dealers
• obtaining TAN (Tax Deduction Account Number) 10 days
3 Four copies of passport size photographs of the directors and the authorized signatory
Basic documents required
3 Self-addressed envelope with postal stamp affixed for Rs.30
3 Form 49A (PAN application)
3 Demand Draft for Rs.500/-in your favour towards registration fee
3 Form 49B (TAN application)
3 Excise Duty registration
IEC registration
3 form ANF 3A
3 PAN copy
3 Bank account details

44 45
 Basic documents required Indirect Tax (as per business model) Time frame
Industrial License IEM • VAT/CST registration 15 days
3 Form FC-IL 3 Form IEM • Excise Duty registration 30 days
3 Certificate of Incorporation 3 Certificate of Incorporation
• IEC (Importer Exporter Code) registration 15 days
3 Memorandum of Association & Article of Association 3 Memorandum of Association & Article of Association
3 Board Resolution Certificate 3 Resolution from Board of Director • Service Tax registration 10 days

Further details are available at https://www.ebiz.gov.in/.

Basic documents required
C. Tax compliance VAT/CST registration

Once the entity has been established, tax related compliance needs to be completed to commence business. Below is the 3 Form A
list of registration required at the initial stage. 3 Form E
3 Form 5
Tax compliance 3 Certified copy of Certificate of establishment of place of business of the company
3 Certified copy of PAN card of the company
3 Certified copy of lease deed of the office space of the company

Other Tax compliance 3 Certified copy of list of directors of the company

Direct tax registration Direct tax registration
(property tax, profession tax etc.) 3 Certified copy of the address proofs of the directors of the company
3 Certified copy of Board resolution authorizing the person to sign and file the CST & VAT registration application with
its enclosures
Direct Tax Time frame
3 Certified copy of the address proof of authorized signatory
• obtaining PAN (Permanent Account Number) 10 days
3 Introduction letters from two existing dealers
• obtaining TAN (Tax Deduction Account Number) 10 days
3 Four copies of passport size photographs of the directors and the authorized signatory
Basic documents required
3 Self-addressed envelope with postal stamp affixed for Rs.30
3 Form 49A (PAN application)
3 Demand Draft for Rs.500/-in your favour towards registration fee
3 Form 49B (TAN application)
3 Excise Duty registration
IEC registration
3 form ANF 3A
3 PAN copy
3 Bank account details

44 45
3 List of Directors with address, Father’s name, Email address and Telephone No
Industrial Park EoU
3 Bank draft INR 1000/- – Registration fees
3 2 passport size photograph of the applicant and directors to be attested by banker after affixing in the IE code
Selection
application SEZ
of Land
3 Bank certificate declaring that an account has been maintained with them
3 Name of the Authorized Signatory, Designation, Residential Address, Telephone and E-mail Address
Private Land
3 Self-certified copy of Memorandum and Articles of Association
3 Extract of the Board Resolution for the Authorized Signatory to sign the Application a) Process for Land allotment from Industrial Park
3 Lease deed / title deeds for the address for which registration need to be obtained Tamil Nadu offers well developed network of industrial parks. Different types of industrial parks have been set up by
Service Tax registration nodal Government agencies or by joint ventures with collaboration with private players.
3 Form ST-1 SIPCOT (State Industries Promotion Corporation of Tamil Nadu Limited) is a State owned Financial and Development
Institution which develops industrial complexes by providing basic and comprehensive infrastructure facilities for the
3 Certified Copy of PAN with PAN allotment letter industries to set up their units. SIPCOT has so far developed 20 Industrial Complexes in 12 districts.
3 MOA & AOA TIDCO (Tamil Nadu Industrial Development Corporation Limited) is another undertaking of Government. TIDCO facilities
3 Certified copy of list of directors of the company with PAN and address proofs investment in large industries and promotes several joint ventures for manufacturing products. TANSIDCO (Tamil Nadu
Small Industries Development Corporation Limited) promotes Small Scale industries by developing Industrial estates with
3 Certified copy of Board resolution authorizing a board member or employee to sign and file registration application infrastructure facilities and provision of work sheds and plots.
under Service Tax law
Step Process Flow Time frame
3 Certified copy of the address proof of the authorized signatory
1 Application for Land Allotment X+1 day
3 Rental agreement for proof of address
2 Approval X+30 days *
3 Acknowledgment of on-line filing 3 Plot deposit to be paid Within 90 days from the date of allotment letter
4 Lease deed to be executed and registered Within 15 days from the date of payment of
D. Investment facilitation framework in Tamil Nadu plot deposit

1. Selection of the Land 5 Possession of plot should be taken Within 15 days from the
date of execution of lease deed
At the outset, the investors need to identify the land for setting up units. Tamil Nadu Industrial Guidance & Export 6 Construction of Factory building should be commenced Within 6 months from the date of allotment order
Promotion Bureau (GUIDANCE) is the first contact point for investors for land identification. It provides the necessary
7 Construction should get completed Within 24 months from the date of allotment order
information on land availability including infrastructure availability, incentive package etc. as per investors’ requirements.
8 Commencement of trial/Commercial production Within 30 months
There are several options investors may consider for selection of the land in Tamil Nadu, as detailed in subsequent
sections overleaf Note:
1. * If the application is submitted along with full details as required, the allotment could be made within a 10 days
period.
2. All the incentives offered by Govt. of Tamil Nadu as per the G.O. in effect and a location is maintained and serviced by
SIPCOT throughout is available for starting the units.

46 47
3 List of Directors with address, Father’s name, Email address and Telephone No
Industrial Park EoU
3 Bank draft INR 1000/- – Registration fees
3 2 passport size photograph of the applicant and directors to be attested by banker after affixing in the IE code
Selection
application SEZ
of Land
3 Bank certificate declaring that an account has been maintained with them
3 Name of the Authorized Signatory, Designation, Residential Address, Telephone and E-mail Address
Private Land
3 Self-certified copy of Memorandum and Articles of Association
3 Extract of the Board Resolution for the Authorized Signatory to sign the Application a) Process for Land allotment from Industrial Park
3 Lease deed / title deeds for the address for which registration need to be obtained Tamil Nadu offers well developed network of industrial parks. Different types of industrial parks have been set up by
Service Tax registration nodal Government agencies or by joint ventures with collaboration with private players.
3 Form ST-1 SIPCOT (State Industries Promotion Corporation of Tamil Nadu Limited) is a State owned Financial and Development
Institution which develops industrial complexes by providing basic and comprehensive infrastructure facilities for the
3 Certified Copy of PAN with PAN allotment letter industries to set up their units. SIPCOT has so far developed 20 Industrial Complexes in 12 districts.
3 MOA & AOA TIDCO (Tamil Nadu Industrial Development Corporation Limited) is another undertaking of Government. TIDCO facilities
3 Certified copy of list of directors of the company with PAN and address proofs investment in large industries and promotes several joint ventures for manufacturing products. TANSIDCO (Tamil Nadu
Small Industries Development Corporation Limited) promotes Small Scale industries by developing Industrial estates with
3 Certified copy of Board resolution authorizing a board member or employee to sign and file registration application infrastructure facilities and provision of work sheds and plots.
under Service Tax law
Step Process Flow Time frame
3 Certified copy of the address proof of the authorized signatory
1 Application for Land Allotment X+1 day
3 Rental agreement for proof of address
2 Approval X+30 days *
3 Acknowledgment of on-line filing 3 Plot deposit to be paid Within 90 days from the date of allotment letter
4 Lease deed to be executed and registered Within 15 days from the date of payment of
D. Investment facilitation framework in Tamil Nadu plot deposit

1. Selection of the Land 5 Possession of plot should be taken Within 15 days from the
date of execution of lease deed
At the outset, the investors need to identify the land for setting up units. Tamil Nadu Industrial Guidance & Export 6 Construction of Factory building should be commenced Within 6 months from the date of allotment order
Promotion Bureau (GUIDANCE) is the first contact point for investors for land identification. It provides the necessary
7 Construction should get completed Within 24 months from the date of allotment order
information on land availability including infrastructure availability, incentive package etc. as per investors’ requirements.
8 Commencement of trial/Commercial production Within 30 months
There are several options investors may consider for selection of the land in Tamil Nadu, as detailed in subsequent
sections overleaf Note:
1. * If the application is submitted along with full details as required, the allotment could be made within a 10 days
period.
2. All the incentives offered by Govt. of Tamil Nadu as per the G.O. in effect and a location is maintained and serviced by
SIPCOT throughout is available for starting the units.

46 47
Basic documents required* 8. Registration with Central Pollution Control Board;

3 Application Form 9. Power connection;

10. Building approval plan;
3 Brief Project Report mentioning the Promoters background, Raw materials, Product process, etc.,
11. Sales Tax registration;
3 Certificate of Incorporation and Memorandum and Articles of Association for Private / Public Limited / Joint Sector
Companies. 12. Approval from Inspectorate of factories;
3 Partnership deed and firm’s registration certificate for partnership firm. 13. Pollution control clearance, wherever required;

3 Industrial License / SIA acknowledgement / FIPB approval ( in case of foreign investment) for Medium and Major 14. Any other approval as may be required from the State Government
Industries. Step Process Flow Time frame
3 SSI Provisional / Permanent certificate issued by DIC for SSI if available. 1 Applications to be filed with the Development 1 day
3 Rough building layout indicating the factory, office, godown, open space, future expansion, etc. Commissioner concerned
2 Interview of the promoter by the Approval Committee Within 10 days after the application is scrutinized
3 Proof for Term Loan sanction if available
3 Letter of Permission (LOP) is issued by the Zone Within 2 weeks after the Interview
3 Latest annual report / Profit and Loss account in case of existing companies / firms. Administration
3 DD / Pay order / Cheque (Local bank) for initial deposit and processing fee as mentioned in serial number 13 of 4 Registration –cum-Membership Certificate (RCMC) Within 2 days of the approval
application should be obtained
3 The Plot is given on long term lease for 99 years and renewable for future period of 99 years 5 Legal undertaking in the prescribed form to be executed Within 1 week from the date of obtaining the RCMC
by the applicant
Note* : in case of application for SIPCOT
6 Green Card will be issued to the unit by the On request by the applicant
Zone Administration
b) Further details are available at http://www.sipcot.com/
index1.htmlProcess flow for land allotment in SEZ Basic documents Required
Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for 3 Form F
the purposes of trade operations and duties and tariffs. Investors can enjoy various tax exemptions and other incentives 3 Memorandum of Association & Article of Association
under SEZ. Units may be set up in SEZ for manufacturing of goods and services with certain conditions.
3 Certificate of Incorporation
Consolidated application form enables investors to obtain required facility and registration listed below,
1. Setting up of units in Special Economic Zone; c) Private Land
2. Annual permission for sub-contracting; In case investors purchase private land, these are the check lists investors may look at;
3. Allotment of Importer Exporter Code Number; 3 Encumbrance of the land
4. Allotment of land/industrial sheds in the Special Economic Zone; 3 Land use classification
5. Water Connection;
3 Availability of infrastructure (water, power, skill labour, connectivity..)
6. Registration-cum-Membership Certificate;
7. Small Scale Industries Registration;

48 49
Basic documents required* 8. Registration with Central Pollution Control Board;

3 Application Form 9. Power connection;

10. Building approval plan;
3 Brief Project Report mentioning the Promoters background, Raw materials, Product process, etc.,
11. Sales Tax registration;
3 Certificate of Incorporation and Memorandum and Articles of Association for Private / Public Limited / Joint Sector
Companies. 12. Approval from Inspectorate of factories;
3 Partnership deed and firm’s registration certificate for partnership firm. 13. Pollution control clearance, wherever required;

3 Industrial License / SIA acknowledgement / FIPB approval ( in case of foreign investment) for Medium and Major 14. Any other approval as may be required from the State Government
Industries. Step Process Flow Time frame
3 SSI Provisional / Permanent certificate issued by DIC for SSI if available. 1 Applications to be filed with the Development 1 day
3 Rough building layout indicating the factory, office, godown, open space, future expansion, etc. Commissioner concerned
2 Interview of the promoter by the Approval Committee Within 10 days after the application is scrutinized
3 Proof for Term Loan sanction if available
3 Letter of Permission (LOP) is issued by the Zone Within 2 weeks after the Interview
3 Latest annual report / Profit and Loss account in case of existing companies / firms. Administration
3 DD / Pay order / Cheque (Local bank) for initial deposit and processing fee as mentioned in serial number 13 of 4 Registration –cum-Membership Certificate (RCMC) Within 2 days of the approval
application should be obtained
3 The Plot is given on long term lease for 99 years and renewable for future period of 99 years 5 Legal undertaking in the prescribed form to be executed Within 1 week from the date of obtaining the RCMC
by the applicant
Note* : in case of application for SIPCOT
6 Green Card will be issued to the unit by the On request by the applicant
Zone Administration
b) Further details are available at http://www.sipcot.com/
index1.htmlProcess flow for land allotment in SEZ Basic documents Required
Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for 3 Form F
the purposes of trade operations and duties and tariffs. Investors can enjoy various tax exemptions and other incentives 3 Memorandum of Association & Article of Association
under SEZ. Units may be set up in SEZ for manufacturing of goods and services with certain conditions.
3 Certificate of Incorporation
Consolidated application form enables investors to obtain required facility and registration listed below,
1. Setting up of units in Special Economic Zone; c) Private Land
2. Annual permission for sub-contracting; In case investors purchase private land, these are the check lists investors may look at;
3. Allotment of Importer Exporter Code Number; 3 Encumbrance of the land
4. Allotment of land/industrial sheds in the Special Economic Zone; 3 Land use classification
5. Water Connection;
3 Availability of infrastructure (water, power, skill labour, connectivity..)
6. Registration-cum-Membership Certificate;
7. Small Scale Industries Registration;

48 49
 Guidance & Export Promotion Bureau acts as a nodal agency to stream line and coordinate the approval process.
d) Process flow for land allotment as EoU
In order to provide a structured clearance and approval mechanism for all types of projects, and to avoid procedural
EoU (Export Oriented Unit) scheme provide an internationally competitive duty free environment. An EoU can be set up delays, the State Government has constituted an Inter-Departmental Committee chaired by the Industries Secretary to
by any investor manufacturing goods and rendering services, expect for trading activities. EoU unit is required to achieve examine requests which are not strictly as per the published policy of the State Government requiring certain relaxations.
only positive Net Foreign Exchange (NFE) over a period of 5 years. Based on the discussions at the Committee with all concerned departments, the Government of Tamil Nadu gives final
Step Process Flow Time frame approvals for the project. A Committee chaired by the Chief Secretary, Government of Tamil Nadu has been constituted
to monitor the clearances given for all the projects by the various wings of the Government.
1 Applications to be filed with the Development X+1 day
Commissioner concerned The following approvals are covered under the single window process:
2 Interview of the promoter by the Approval Committee Within 10 days after the application is scrutinized
3 Development commissioner to approve the case by
issuing Letter of Permission (LOP) Within 2 weeks after the Interview
4 Registration –cum-Membership Certificate (RCMC) Single Window Clearances
should be obtained Within 2 days of the approval
5 Legal undertaking in the prescribed form to be
executed by the applicant Within 1 week from the date of obtaining the RCMC
Planning permission from Directorate of Town & Country Planning (DTCP)
6 Green Card will be issued to the unit by the
Zone Administration On request by the applicant
7 The unit has to secure approval for its wiring and Within 3 weeks from the date of approval Fire service clearance
electrical plan from the Electrical authorities
8 To secure power allocation and wiring approval from Within 3 weeks from the date of approval
the State Electricity Board Environmental clearance from Tamil Nadu Pollution Control Board (TNPCB)
9 The industrial water supply is undertaken Within 2 weeks from the date of approval
10 In case there are effluents or emissions the unit has to 2 weeks prior to the date of commencement of
Water Supply from Tamil Nadu Water Supply and Drainage(TWAD) Board
secure approval form the Pollution Control Board actual production

Basic documents Required

Power supply from Tamil Nadu Electricity Board (TNEB)
3 Appendix 14-1A
3 Memorandum of Association & Article of Association
Electrical safety certificate from Chief Electrical Inspector (CEI)
3 Certificate of Incorporation

2. Setting up a Factory - Single window mechanism Registration under Factories Act

The State Government realizes the complexity involved in getting clearances / infrastructure support from individual
statutory authorities/agencies, as well as the need for different documentation/forms to set up a factory. To
avoid such procedural delays, Government of Tamil Nadu has established an effective Single Window Registration under Boilers Act
System to accord all such pre project clearances at the State Government level. Tamil Nadu Industrial

50 51
 Guidance & Export Promotion Bureau acts as a nodal agency to stream line and coordinate the approval process.
d) Process flow for land allotment as EoU
In order to provide a structured clearance and approval mechanism for all types of projects, and to avoid procedural
EoU (Export Oriented Unit) scheme provide an internationally competitive duty free environment. An EoU can be set up delays, the State Government has constituted an Inter-Departmental Committee chaired by the Industries Secretary to
by any investor manufacturing goods and rendering services, expect for trading activities. EoU unit is required to achieve examine requests which are not strictly as per the published policy of the State Government requiring certain relaxations.
only positive Net Foreign Exchange (NFE) over a period of 5 years. Based on the discussions at the Committee with all concerned departments, the Government of Tamil Nadu gives final
Step Process Flow Time frame approvals for the project. A Committee chaired by the Chief Secretary, Government of Tamil Nadu has been constituted
to monitor the clearances given for all the projects by the various wings of the Government.
1 Applications to be filed with the Development X+1 day
Commissioner concerned The following approvals are covered under the single window process:
2 Interview of the promoter by the Approval Committee Within 10 days after the application is scrutinized
3 Development commissioner to approve the case by
issuing Letter of Permission (LOP) Within 2 weeks after the Interview
4 Registration –cum-Membership Certificate (RCMC) Single Window Clearances
should be obtained Within 2 days of the approval
5 Legal undertaking in the prescribed form to be
executed by the applicant Within 1 week from the date of obtaining the RCMC
Planning permission from Directorate of Town & Country Planning (DTCP)
6 Green Card will be issued to the unit by the
Zone Administration On request by the applicant
7 The unit has to secure approval for its wiring and Within 3 weeks from the date of approval Fire service clearance
electrical plan from the Electrical authorities
8 To secure power allocation and wiring approval from Within 3 weeks from the date of approval
the State Electricity Board Environmental clearance from Tamil Nadu Pollution Control Board (TNPCB)
9 The industrial water supply is undertaken Within 2 weeks from the date of approval
10 In case there are effluents or emissions the unit has to 2 weeks prior to the date of commencement of
Water Supply from Tamil Nadu Water Supply and Drainage(TWAD) Board
secure approval form the Pollution Control Board actual production

Basic documents Required

Power supply from Tamil Nadu Electricity Board (TNEB)
3 Appendix 14-1A
3 Memorandum of Association & Article of Association
Electrical safety certificate from Chief Electrical Inspector (CEI)
3 Certificate of Incorporation

2. Setting up a Factory - Single window mechanism Registration under Factories Act

The State Government realizes the complexity involved in getting clearances / infrastructure support from individual
statutory authorities/agencies, as well as the need for different documentation/forms to set up a factory. To
avoid such procedural delays, Government of Tamil Nadu has established an effective Single Window Registration under Boilers Act
System to accord all such pre project clearances at the State Government level. Tamil Nadu Industrial

50 51
The Single Window Fee is as below; 3 If access gained from other than layouts, details of FMB sketch / Town survey map, adangal, copy of A register
Projects Single Window fee 3 Certificate from Architects
Projects with investment between USD 1.6 million to 8.3 million USD 5,000 3 Seizmic and stability certificate from Architects
Projects with investment between USD 8.3 million to 16.6 millionRs.50 – 100 Crores USD 8,333 3 Write up on Air Conditioning
Projects with investment between USD 16.6 million to 50 million USD 16,666 3 Write up on Rain Water Harvesting / dimensions of rain water harvesting pond
Projects with investment between USD 50 million to 166.6 million USD 25,000 3 Building wise ventilation statement
Projects with investment above USD 166.6 million USD 33,333 3 Fire protection and mitigation plans – A write up.
3 Building wise fire protection arrangements
Guidance Bureau has facilitated over 190 project proposals with a cumulative
3 DG Sets Acoustic measures & Diesel storage – a write up
investment of USD 10 billion till date, through single window facilitation
3 Labour Welfare and Safety Measures – A detailed write up
Basic documents required 3 Energy Conservation measures
3 Single window form, along with 3 A write up on CSR (Corporate Social Responsibilities) Activities carried out
– Copy of lease deed 3 Form I & II (3 copies to be submitted separately)
– Memorandum and Articles of Association 3 Pollution Control Measures
– Copy of certificate of Incorporation
3 Proposal for Sewage Treatment Plant
– List of Board of Directors
3 Certificate from Electrical Contractor. This must include HT & LT questionnaire, copy of license, copy of the
3 20-25 slide Power Point material for project presentation agreement between the company and contractor, Xerox copy of the challan (for payment towards scrutiny fee)
3 Excerpts of Board Resolution for authorized signatory 3 Checklist from DTCP
3 FIPB Approval / RBI approval 3 A legal undertaking (Rs.20/- stamp paper) that your building height will not exceed 15.0 Metres height
3 Project write up. 3 A legal undertaking (Rs.20/- stamp paper) that you will undertake to pay the I & A charges
3 Manufacturing process & flow chart 3 Index of Drawings (Civil, Electrical and Fire)
3 List of machinery with Horse Power details 3 12 sets of Civil Drawings. The site plan should contain provisions of a) RWH Provisions, b) Transformer yard and c)
Solar water heating provisions. The building plan should indicate no. of workers and installation power.
If the land is not part of SIPCOT / TIDCO / SIDCO layout
- Land use reclassification certificate from the DTCP 3 6 sets of Fire Drawings along with site plan

- Encumbrance certificate 13 years (one month prior to date of application) 3 6 sets of Electrical Drawings. These electrical drawings should be signed by the Occupier as well as the Electrical
Contractor
- Documents from Tahsildar 1) FMB / Town survey sketch, 2) Patta / Chitta / Town survey land records (TSLR), 3) A
register abstract Further details are available at http://www.investinginTamil Nadu.com/index.php.
3If access gained from approved layouts, roads registered gift deed copy with notary public attestation
along with layout plan

52 53
The Single Window Fee is as below; 3 If access gained from other than layouts, details of FMB sketch / Town survey map, adangal, copy of A register
Projects Single Window fee 3 Certificate from Architects
Projects with investment between USD 1.6 million to 8.3 million USD 5,000 3 Seizmic and stability certificate from Architects
Projects with investment between USD 8.3 million to 16.6 millionRs.50 – 100 Crores USD 8,333 3 Write up on Air Conditioning
Projects with investment between USD 16.6 million to 50 million USD 16,666 3 Write up on Rain Water Harvesting / dimensions of rain water harvesting pond
Projects with investment between USD 50 million to 166.6 million USD 25,000 3 Building wise ventilation statement
Projects with investment above USD 166.6 million USD 33,333 3 Fire protection and mitigation plans – A write up.
3 Building wise fire protection arrangements
Guidance Bureau has facilitated over 190 project proposals with a cumulative
3 DG Sets Acoustic measures & Diesel storage – a write up
investment of USD 10 billion till date, through single window facilitation
3 Labour Welfare and Safety Measures – A detailed write up
Basic documents required 3 Energy Conservation measures
3 Single window form, along with 3 A write up on CSR (Corporate Social Responsibilities) Activities carried out
– Copy of lease deed 3 Form I & II (3 copies to be submitted separately)
– Memorandum and Articles of Association 3 Pollution Control Measures
– Copy of certificate of Incorporation
3 Proposal for Sewage Treatment Plant
– List of Board of Directors
3 Certificate from Electrical Contractor. This must include HT & LT questionnaire, copy of license, copy of the
3 20-25 slide Power Point material for project presentation agreement between the company and contractor, Xerox copy of the challan (for payment towards scrutiny fee)
3 Excerpts of Board Resolution for authorized signatory 3 Checklist from DTCP
3 FIPB Approval / RBI approval 3 A legal undertaking (Rs.20/- stamp paper) that your building height will not exceed 15.0 Metres height
3 Project write up. 3 A legal undertaking (Rs.20/- stamp paper) that you will undertake to pay the I & A charges
3 Manufacturing process & flow chart 3 Index of Drawings (Civil, Electrical and Fire)
3 List of machinery with Horse Power details 3 12 sets of Civil Drawings. The site plan should contain provisions of a) RWH Provisions, b) Transformer yard and c)
Solar water heating provisions. The building plan should indicate no. of workers and installation power.
If the land is not part of SIPCOT / TIDCO / SIDCO layout
- Land use reclassification certificate from the DTCP 3 6 sets of Fire Drawings along with site plan

- Encumbrance certificate 13 years (one month prior to date of application) 3 6 sets of Electrical Drawings. These electrical drawings should be signed by the Occupier as well as the Electrical
Contractor
- Documents from Tahsildar 1) FMB / Town survey sketch, 2) Patta / Chitta / Town survey land records (TSLR), 3) A
register abstract Further details are available at http://www.investinginTamil Nadu.com/index.php.
3If access gained from approved layouts, roads registered gift deed copy with notary public attestation
along with layout plan

52 53
a) Planning permission c) Environmental clearance
The Town and Country Planning Act 1971 under section 2(b) of 49 requires that anyone who wants to develop any land The Tamil Nadu Pollution Control Board has introduced an online application and tracking mechanism for all pollution
or building should take a planning permission before commencement of the development work. Directorate of Town control related approvals. For further details, visit
and Country Planning approves on layout and building plan. In case of issue of planning permission is retained with
www.tnocmms.nic.in/OCMMS
Local Planning Authority, building license or any other license should be issued by local body only after planning
permission is issued by Local Planning Authority. • Consent to Establish

Basic documents required Investors need to apply for Consent to Establish from TNPCB (Tamil Nadu Pollution Control) as per The Water (Prevention
and Control of Pollution) Act, 1974 and The Air (Prevention and Control of Pollution) Act, 1981. In case industries fall
3 Land allotment letter from SIPCOT / documents of site ownership under 39 categories as prescribed in EIA Notification 2006, industries have to obtain environmental clearance from MoEF
3 Building Plan with a certificate from accredited Architect certifying that the building conforms to the building plan (Ministry of Environment and Forest, Government of India) / SEIAA (State Environmental Impact Assessment Authority,
rules of Tamil Nadu Government of Tamil Nadu). TNPCB will issue consent only for establishment to the projects which attracts EIA
Notification 2006, only on receipt of environment clearance from MoEF/SEIAA and after satisfying the citing criteria and
3 Sketch for drawings all other requirements. The list of 39 industries which require prior environmental clearance is listed in Appendix 1 A.
3 Seismic Certificate and Stability Certificate from accredited Architect Further, other regulations such as Hazardous Wastes (Management, Handling & Trans-boundary Movement) Rules 2008
3 If the ridge height of the project is 14.9 Metres, then an undertaking from the Architect (in Rs.20 stamp paper) that and E-waste Management and handling rules 2011 may be applicable depending on industries.
the height of the building will not exceed 14.9 Metres Step Process Flow* Time frame
Further details are available at http://www.tn.gov.in/tcp/. 1 Form along with enclosures to be filed with the One day
District officer concerned, Tamil Nadu Pollution
b) Fire service clearance Control Board (now Online filing is recognized)
Investors are required to obtain NOC (Non Objection Certificate) for getting planning permission and subsequently fire 2 Processing of Application One week from the date of Application
license from Fire and Rescue Service Department. Investors need to provide details of fire safety measures undertaken in 3 Inspection by the authorities of TNPCB Within one week from the processing
the building, including Fire alarm, Hydrant layout etc.
4 Application clearance post inspection Within one week from Inspection
Step Process Flow Time frame 5 Issue of Certificate Within ten days of application clearance
1 Application for a Fire License should be made to the As per prescribed format – On having all the prescribed Note : *in case the industry does not require environmental clearance
Divisional Fire Officer, located in the Head Quarters documents
of every district • Consent to Operate

2 The Fire License will be issued by the Divisional Fire within 15 days from the date of presenting the Investors need to apply for Operate two months in advance of the commissioning of the operation.
Officer to the application direct application Step Process Flow Time frame

Basic documents required 1 Form along with enclosures to be filed with the Two months in advance of
District officer concerned, Tamil Nadu Pollution
3 One separate fire drawing of whole site without scale (but mention area) Control Board (now Online filing is recognized)
3 Separate colour code should be indicated to Hydrants, Sprinklers, Smoke detectors and extinguishers 2 Processing of Application One week from the date of Application
3 Mention Nos. of Hydrants, sprinkler heads, detectors and extinguishers 3 Inspection by the District Engineer Within one week from the processing
4 Application clearance post inspection Within one week from Inspection
Further details are available at http://www.tnfrs.tn.nic.in/.
5 Issue of Consent Within ten days of application clearance

54 55
a) Planning permission c) Environmental clearance
The Town and Country Planning Act 1971 under section 2(b) of 49 requires that anyone who wants to develop any land The Tamil Nadu Pollution Control Board has introduced an online application and tracking mechanism for all pollution
or building should take a planning permission before commencement of the development work. Directorate of Town control related approvals. For further details, visit
and Country Planning approves on layout and building plan. In case of issue of planning permission is retained with
www.tnocmms.nic.in/OCMMS
Local Planning Authority, building license or any other license should be issued by local body only after planning
permission is issued by Local Planning Authority. • Consent to Establish

Basic documents required Investors need to apply for Consent to Establish from TNPCB (Tamil Nadu Pollution Control) as per The Water (Prevention
and Control of Pollution) Act, 1974 and The Air (Prevention and Control of Pollution) Act, 1981. In case industries fall
3 Land allotment letter from SIPCOT / documents of site ownership under 39 categories as prescribed in EIA Notification 2006, industries have to obtain environmental clearance from MoEF
3 Building Plan with a certificate from accredited Architect certifying that the building conforms to the building plan (Ministry of Environment and Forest, Government of India) / SEIAA (State Environmental Impact Assessment Authority,
rules of Tamil Nadu Government of Tamil Nadu). TNPCB will issue consent only for establishment to the projects which attracts EIA
Notification 2006, only on receipt of environment clearance from MoEF/SEIAA and after satisfying the citing criteria and
3 Sketch for drawings all other requirements. The list of 39 industries which require prior environmental clearance is listed in Appendix 1 A.
3 Seismic Certificate and Stability Certificate from accredited Architect Further, other regulations such as Hazardous Wastes (Management, Handling & Trans-boundary Movement) Rules 2008
3 If the ridge height of the project is 14.9 Metres, then an undertaking from the Architect (in Rs.20 stamp paper) that and E-waste Management and handling rules 2011 may be applicable depending on industries.
the height of the building will not exceed 14.9 Metres Step Process Flow* Time frame
Further details are available at http://www.tn.gov.in/tcp/. 1 Form along with enclosures to be filed with the One day
District officer concerned, Tamil Nadu Pollution
b) Fire service clearance Control Board (now Online filing is recognized)
Investors are required to obtain NOC (Non Objection Certificate) for getting planning permission and subsequently fire 2 Processing of Application One week from the date of Application
license from Fire and Rescue Service Department. Investors need to provide details of fire safety measures undertaken in 3 Inspection by the authorities of TNPCB Within one week from the processing
the building, including Fire alarm, Hydrant layout etc.
4 Application clearance post inspection Within one week from Inspection
Step Process Flow Time frame 5 Issue of Certificate Within ten days of application clearance
1 Application for a Fire License should be made to the As per prescribed format – On having all the prescribed Note : *in case the industry does not require environmental clearance
Divisional Fire Officer, located in the Head Quarters documents
of every district • Consent to Operate

2 The Fire License will be issued by the Divisional Fire within 15 days from the date of presenting the Investors need to apply for Operate two months in advance of the commissioning of the operation.
Officer to the application direct application Step Process Flow Time frame

Basic documents required 1 Form along with enclosures to be filed with the Two months in advance of
District officer concerned, Tamil Nadu Pollution
3 One separate fire drawing of whole site without scale (but mention area) Control Board (now Online filing is recognized)
3 Separate colour code should be indicated to Hydrants, Sprinklers, Smoke detectors and extinguishers 2 Processing of Application One week from the date of Application
3 Mention Nos. of Hydrants, sprinkler heads, detectors and extinguishers 3 Inspection by the District Engineer Within one week from the processing
4 Application clearance post inspection Within one week from Inspection
Further details are available at http://www.tnfrs.tn.nic.in/.
5 Issue of Consent Within ten days of application clearance

54 55
Basic documents required Step Process Flow Time frame

3 Form I (Air Act application form) 1 Consent letter from the owner of the premises if the 1 day
intending consumer is not the owner
3 Form II (Water Act application form)
2 Apply for your Domestic or commercial service 1 day
3 EIA Study report (for projects which require EIA Study as per Environment policy) connection in the prescribed form
Further details are available at http://www.tnpcb.gov.in/. 3 A notice will be sent to the intending consumer to Within 1 week of application
meet the divisional Engineer
d) Obtaining power supply 4 Engineer to agree on the position of the point of Within 3 days of notice
• Obtaining TNEB power supply supply/ space for fixing the meter at a convenient place
in the ground floor with easy accessibility for inspection
TANGEDCO (Tamil Nadu Generation and Distribution Corporation Ltd) is the nodal agency for power supply. Investors 5 Advice Slip/notice/Letter will be issued indicating the Within 3 days after the inspection is completed
need to file application to TANGEDCO to obtain HT (high tension voltage) connection and LT (Low tension voltage) prescribed charges payable
connection.
6 After completion of the wiring, notice must be sent Within 1 week from the date of completion
As per the Electricity Act, TANGEDCO has become one of the two subsidiaries of TNEB (Tamil Nadu Electricity Board). to the Engineer by the intending consumer
TNEB is now a holding company which has two subsidiaries; TANGEDCO and TANRANSCO ( Tamil Nadu Transmission (printed test report)
Corporation Ltd.) . 7 notice will be sent to the intending consumer Within 2 days of receiving the printed test report
Basic documents required to avail supply
Further details are available at http://www.tangedco.gov.in/index1.php?tempno=1.
3 Resolution of Board meeting for authentication to sign the EB application with the specimen signature attested by a
Director whose name should be available in MoA e) Obtaining sewer and water connections
3 Site plan with marking of metering point with security arrangement
In Tamil Nadu, the water and sewer connections are generally provided by the concerned corporations, municipalities,
3 An undertaking that (i) the company agrees to provide the metering point as per Board norms (within 30 mtrs of Town Panchayats and Village Panchayats except in Chennai City, where they are provided by Chennai Metro Water Supply
main gate) and that (ii) the company agree to abide by the terms & conditions of power supply and Sewerage Board (CMWSSB). Sewer and Water connection charges can be calculated by the applicant themselves
• Electrical Safety Certificate based on the built up area and category of the building as per prescribed in the application form.
Investors are required to obtain Electrical Safety Certificate from Chief Electrical Inspector (CEI) for new electrical Step Process Flow Time frame
Installations, depending on the voltage class and capacity of the proposed additions or alternations. 1 Filled-up Application with necessary enclosures should One day
Basic documents required be submitted only at the Registration counter
functioning at Head Office of CMWSSB, No.1, Pumping
3 Schematic & sectional drawings signed by the Electrical Contractor Station Road, Chintadripet, Chennai - 600 002. for
3 Site plan Chennai City and for other areas, the respective local
body offices
3 Transformer Structure, Sub Station, Power House Layout, earthing arrangements
2 Sewer and Water connection charges can be calculated NA
3 Single Line Electrical Schematic Layouts for Transformer, generator, switch boards, etc.
by the applicant themselves based on the built up area
3Physical layouts of factory showing location of motors, switchboards, etc. and category of the building
3 Name, address, telephone number of Chairman / Managing Director / Directors and Authorized signatory
with a copy of the Memorandum and Articles of Association
3 Fire fighting measures should also be shown in the electrical drawings

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Basic documents required Step Process Flow Time frame

3 Form I (Air Act application form) 1 Consent letter from the owner of the premises if the 1 day
intending consumer is not the owner
3 Form II (Water Act application form)
2 Apply for your Domestic or commercial service 1 day
3 EIA Study report (for projects which require EIA Study as per Environment policy) connection in the prescribed form
Further details are available at http://www.tnpcb.gov.in/. 3 A notice will be sent to the intending consumer to Within 1 week of application
meet the divisional Engineer
d) Obtaining power supply 4 Engineer to agree on the position of the point of Within 3 days of notice
• Obtaining TNEB power supply supply/ space for fixing the meter at a convenient place
in the ground floor with easy accessibility for inspection
TANGEDCO (Tamil Nadu Generation and Distribution Corporation Ltd) is the nodal agency for power supply. Investors 5 Advice Slip/notice/Letter will be issued indicating the Within 3 days after the inspection is completed
need to file application to TANGEDCO to obtain HT (high tension voltage) connection and LT (Low tension voltage) prescribed charges payable
connection.
6 After completion of the wiring, notice must be sent Within 1 week from the date of completion
As per the Electricity Act, TANGEDCO has become one of the two subsidiaries of TNEB (Tamil Nadu Electricity Board). to the Engineer by the intending consumer
TNEB is now a holding company which has two subsidiaries; TANGEDCO and TANRANSCO ( Tamil Nadu Transmission (printed test report)
Corporation Ltd.) . 7 notice will be sent to the intending consumer Within 2 days of receiving the printed test report
Basic documents required to avail supply
Further details are available at http://www.tangedco.gov.in/index1.php?tempno=1.
3 Resolution of Board meeting for authentication to sign the EB application with the specimen signature attested by a
Director whose name should be available in MoA e) Obtaining sewer and water connections
3 Site plan with marking of metering point with security arrangement
In Tamil Nadu, the water and sewer connections are generally provided by the concerned corporations, municipalities,
3 An undertaking that (i) the company agrees to provide the metering point as per Board norms (within 30 mtrs of Town Panchayats and Village Panchayats except in Chennai City, where they are provided by Chennai Metro Water Supply
main gate) and that (ii) the company agree to abide by the terms & conditions of power supply and Sewerage Board (CMWSSB). Sewer and Water connection charges can be calculated by the applicant themselves
• Electrical Safety Certificate based on the built up area and category of the building as per prescribed in the application form.
Investors are required to obtain Electrical Safety Certificate from Chief Electrical Inspector (CEI) for new electrical Step Process Flow Time frame
Installations, depending on the voltage class and capacity of the proposed additions or alternations. 1 Filled-up Application with necessary enclosures should One day
Basic documents required be submitted only at the Registration counter
functioning at Head Office of CMWSSB, No.1, Pumping
3 Schematic & sectional drawings signed by the Electrical Contractor Station Road, Chintadripet, Chennai - 600 002. for
3 Site plan Chennai City and for other areas, the respective local
body offices
3 Transformer Structure, Sub Station, Power House Layout, earthing arrangements
2 Sewer and Water connection charges can be calculated NA
3 Single Line Electrical Schematic Layouts for Transformer, generator, switch boards, etc.
by the applicant themselves based on the built up area
3Physical layouts of factory showing location of motors, switchboards, etc. and category of the building
3 Name, address, telephone number of Chairman / Managing Director / Directors and Authorized signatory
with a copy of the Memorandum and Articles of Association
3 Fire fighting measures should also be shown in the electrical drawings

56 57
 3 The official in charge in the Registration Counter will Within 1 week on receipt of the Basic documents required
recommend to the bank by endorsing the applicant's application
3 Signature of Occupier should be obtained in all the drawings
filled up challan to accept the connection charges from
the applicant whose application is found to be in order 3 A write up on labour welfare and labour safety measures
4 Remittance of Connection Charges Within 10 days of receiving the 3 Detailed information needs to be given if the project involves use of hazardous / inflammable chemicals
recommendation
3 Sufficient number of exits (at a travel distance of not more than 30 metre from the work spot must be provided)
5 Registration of Application Within 1 week of remitting the connection
3 Plans of mezzanine floor Office
charges
3 Plan of location of the machineries should be provided in 1:100 scale
6 An acknowledgement slip recording the registration Within 3 days
No., date etc. will be issued to the applicant 3 Installation details pertaining to compressor and utility pump and cooling tower
7 Sanctioning of application - On receipt of registered Within 7 days from the date of registration 3 E.O.T. Cranes should be provided with the safety provisions as prescribed in the rule 55A (4A) of the Tamil Nadu
application. Area Engineer will sanction the service Factories Rules, 1950
connection
3 Canteen as per the standards prescribed in the rules 65 & 66 of the Tamil Nadu Factories Rules, 1950
8 Effecting water and sewer connections Service connection shall be effected within 30 days
3 The detailed plan of the store shed and location of the same
from the date of registration
Further details are available at http://www.chennaimetrowater.com/index.htm. g) Registration under Boilers Act, 1923
f) Registration under Factories Act, 1948 The Tamil Nadu Directorate is the enforcing authority of the Boilers Act, 1923, for the safe operation of the boilers.
Investors are required to provide full details of boilers as prescribed form for registration.
Building plan and plant machinery layout needs to be complied as per Factories Act, 1948. Investors need to apply for
Further details are available at http://www.boilers.tn.gov.in/index.html.
registration and grant of license to verify health, safety & welfare of workers. The license will be issued after inspection
of a factory by Directorate of Industrial Safety and Health.
Step Process Flow Time frame
1 Form along with enclosures to be filed with One day
Jurisdictional factory inspector
2 All such applications are scrutinized at the level of Within 2 weeks of making application
district Dy. Chief Inspector of Factories
3 Passing off the application to the factory Inspector for Within 2 weeks of completion of scrutiny
Inspection
4 The factory premises is inspected by the Chief Within 3 weeks or stipulated time by the
Inspector of Factories or by Dy. Chief Inspector of inspecting authority
Factories or Inspector of Factories
5 Grant of Factory License Within 2 to 3 months
Note: The License is valid upto 31st December of the year in which it has been granted.

58 59
 3 The official in charge in the Registration Counter will Within 1 week on receipt of the Basic documents required
recommend to the bank by endorsing the applicant's application
3 Signature of Occupier should be obtained in all the drawings
filled up challan to accept the connection charges from
the applicant whose application is found to be in order 3 A write up on labour welfare and labour safety measures
4 Remittance of Connection Charges Within 10 days of receiving the 3 Detailed information needs to be given if the project involves use of hazardous / inflammable chemicals
recommendation
3 Sufficient number of exits (at a travel distance of not more than 30 metre from the work spot must be provided)
5 Registration of Application Within 1 week of remitting the connection
3 Plans of mezzanine floor Office
charges
3 Plan of location of the machineries should be provided in 1:100 scale
6 An acknowledgement slip recording the registration Within 3 days
No., date etc. will be issued to the applicant 3 Installation details pertaining to compressor and utility pump and cooling tower
7 Sanctioning of application - On receipt of registered Within 7 days from the date of registration 3 E.O.T. Cranes should be provided with the safety provisions as prescribed in the rule 55A (4A) of the Tamil Nadu
application. Area Engineer will sanction the service Factories Rules, 1950
connection
3 Canteen as per the standards prescribed in the rules 65 & 66 of the Tamil Nadu Factories Rules, 1950
8 Effecting water and sewer connections Service connection shall be effected within 30 days
3 The detailed plan of the store shed and location of the same
from the date of registration
Further details are available at http://www.chennaimetrowater.com/index.htm. g) Registration under Boilers Act, 1923
f) Registration under Factories Act, 1948 The Tamil Nadu Directorate is the enforcing authority of the Boilers Act, 1923, for the safe operation of the boilers.
Investors are required to provide full details of boilers as prescribed form for registration.
Building plan and plant machinery layout needs to be complied as per Factories Act, 1948. Investors need to apply for
Further details are available at http://www.boilers.tn.gov.in/index.html.
registration and grant of license to verify health, safety & welfare of workers. The license will be issued after inspection
of a factory by Directorate of Industrial Safety and Health.
Step Process Flow Time frame
1 Form along with enclosures to be filed with One day
Jurisdictional factory inspector
2 All such applications are scrutinized at the level of Within 2 weeks of making application
district Dy. Chief Inspector of Factories
3 Passing off the application to the factory Inspector for Within 2 weeks of completion of scrutiny
Inspection
4 The factory premises is inspected by the Chief Within 3 weeks or stipulated time by the
Inspector of Factories or by Dy. Chief Inspector of inspecting authority
Factories or Inspector of Factories
5 Grant of Factory License Within 2 to 3 months
Note: The License is valid upto 31st December of the year in which it has been granted.

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E. Labor Law compliance
Institutional support
for investors
There are various legislations under Labour Law in India. The list below is the illustrative list of Acts which may applicable
for investors to set up a factory. Investors are required to register or comply the prescribed provisions of each Acts, and
draft company policy.
Name of the Act Regulation
The Tamil Nadu Shops and The provides for the opening and closing hours of shops and establishments and A. Key investment facilitators
Establishment Act, 1947 provision of weekly holiday with wages.
• Guidance Bureau (Tamil Nadu Industrial Guidance & Export Promotion Bureau)
The Contract Labour (Regulation This Act regulates the employment of contract labour and abolishes the system
and Abolition) Act, 1970 of contract labour in certain circumstances. Tamil Nadu Industrial Guidance & Export Promotion Bureau, shortly called as "Guidance Bureau", was started by the State
Government in the year 1992. The primary objective of Guidance Bureau is to attract major industrial projects into Tamil
The Inter-State Migrant Workmen This Act regulates the employment of interstate migrant workers and to provide Nadu and to provide Single Window facilitation to such projects.
(Regulation of Employment and for regulation of their conditions of service.
Conditions of Service) Act, 1979 Guidance Bureau is the first point of contact for investors. Guidance Bureau is mandated to provide all necessary
information with prospective investors and act as the facilitator for Single Window Mechanism. Guidance Bureau is the
The Industrial Employment The Act requires employers of industrial establishments to define conditions of "Documentation and Clearance Center" to accept common application form for obtaining all pre-project state-level
(Standing Orders) Act, 1946 employment of 16 workers. approvals and infrastructure support.
The Trade Unions Act, 1926 The Act provides for the registration of trade unions and lays down the law Functions of Guidance Bureau
relating to registration of trade unions.
q First point of contact for investors – single window facilitation office
The Payment of Gratuity Act, 1972 The Act provides for the payment of gratuity to the employees. Gratuity is paid q The designated investment promotion office
to an employee on 17 superannuation / retirement or resignation, if he / she has
q Single point of contact for investors
put in a continuous service for a period of not less than five years.
q Single Window facilitation to get State-level approvals
The Payment of Bonus Act, 1965 The Act provides for the payment of bonus to persons employed, on the basis of
profit or production or productivity. Since inception, during the period 1992 - April 2014, Guidance Bureau successfully attracted 290 major
investment proposals with an aggregate investment exceeding USD 20 billion. This includes a number of projects of
The Equal Remuneration Act, 1976 The Act provides for the payment of equal remuneration to men and women
Fortune 500 companies like FORD, Hyundai, Daimler, Nissan, Renault, BMW, Michelin, DELL, Flextronics, Foxconn,
workers and for the prevention of discrimination on the ground of sex against
Visteon, Delphi, Samsung, Sanmina-SCI, BASF, Bosch, etc.
women in recruitment for employment and in payment of salary to women
employees. Some major investment proposals successfully attracted by Guidance Bureau are:
The Minimum Wages Act, 1948 The Minimum Wages Act, 1948 provides for fixing minimum rates of wages in Company Products Investment USD million Location
certain employments appended as schedule to Act.
1 Hyundai Motor India Cars 1733 Irungattukottai
The Employees’ Compensation The Act provides for compensation to workers in the event of death or loss of South Korea (3 MoUs) Industrial Park
Act, 1923 earning capacity due to accidents in the course of their employment.
2 Renault and Nissan Cars 1417 Oragadam
Industrial Disputes Act, 1947 The Act specifies the matters for an industrial tribunal. (including expansion) Industrial park

60 61
E. Labor Law compliance
Institutional support
for investors
There are various legislations under Labour Law in India. The list below is the illustrative list of Acts which may applicable
for investors to set up a factory. Investors are required to register or comply the prescribed provisions of each Acts, and
draft company policy.
Name of the Act Regulation
The Tamil Nadu Shops and The provides for the opening and closing hours of shops and establishments and A. Key investment facilitators
Establishment Act, 1947 provision of weekly holiday with wages.
• Guidance Bureau (Tamil Nadu Industrial Guidance & Export Promotion Bureau)
The Contract Labour (Regulation This Act regulates the employment of contract labour and abolishes the system
and Abolition) Act, 1970 of contract labour in certain circumstances. Tamil Nadu Industrial Guidance & Export Promotion Bureau, shortly called as "Guidance Bureau", was started by the State
Government in the year 1992. The primary objective of Guidance Bureau is to attract major industrial projects into Tamil
The Inter-State Migrant Workmen This Act regulates the employment of interstate migrant workers and to provide Nadu and to provide Single Window facilitation to such projects.
(Regulation of Employment and for regulation of their conditions of service.
Conditions of Service) Act, 1979 Guidance Bureau is the first point of contact for investors. Guidance Bureau is mandated to provide all necessary
information with prospective investors and act as the facilitator for Single Window Mechanism. Guidance Bureau is the
The Industrial Employment The Act requires employers of industrial establishments to define conditions of "Documentation and Clearance Center" to accept common application form for obtaining all pre-project state-level
(Standing Orders) Act, 1946 employment of 16 workers. approvals and infrastructure support.
The Trade Unions Act, 1926 The Act provides for the registration of trade unions and lays down the law Functions of Guidance Bureau
relating to registration of trade unions.
q First point of contact for investors – single window facilitation office
The Payment of Gratuity Act, 1972 The Act provides for the payment of gratuity to the employees. Gratuity is paid q The designated investment promotion office
to an employee on 17 superannuation / retirement or resignation, if he / she has
q Single point of contact for investors
put in a continuous service for a period of not less than five years.
q Single Window facilitation to get State-level approvals
The Payment of Bonus Act, 1965 The Act provides for the payment of bonus to persons employed, on the basis of
profit or production or productivity. Since inception, during the period 1992 - April 2014, Guidance Bureau successfully attracted 290 major
investment proposals with an aggregate investment exceeding USD 20 billion. This includes a number of projects of
The Equal Remuneration Act, 1976 The Act provides for the payment of equal remuneration to men and women
Fortune 500 companies like FORD, Hyundai, Daimler, Nissan, Renault, BMW, Michelin, DELL, Flextronics, Foxconn,
workers and for the prevention of discrimination on the ground of sex against
Visteon, Delphi, Samsung, Sanmina-SCI, BASF, Bosch, etc.
women in recruitment for employment and in payment of salary to women
employees. Some major investment proposals successfully attracted by Guidance Bureau are:
The Minimum Wages Act, 1948 The Minimum Wages Act, 1948 provides for fixing minimum rates of wages in Company Products Investment USD million Location
certain employments appended as schedule to Act.
1 Hyundai Motor India Cars 1733 Irungattukottai
The Employees’ Compensation The Act provides for compensation to workers in the event of death or loss of South Korea (3 MoUs) Industrial Park
Act, 1923 earning capacity due to accidents in the course of their employment.
2 Renault and Nissan Cars 1417 Oragadam
Industrial Disputes Act, 1947 The Act specifies the matters for an industrial tribunal. (including expansion) Industrial park

60 61
 Company Products Investment USD million Location Industrial projects seeking Single Window clearance will have to fill up the Common Application Form (including TNPCB
forms as annexure) and file with Guidance Bureau, the designated Documentation 85 Clearance Centre (DCC).
3 Michelin Tyres Tyres 667 Thervoykandigai
Industrial Park Guidance Bureau receives the common application form duly filled in from the investors. After scrutiny, Guidance Bureau
forwards the application form along with the fees payable to the concerned agencies with a request to process 86 offer
4 Indo Rama Group PTA, PET and Synthetic 750 Ennore & Coimbatore
within 15 days, their remarks / objections, if any, to give the approval. The Single Window Nodal Officers' Screening
fibres
Committee meeting will be held to scrutinize the application form to check the legal compliance of all parameters of all
5 Ford, USA Cars 700 Maraimalai Nagar statutory agencies by the proposed project. If the proposal is found to comply will all the parameters of statutory
6 Ashok Leyland – Nissan Commercial Vehicles 689 Industrial Park, agencies, then, the Single Window Committee will resolve to issue "Composite In-Principle Approval". Also, Guidance
Pillaipakkam Bureau will monitor status of actual approvals and follow-up with the concerned statutory agencies.
7 Harsha Group Fibre glass, float glass, 683 SIPCOT Thervoykandigai • SIPCOT(State Industries Promotion Corporation)
Industrial Park
SIPCOT is established in 1971 to develop, maintain and manage Industrial Complexes and Parks with necessary
8 Daimler India Commercial Commercial Vehicles 667 SIPCOT Industrial Park,
infrastructures for investors. SIPCOT so far 20 Industrial Complexes/Parks including 6 SEZ in 12 Districts across the State
Vehicles Pvt Ltd Oragadam
with about 29,500 acres of land acquired for the purpose. SIPCOT is in the process of land acquisition for expansion of
9 Ascendas Integrated Integrated industrial park 583 Chennai existing Industrial Park and establishment of the new Industrial Complexes.
Industrial Park
Also, SIPCOT is the nodal agency for implementing and monitoring the structured package of assistance scheme under
10 ADD Industrial Park Textile and industrial park 517 Coimbatore
various incentives.
11 BGR Energy Group Turbines, generators 388 Kancheepuram District
and boilers The list of SIPCOT Industrial Complexes
12 Apollo Tyres Tyres 350 Oragadam Industrial park 1 BARGUR 11 IRUNGATTUKOTTAI
13 Moser Baer Photovoltaic cells 333 Oragadam Hi Tech SEZ 2 CHEYYAR 12 SIRUSERI
14 J.K Tyre & Industries Tyres 250 Sriperumpudur
3 CUDDALORE 13 SRIPERUMPUDUR
15 India Yamaha Motor Two Wheelers 250 Vallam Vadagal
Company Limited Industrial Park 4 GUMMIDIPOONDI 14 THERVOYKANDIGAI
5 HOSUR 15 MAPPEDU
Single window facilitation
At present, investors setting up industrial projects will have to obtain the following pre - project clearances:- 6 MANAMADURAI 16 PILLAIPAKKAM
• Planning Permission 7 NILAKOTTAI 17 PERUNDURAI
• Fire Service clearance 8 PUDUKOTTAI 18 GANGAIKONDAN
• Environmental Clearance from TNPCB
9 RANIPET 19 ORAGADAM
• Water supply
10 THOOTHUKUDI 20 VALLAM-VADAGAL
• Power supply from TNEB
• Electrical Safety Certificate from CEIG • TIDCO (Tamil Nadu Industrial Development Corporation Limited)
• Approval under Factories Act
TIDCO was established in 1965 to promote the large and medium industries and infrastructure projects in
• Registration under Boilers Act association with private sectors.

62 63
 Company Products Investment USD million Location Industrial projects seeking Single Window clearance will have to fill up the Common Application Form (including TNPCB
forms as annexure) and file with Guidance Bureau, the designated Documentation 85 Clearance Centre (DCC).
3 Michelin Tyres Tyres 667 Thervoykandigai
Industrial Park Guidance Bureau receives the common application form duly filled in from the investors. After scrutiny, Guidance Bureau
forwards the application form along with the fees payable to the concerned agencies with a request to process 86 offer
4 Indo Rama Group PTA, PET and Synthetic 750 Ennore & Coimbatore
within 15 days, their remarks / objections, if any, to give the approval. The Single Window Nodal Officers' Screening
fibres
Committee meeting will be held to scrutinize the application form to check the legal compliance of all parameters of all
5 Ford, USA Cars 700 Maraimalai Nagar statutory agencies by the proposed project. If the proposal is found to comply will all the parameters of statutory
6 Ashok Leyland – Nissan Commercial Vehicles 689 Industrial Park, agencies, then, the Single Window Committee will resolve to issue "Composite In-Principle Approval". Also, Guidance
Pillaipakkam Bureau will monitor status of actual approvals and follow-up with the concerned statutory agencies.
7 Harsha Group Fibre glass, float glass, 683 SIPCOT Thervoykandigai • SIPCOT(State Industries Promotion Corporation)
Industrial Park
SIPCOT is established in 1971 to develop, maintain and manage Industrial Complexes and Parks with necessary
8 Daimler India Commercial Commercial Vehicles 667 SIPCOT Industrial Park,
infrastructures for investors. SIPCOT so far 20 Industrial Complexes/Parks including 6 SEZ in 12 Districts across the State
Vehicles Pvt Ltd Oragadam
with about 29,500 acres of land acquired for the purpose. SIPCOT is in the process of land acquisition for expansion of
9 Ascendas Integrated Integrated industrial park 583 Chennai existing Industrial Park and establishment of the new Industrial Complexes.
Industrial Park
Also, SIPCOT is the nodal agency for implementing and monitoring the structured package of assistance scheme under
10 ADD Industrial Park Textile and industrial park 517 Coimbatore
various incentives.
11 BGR Energy Group Turbines, generators 388 Kancheepuram District
and boilers The list of SIPCOT Industrial Complexes
12 Apollo Tyres Tyres 350 Oragadam Industrial park 1 BARGUR 11 IRUNGATTUKOTTAI
13 Moser Baer Photovoltaic cells 333 Oragadam Hi Tech SEZ 2 CHEYYAR 12 SIRUSERI
14 J.K Tyre & Industries Tyres 250 Sriperumpudur
3 CUDDALORE 13 SRIPERUMPUDUR
15 India Yamaha Motor Two Wheelers 250 Vallam Vadagal
Company Limited Industrial Park 4 GUMMIDIPOONDI 14 THERVOYKANDIGAI
5 HOSUR 15 MAPPEDU
Single window facilitation
At present, investors setting up industrial projects will have to obtain the following pre - project clearances:- 6 MANAMADURAI 16 PILLAIPAKKAM
• Planning Permission 7 NILAKOTTAI 17 PERUNDURAI
• Fire Service clearance 8 PUDUKOTTAI 18 GANGAIKONDAN
• Environmental Clearance from TNPCB
9 RANIPET 19 ORAGADAM
• Water supply
10 THOOTHUKUDI 20 VALLAM-VADAGAL
• Power supply from TNEB
• Electrical Safety Certificate from CEIG • TIDCO (Tamil Nadu Industrial Development Corporation Limited)
• Approval under Factories Act
TIDCO was established in 1965 to promote the large and medium industries and infrastructure projects in
• Registration under Boilers Act association with private sectors.

62 63
TIDCO has promoted several joint ventures for manufacturing projects as well as development of industrial complexes. B. Institutional framework
Some of achievements are shown in the table below.
Tamil Nadu has robust institutional mechanism to facilitate investments. It is important for investors to understand to
Joint Venture Partner Industry whom to approach for the future investment.
Titan Industries Ltd Questar Investments Limited Watch manufacturing • Industries Department
(TATA Group companies)
Industries Department is the department which takes the responsibility for industry development in Tamil Nadu. The
Mahindra World City Mahindra World City Developers Limited Industrial complex Department formulates and implements the industry polices to achieve the robust growth of the State.
Ascendas IT Park (Chennai) Ltd Ascendas (India) Private Limited IT park Industries Department organizes the various Government Undertakings related to industry.
Tamil Nadu Road Development IL&FS Development of highway system Industries Department SIPCOT (State Industries Promotion Corporation)
Company Limited
TIIC (Tamil Nadu Industrial Investment Corporation Limited )
TANFAC Industries Ltd Aditya Birla Group Chemical complex
Tamil Nadu Newsprint and Papers Limited
Cheslind Textiles Ltd Thiru T.N. Aravind Reddy & Associates Manufacturing of combed cotton
yarns Guidance Bureau (Tamil Nadu Industrial Cuidance and Export Promotion Bureau)
SKM Egg Products Export (India) Ltd. SKM Animal Feeds and Foods Egg processing unit TIDCO (Tamil Nadu Industrial Development Corporation Limited)
(India) Limited Tamil Nadu Cements Corporation Limited
• TIIC (Tamil Nadu Industrial Investment Corporation Limited) Tamil Nadu Salt Corporation Limited
TIIC is incorporated in 1949 as a pioneer among State Financial Corporations in India. TIIC provides financial assistance Tamil Nadu Magnesite Limited
to Small Scale and Medium Scale Industrial Units in various forms such as subsidy, term loan, soft loan, lease financing Tamil Nadu Industrial Explosives Limited
for machinery/equipment etc. TIIC so far assisted 1,15,806 units with a cumulative sanctions of approx. USD 1,936
million (as of 31.03.2014). TAMIN (Tamil Nadu Minerals Limited)
• ELCOT (Electronics Corporation of Tamil Nadu Limited) Department of Geology and Mining
ELCOT comes under Information Technology Department. ELCOT is the Nodal Agency for information and Department of Sugar
communication technology projects. ELCOT was established to promote electronic industries in Tamil Nadu to make the
State the premier IT destination in India. • Micro, Small and Medium Enterprises Department
ELCOT provides support to IT entrepreneurs and promotes joint ventures in electronics, communication and IT, and The Government recognizes MSME contribution to the economy development is significant.
develops infrastructure such as IT Parks and communication backbone. ELCOT is also involved in various e-governance Under the Department, The Commissionerate of Industries and Commerce acts as the State level agency for the
and computer education initiatives. development of industries in general and micro, small and medium enterprises in particular. There are District Industries
• TANSIDCO (Tamil Nadu Small Industries Development Corporation Limited) Centres (DICs) functioning in all the 32 Districts. In Chennai, the Regional Joint Director heads the District Industries
Centre.
TANSIDCO was established to promote the development of Small Scale Industries. TANSIDCO develops industrial estates
with infrastructure facilities and provision of work sheds and plots. Also, TANSIDCO implements Raw material supply These Centres provide a variety of services to the entrepreneurs, like, identification of activities, the preparation of
scheme, Marketing Assistance scheme, Export assistant scheme to support Small Scale Industries. project profiles, obtaining financial assistance from various financial institutions, statutory clearances from
Government Departments, sanction and disbursement of eligible subsidies.

64 65
TIDCO has promoted several joint ventures for manufacturing projects as well as development of industrial complexes. B. Institutional framework
Some of achievements are shown in the table below.
Tamil Nadu has robust institutional mechanism to facilitate investments. It is important for investors to understand to
Joint Venture Partner Industry whom to approach for the future investment.
Titan Industries Ltd Questar Investments Limited Watch manufacturing • Industries Department
(TATA Group companies)
Industries Department is the department which takes the responsibility for industry development in Tamil Nadu. The
Mahindra World City Mahindra World City Developers Limited Industrial complex Department formulates and implements the industry polices to achieve the robust growth of the State.
Ascendas IT Park (Chennai) Ltd Ascendas (India) Private Limited IT park Industries Department organizes the various Government Undertakings related to industry.
Tamil Nadu Road Development IL&FS Development of highway system Industries Department SIPCOT (State Industries Promotion Corporation)
Company Limited
TIIC (Tamil Nadu Industrial Investment Corporation Limited )
TANFAC Industries Ltd Aditya Birla Group Chemical complex
Tamil Nadu Newsprint and Papers Limited
Cheslind Textiles Ltd Thiru T.N. Aravind Reddy & Associates Manufacturing of combed cotton
yarns Guidance Bureau (Tamil Nadu Industrial Cuidance and Export Promotion Bureau)
SKM Egg Products Export (India) Ltd. SKM Animal Feeds and Foods Egg processing unit TIDCO (Tamil Nadu Industrial Development Corporation Limited)
(India) Limited Tamil Nadu Cements Corporation Limited
• TIIC (Tamil Nadu Industrial Investment Corporation Limited) Tamil Nadu Salt Corporation Limited
TIIC is incorporated in 1949 as a pioneer among State Financial Corporations in India. TIIC provides financial assistance Tamil Nadu Magnesite Limited
to Small Scale and Medium Scale Industrial Units in various forms such as subsidy, term loan, soft loan, lease financing Tamil Nadu Industrial Explosives Limited
for machinery/equipment etc. TIIC so far assisted 1,15,806 units with a cumulative sanctions of approx. USD 1,936
million (as of 31.03.2014). TAMIN (Tamil Nadu Minerals Limited)
• ELCOT (Electronics Corporation of Tamil Nadu Limited) Department of Geology and Mining
ELCOT comes under Information Technology Department. ELCOT is the Nodal Agency for information and Department of Sugar
communication technology projects. ELCOT was established to promote electronic industries in Tamil Nadu to make the
State the premier IT destination in India. • Micro, Small and Medium Enterprises Department
ELCOT provides support to IT entrepreneurs and promotes joint ventures in electronics, communication and IT, and The Government recognizes MSME contribution to the economy development is significant.
develops infrastructure such as IT Parks and communication backbone. ELCOT is also involved in various e-governance Under the Department, The Commissionerate of Industries and Commerce acts as the State level agency for the
and computer education initiatives. development of industries in general and micro, small and medium enterprises in particular. There are District Industries
• TANSIDCO (Tamil Nadu Small Industries Development Corporation Limited) Centres (DICs) functioning in all the 32 Districts. In Chennai, the Regional Joint Director heads the District Industries
Centre.
TANSIDCO was established to promote the development of Small Scale Industries. TANSIDCO develops industrial estates
with infrastructure facilities and provision of work sheds and plots. Also, TANSIDCO implements Raw material supply These Centres provide a variety of services to the entrepreneurs, like, identification of activities, the preparation of
scheme, Marketing Assistance scheme, Export assistant scheme to support Small Scale Industries. project profiles, obtaining financial assistance from various financial institutions, statutory clearances from
Government Departments, sanction and disbursement of eligible subsidies.

64 65
Appendix 1 A 21 Petrochemical based processing (processing other than cracking & reformation and not covered under the
complexes)
The list of 39 industries requiring prior environmental clearance 22 Synthetic organic chemicals industry (dyes & dye intermediates; bulk drugs and intermediates excluding drug
formulations; synthetic rubbers; basis organic chemicals, other synthetic organic chemicals and chemical
No Category of Industry intermediates)
1 Mining of minerals 23 Distilleries
2 Slurry pipelines (coal lignite and other ores) passing through national parks/sanctuaries/coral reefs, ecologically 24 Integrated paint industry
sensitive ares
25 Pulp & paper industry excluding manufacturing of paper from waste paper and manufacture of paper from ready
3 Offshore and on shore oil and gas exploration, development & production pulp without bleaching
4 River valley projects 26 Sugar industry
5 Thermal power plants 27 Oil & gas transportation pipe line (crude and refinery / petrochemical products), passing through national
6 Nuclear power projects and processing of nuclear fuel parks/sanctuaries/coral reefs/ecologically sensitive areas including LNG terminal
7 Coal washeries 28 Isolated storage & handling of hazardous chemicals
8 Mineral beneficiation 29 Air ports
9 Metallurgical industries (ferrous & non ferrous) 30 All ship breaking yards including ship breaking units
10 Cement plants 31 Industrial estates/parks/complexes areas, export processing Zones (EPZs), Special Economic Zones (SEZs), Biotech
Parks, Leather Complexes
11 Petroleum refining industry
32 Common hazardous waste management, storage and disposal facilities (TSDFs)
12 Coke oven plants
33 Ports, harbours, break waters, dredging
13 Asbestos milling and asbestos based products
34 Highways
14 Chlor-alkali industry
35 Aerial ropeways
15 Soda ash industry
36 Common effluent plants (CETPs)
16 Leather/ skin / hide processing industry
37 Common municipal solid waste management facilities (CMSWMF)
17 Chemical fertilizers
38 Building and construction projects
18 Pesticides industry and pesticide specific intermediates (excluding formulations)
39 Township and area development projects
19 Petro-chemical complexes (industries based on processing of petroleum fractions & natural gas and/or reforming
to aromatics Note : As per Environment Impact Assessment (EIA Notification), 2006
20 Manmade fibers manufacturing

66 67
Appendix 1 A 21 Petrochemical based processing (processing other than cracking & reformation and not covered under the
complexes)
The list of 39 industries requiring prior environmental clearance 22 Synthetic organic chemicals industry (dyes & dye intermediates; bulk drugs and intermediates excluding drug
formulations; synthetic rubbers; basis organic chemicals, other synthetic organic chemicals and chemical
No Category of Industry intermediates)
1 Mining of minerals 23 Distilleries
2 Slurry pipelines (coal lignite and other ores) passing through national parks/sanctuaries/coral reefs, ecologically 24 Integrated paint industry
sensitive ares
25 Pulp & paper industry excluding manufacturing of paper from waste paper and manufacture of paper from ready
3 Offshore and on shore oil and gas exploration, development & production pulp without bleaching
4 River valley projects 26 Sugar industry
5 Thermal power plants 27 Oil & gas transportation pipe line (crude and refinery / petrochemical products), passing through national
6 Nuclear power projects and processing of nuclear fuel parks/sanctuaries/coral reefs/ecologically sensitive areas including LNG terminal
7 Coal washeries 28 Isolated storage & handling of hazardous chemicals
8 Mineral beneficiation 29 Air ports
9 Metallurgical industries (ferrous & non ferrous) 30 All ship breaking yards including ship breaking units
10 Cement plants 31 Industrial estates/parks/complexes areas, export processing Zones (EPZs), Special Economic Zones (SEZs), Biotech
Parks, Leather Complexes
11 Petroleum refining industry
32 Common hazardous waste management, storage and disposal facilities (TSDFs)
12 Coke oven plants
33 Ports, harbours, break waters, dredging
13 Asbestos milling and asbestos based products
34 Highways
14 Chlor-alkali industry
35 Aerial ropeways
15 Soda ash industry
36 Common effluent plants (CETPs)
16 Leather/ skin / hide processing industry
37 Common municipal solid waste management facilities (CMSWMF)
17 Chemical fertilizers
38 Building and construction projects
18 Pesticides industry and pesticide specific intermediates (excluding formulations)
39 Township and area development projects
19 Petro-chemical complexes (industries based on processing of petroleum fractions & natural gas and/or reforming
to aromatics Note : As per Environment Impact Assessment (EIA Notification), 2006
20 Manmade fibers manufacturing

66 67
Appendix 1 B Highways and Thiru Rajeev Ranjan IAS., 91-44-25670959 [email protected] Highways and Minor
Minor Ports Principal Secretary to Ports Department
Appendix 1 B - Contact details of key Government Agencies and Department Government Secretariat,
Chennai-600009
Departments - Government of Tamil Nadu
Information Thiru T.K. Ramachandran IAS., 91-44-25670783 [email protected] Information Technology
Technology Principal Secretary to Department Secretariat,
Department Name and Designation Direct Contact E-Mail Address
Department Government Chennai 600 009
of the concerned officer
Micro, Small and Thiru Kumar Jayant, IAS., 91-44-25671476 [email protected] Micro , Small and
Government of Thiru K. Gnanadesikan, IAS., 91-44-25671555 [email protected] Chief Secretary to
Medium Enterprises Secretary to Government Medium Enterprises
Tamil Nadu Chief Secretary to Government
Government, Public Department Department Department (formerly
Government of Tamil Nadu Secretariat, Small Industries
Chennai 600 009 Department) Secretariat,
Chennai-600009
Industries Thiru C.V. Sankar, IAS., 91-44-25671383 [email protected] Industries Department
Transport Dr. T. Prabhakara Rao, IAS., 91-44-25671475 [email protected] Transport Department
Department Additional Chief Secretary Secretariat,
to Government Chennai 600 009 Department Additional Chief Secretary Secretariat,
to Government Chennai - 600009
Industries Dr. Pingale Vijay Maruti, IAS., 91-44-25677607 [email protected] Industries Department
Madras Export Shri A.K.Choudhary, I.T.S., 91-44-22628218 [email protected] MEPZ Special Economic
Department Joint Secretary to the Secretariat,
Government Chennai 600 009 Processing Zone Development Commissioner, Zone, Administrative
(MEPZ) Building, N.H.45,
Tamil Nadu Thiru M.Velmurugan, IES., 91-44-28553118 directorguidance@ 19-A, Rukmani Tambaram,
Industrial Guidance Executive Vice Chairman gmail.com Lakshmipathy Road, Chennai- 600 045
& Export Promotion Egmore,
Tamilnadu Pollution Thiru K. Skandan, IAS., 91-44-22353134- Tamil Nadu Pollution
Bureau, (Single Chennai 600 008
Control Board Additional Chief Secretary 40 Control Board
window office)
76, Mount Salai, Guindy,
Agriculture Thiru Rajesh Lakhoni, IAS., 91-44-25674482 [email protected] Agriculture Department Chennai - 600 032
Department Agricultural Production Secretariat,
Tamil Nadu Er. T.V.K. Murugan, B.E., 91-44-28520496 cecoml@ 2nd Floor, Eastern Wing,
Commissioner & Principal Chennai 600 009
Electricity Board Chief Engineer/Commercial tnebnet.org NPKRR Maaligai,
Secretary to Government
Electricity Avenue,
Energy Department Thiru Rajesh Lakhoni IAS., 91-44-25671496 [email protected] Energy Department 144,Anna Salai,
Secretary Secretariat, Chennai - 600 002.
Chennai-600009
SIPCOT Dr. R. Selvaraj, IAS., 91-044-28554514 sipcot@ State Industries
Handlooms, Thiru Harmander Singh IAS. 91-44-25671623, [email protected] Handlooms, Handicrafts, Managing Director md3.vsnl.net.in Promotion Corporation
Handicrafts, Textiles Principal Secretary to Textiles and Khadi Of Tamil Nadu Ltd.
and Khadi Government Department Secretariat, 19-A, Rukmani
Department Chennai-600009 Lakshmipathy Road,
Egmore,
Chennai 600 008

68 69
Appendix 1 B Highways and Thiru Rajeev Ranjan IAS., 91-44-25670959 [email protected] Highways and Minor
Minor Ports Principal Secretary to Ports Department
Appendix 1 B - Contact details of key Government Agencies and Department Government Secretariat,
Chennai-600009
Departments - Government of Tamil Nadu
Information Thiru T.K. Ramachandran IAS., 91-44-25670783 [email protected] Information Technology
Technology Principal Secretary to Department Secretariat,
Department Name and Designation Direct Contact E-Mail Address
Department Government Chennai 600 009
of the concerned officer
Micro, Small and Thiru Kumar Jayant, IAS., 91-44-25671476 [email protected] Micro , Small and
Government of Thiru K. Gnanadesikan, IAS., 91-44-25671555 [email protected] Chief Secretary to
Medium Enterprises Secretary to Government Medium Enterprises
Tamil Nadu Chief Secretary to Government
Government, Public Department Department Department (formerly
Government of Tamil Nadu Secretariat, Small Industries
Chennai 600 009 Department) Secretariat,
Chennai-600009
Industries Thiru C.V. Sankar, IAS., 91-44-25671383 [email protected] Industries Department
Transport Dr. T. Prabhakara Rao, IAS., 91-44-25671475 [email protected] Transport Department
Department Additional Chief Secretary Secretariat,
to Government Chennai 600 009 Department Additional Chief Secretary Secretariat,
to Government Chennai - 600009
Industries Dr. Pingale Vijay Maruti, IAS., 91-44-25677607 [email protected] Industries Department
Madras Export Shri A.K.Choudhary, I.T.S., 91-44-22628218 [email protected] MEPZ Special Economic
Department Joint Secretary to the Secretariat,
Government Chennai 600 009 Processing Zone Development Commissioner, Zone, Administrative
(MEPZ) Building, N.H.45,
Tamil Nadu Thiru M.Velmurugan, IES., 91-44-28553118 directorguidance@ 19-A, Rukmani Tambaram,
Industrial Guidance Executive Vice Chairman gmail.com Lakshmipathy Road, Chennai- 600 045
& Export Promotion Egmore,
Tamilnadu Pollution Thiru K. Skandan, IAS., 91-44-22353134- Tamil Nadu Pollution
Bureau, (Single Chennai 600 008
Control Board Additional Chief Secretary 40 Control Board
window office)
76, Mount Salai, Guindy,
Agriculture Thiru Rajesh Lakhoni, IAS., 91-44-25674482 [email protected] Agriculture Department Chennai - 600 032
Department Agricultural Production Secretariat,
Tamil Nadu Er. T.V.K. Murugan, B.E., 91-44-28520496 cecoml@ 2nd Floor, Eastern Wing,
Commissioner & Principal Chennai 600 009
Electricity Board Chief Engineer/Commercial tnebnet.org NPKRR Maaligai,
Secretary to Government
Electricity Avenue,
Energy Department Thiru Rajesh Lakhoni IAS., 91-44-25671496 [email protected] Energy Department 144,Anna Salai,
Secretary Secretariat, Chennai - 600 002.
Chennai-600009
SIPCOT Dr. R. Selvaraj, IAS., 91-044-28554514 sipcot@ State Industries
Handlooms, Thiru Harmander Singh IAS. 91-44-25671623, [email protected] Handlooms, Handicrafts, Managing Director md3.vsnl.net.in Promotion Corporation
Handicrafts, Textiles Principal Secretary to Textiles and Khadi Of Tamil Nadu Ltd.
and Khadi Government Department Secretariat, 19-A, Rukmani
Department Chennai-600009 Lakshmipathy Road,
Egmore,
Chennai 600 008

68 69
Department Name and Designation Direct Contact E-Mail Address
Appendix 1 C
of the concerned officer
TIDCO Thiru C.V. Sankar, IAS., 91-44-28554421 [email protected] Tamil Nadu Industrial Looking at new horizon – Budget Analysis 2015
Additional Chief Secretary / Development
Chairman & Managing Corporation Ltd, C. Promoting and incentivizing ‘Make in India’
Director (I/c) 19-A, Rukmini
Lakshmipathy Road, • Income tax on royalties and fee for technical services received by non-residents restored to 10 from 25%
Egmore, • Phased reduction of corporate tax rate from 30 to 25% over next four years
Chennai - 600 008.
• Reduction in basic customs duty rate on specific items of inputs to address inverted duty structure concerns and to
TNIDB Thiru S. Krishnan, IAS., 91-44-25674310 [email protected] Tamil Nadu Infrastructure reduce manufacturing costs
Chief Executive Officer Development Board,
O/o The Principal • Reiteration of government’s resolve of rolling out GST from 1 April 2016 and reiteration of presenting the Land
Secretary to Government Acquisition Ordinance to current session of Parliament to enact it
(Planning and • Threshold for weighted deduction from corporate tax for wages of new workmen reduced from 100 to 50; benefit
Development), extended to even non corporate taxpayers
Fort St. George,
• Extension in excise duty exemption and concessions for manufacture of cleaner technology vehicles (i.e. hybrid and
Chennai -600 009.
electrically operated vehicles)
TANGEDCO Dr. M. Saikumar, IAS., 91-44-28521300 chairman@ Tamil Nadu Generation
• Special additional duty exemption on import of raw materials for use in manufacture of specific goods (ITA bound
Chairman tnebnet.org and Distribution
goods, LED lights, pacemakers)
Corporation Limited,
NPKRR Maaligai, D. Ensuring the much-needed ease of doing business in India
144,Anna Salai,
Chennai - 600 002. • Principle of composite cap (FDI + FPI) introduced to simplify calculation of foreign investment limit in sectors where
FDI cap apply (e.g retail, banking, brownfield pharma, etc.)
TANTRANSCO Dr. M. Saikumar, IAS., 91-44-28521300 chairman@ Tamil Nadu Transmission
Chairman tnebnet.org Corporation Limited, • Powers to make or amend rules relating to foreign investments and outbound investments to vest with government,
NPKRR Maaligai, being a policy matter; this simplification to ensure a faster policymaking process; requires a legislative amendment
144,Anna Salai, in Foreign Exchange Management Act (FEMA)
Chennai - 600 002. • Setting up business in India to be made easy by prescribing simple compliance with a pre-existing regulatory
DTCP Thiru R. Kirlosh Kumar, IAS., 91-44-2852 1115 [email protected] Directorate of Town and mechanism instead of prior multiple approvals permissions; expert committee to be set up to examine and make
Director – Town & Country 91-44-2852 1116 Country Planning, recommendations in this regard
Planning 91-44-28521495 Opposite to LIC,
• Comprehensive Bankruptcy Code of global standards to be brought in year 2015-16
Chengalvarayan Building,
Fourth floor, • Implementation of General Anti Avoidance Rule (GAAR) deferred by two years; GAAR provisions to be applicable
807, Anna Salai, from FY 2017-18 onwards
Chennai - 600 002. • Threshold for specified domestic transactions (domestic transfer pricing provisions) rose from Indian Rupees (INR) 5
CMDA Thiru A. Karthik IAS., 28414355 (D) mscmda@ 1, Gandhi Irwin Road, crore to INR 20 crore.
Member-Secretary 28414855 - tn.gov.in Egmore,
• Advance ruling option for customs, excise and service tax extended to resident firms (including
Ext.210 Chennai – 600 008.
partnership firms, sole proprietorship and one-person companies)
Fax : 28548416

70 71
Department Name and Designation Direct Contact E-Mail Address
Appendix 1 C
of the concerned officer
TIDCO Thiru C.V. Sankar, IAS., 91-44-28554421 [email protected] Tamil Nadu Industrial Looking at new horizon – Budget Analysis 2015
Additional Chief Secretary / Development
Chairman & Managing Corporation Ltd, C. Promoting and incentivizing ‘Make in India’
Director (I/c) 19-A, Rukmini
Lakshmipathy Road, • Income tax on royalties and fee for technical services received by non-residents restored to 10 from 25%
Egmore, • Phased reduction of corporate tax rate from 30 to 25% over next four years
Chennai - 600 008.
• Reduction in basic customs duty rate on specific items of inputs to address inverted duty structure concerns and to
TNIDB Thiru S. Krishnan, IAS., 91-44-25674310 [email protected] Tamil Nadu Infrastructure reduce manufacturing costs
Chief Executive Officer Development Board,
O/o The Principal • Reiteration of government’s resolve of rolling out GST from 1 April 2016 and reiteration of presenting the Land
Secretary to Government Acquisition Ordinance to current session of Parliament to enact it
(Planning and • Threshold for weighted deduction from corporate tax for wages of new workmen reduced from 100 to 50; benefit
Development), extended to even non corporate taxpayers
Fort St. George,
• Extension in excise duty exemption and concessions for manufacture of cleaner technology vehicles (i.e. hybrid and
Chennai -600 009.
electrically operated vehicles)
TANGEDCO Dr. M. Saikumar, IAS., 91-44-28521300 chairman@ Tamil Nadu Generation
• Special additional duty exemption on import of raw materials for use in manufacture of specific goods (ITA bound
Chairman tnebnet.org and Distribution
goods, LED lights, pacemakers)
Corporation Limited,
NPKRR Maaligai, D. Ensuring the much-needed ease of doing business in India
144,Anna Salai,
Chennai - 600 002. • Principle of composite cap (FDI + FPI) introduced to simplify calculation of foreign investment limit in sectors where
FDI cap apply (e.g retail, banking, brownfield pharma, etc.)
TANTRANSCO Dr. M. Saikumar, IAS., 91-44-28521300 chairman@ Tamil Nadu Transmission
Chairman tnebnet.org Corporation Limited, • Powers to make or amend rules relating to foreign investments and outbound investments to vest with government,
NPKRR Maaligai, being a policy matter; this simplification to ensure a faster policymaking process; requires a legislative amendment
144,Anna Salai, in Foreign Exchange Management Act (FEMA)
Chennai - 600 002. • Setting up business in India to be made easy by prescribing simple compliance with a pre-existing regulatory
DTCP Thiru R. Kirlosh Kumar, IAS., 91-44-2852 1115 [email protected] Directorate of Town and mechanism instead of prior multiple approvals permissions; expert committee to be set up to examine and make
Director – Town & Country 91-44-2852 1116 Country Planning, recommendations in this regard
Planning 91-44-28521495 Opposite to LIC,
• Comprehensive Bankruptcy Code of global standards to be brought in year 2015-16
Chengalvarayan Building,
Fourth floor, • Implementation of General Anti Avoidance Rule (GAAR) deferred by two years; GAAR provisions to be applicable
807, Anna Salai, from FY 2017-18 onwards
Chennai - 600 002. • Threshold for specified domestic transactions (domestic transfer pricing provisions) rose from Indian Rupees (INR) 5
CMDA Thiru A. Karthik IAS., 28414355 (D) mscmda@ 1, Gandhi Irwin Road, crore to INR 20 crore.
Member-Secretary 28414855 - tn.gov.in Egmore,
• Advance ruling option for customs, excise and service tax extended to resident firms (including
Ext.210 Chennai – 600 008.
partnership firms, sole proprietorship and one-person companies)
Fax : 28548416

70 71
E. Indirect transfer rules clarified G. Some Direct Tax Rationalization measures
• The interest or share in an Indian company to be deemed to derive value substantially from India, if the fair market • The Wealth Tax Act, 1957 be abolished and compensated by an increased levy of surcharge on taxpayers earning
value of Indian assets (without reduction of liabilities) exceeds 10 crore INR and represents at least 50% of the value higher income; effective increase in tax rate for the affluent (including corporates) in FY 15-16 on account of this
of all assets owned by transferor entity additional 2% surcharge
• A transaction to not be taxed if the transferor (along with associate enterprises) neither holds right of control or • Rationalized the criteria for tax residency of companies to include the concept of place of effective management
management nor holds voting power or share capital or interest exceeding 5%
• To avoid ambiguity, any person responsible for paying any sum, whether chargeable to tax or not, to a non-resident
• Indirect transfer on account of group reorganization exempted subject to meeting specified conditions to be required to furnish the information of such sum in prescribed forms
• The Indian entity in the chain obligated to furnish information relating to transaction; failure to report may attract a • Rationalization of provisions relating to Income Tax Settlement Commission
penalty up to 2% of transaction value
H. Some important indirect tax proposals
• Central Board of Direct Taxes to clarify the dividends declared by foreign company from Indian source income to not
be subject to indirect transfer rules • Service tax rate effectively increased from 12.36 to 14%; enabling provision introduced to empower imposition of
additional Swach Bharat Cess at the rate of 2%
F. Special benefits to financial investors and financial sector
• Rationalization of general rate of excise duty from 12.36 to 12.5%
• Foreign investments in alternate investment funds (AIFs) to be permitted; entail issue of an enabling policy
• Rate of clean energy cess increased from 100 INR per tonne to 200 INR per tonne on specific products
framework
• Increase in additional duty of excise on manufactured HSD and motor spirits (petrol) from 2 INR per litre to 6 INR per
• In case of eligible offshore funds, fund management activity carried out through independent fund managers in
litre; however, no change in effective excise duty rate
India to not constitute a taxable presence in India albeit subject to conditions
• Service tax net widened by including new services and withdrawal of some exemptions. An indicative list includes
• Rationalization of tax regime of real estate investment trust (REIT) and infrastructure investment trust (InvIT)
the following:
• Concessional rate of 5% withholding tax on interest payable to FIIs and QFIs on their investment in government
i. Entry to entertainment events and amusement facility
securities and rupee denominated bonds to be available upto 30 June, 2015
ii. Job-work activity for manufacture of alcohol for human consumption
• Benefit of reduced tax rate of 5% on rupee denominated bonds issued to QIP extended upto 30 June 2017
iii. Transportation service of food stuff by rail, vessels, road limited to food grains including rice and pulses, flour milk
• Capital gain income of FII (other than short-term capital gain not subject to securities transaction tax) to be
and salt
excluded from levy of minimum alternate tax (MAT)
iv. Services provided by a mutual fund agent and distributor to an MF/AMC
• In case of merger of similar scheme of mutual funds, no capital gains arise in the hands of the unit holder
• Service tax exemption extended to the following:
• Non-Banking Finance Companies with a minimum asset size of 500 crore INR to be empowered to enforce its
security interest in non-performing assets; SARFAESI Act, 2002 to be amended to this effect i. Ambulance services provided to patients
• Forwards Markets Commission to be merged with the capital markets regulator (Securities Exchange Board of India) ii. Life insurance service provided by way of Varishtha Pension Bima Yojna
to strengthen regulation of commodity forward markets and reduce speculation
iii. Services by a common effluent treatment plant operator for treatment of effluent
• Any interest payable by an Indian branch of a foreign bank to its head office to be income deemed to accrue or arise
iv. Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables
in India, also subject to withholding tax

72 73
E. Indirect transfer rules clarified G. Some Direct Tax Rationalization measures
• The interest or share in an Indian company to be deemed to derive value substantially from India, if the fair market • The Wealth Tax Act, 1957 be abolished and compensated by an increased levy of surcharge on taxpayers earning
value of Indian assets (without reduction of liabilities) exceeds 10 crore INR and represents at least 50% of the value higher income; effective increase in tax rate for the affluent (including corporates) in FY 15-16 on account of this
of all assets owned by transferor entity additional 2% surcharge
• A transaction to not be taxed if the transferor (along with associate enterprises) neither holds right of control or • Rationalized the criteria for tax residency of companies to include the concept of place of effective management
management nor holds voting power or share capital or interest exceeding 5%
• To avoid ambiguity, any person responsible for paying any sum, whether chargeable to tax or not, to a non-resident
• Indirect transfer on account of group reorganization exempted subject to meeting specified conditions to be required to furnish the information of such sum in prescribed forms
• The Indian entity in the chain obligated to furnish information relating to transaction; failure to report may attract a • Rationalization of provisions relating to Income Tax Settlement Commission
penalty up to 2% of transaction value
H. Some important indirect tax proposals
• Central Board of Direct Taxes to clarify the dividends declared by foreign company from Indian source income to not
be subject to indirect transfer rules • Service tax rate effectively increased from 12.36 to 14%; enabling provision introduced to empower imposition of
additional Swach Bharat Cess at the rate of 2%
F. Special benefits to financial investors and financial sector
• Rationalization of general rate of excise duty from 12.36 to 12.5%
• Foreign investments in alternate investment funds (AIFs) to be permitted; entail issue of an enabling policy
• Rate of clean energy cess increased from 100 INR per tonne to 200 INR per tonne on specific products
framework
• Increase in additional duty of excise on manufactured HSD and motor spirits (petrol) from 2 INR per litre to 6 INR per
• In case of eligible offshore funds, fund management activity carried out through independent fund managers in
litre; however, no change in effective excise duty rate
India to not constitute a taxable presence in India albeit subject to conditions
• Service tax net widened by including new services and withdrawal of some exemptions. An indicative list includes
• Rationalization of tax regime of real estate investment trust (REIT) and infrastructure investment trust (InvIT)
the following:
• Concessional rate of 5% withholding tax on interest payable to FIIs and QFIs on their investment in government
i. Entry to entertainment events and amusement facility
securities and rupee denominated bonds to be available upto 30 June, 2015
ii. Job-work activity for manufacture of alcohol for human consumption
• Benefit of reduced tax rate of 5% on rupee denominated bonds issued to QIP extended upto 30 June 2017
iii. Transportation service of food stuff by rail, vessels, road limited to food grains including rice and pulses, flour milk
• Capital gain income of FII (other than short-term capital gain not subject to securities transaction tax) to be
and salt
excluded from levy of minimum alternate tax (MAT)
iv. Services provided by a mutual fund agent and distributor to an MF/AMC
• In case of merger of similar scheme of mutual funds, no capital gains arise in the hands of the unit holder
• Service tax exemption extended to the following:
• Non-Banking Finance Companies with a minimum asset size of 500 crore INR to be empowered to enforce its
security interest in non-performing assets; SARFAESI Act, 2002 to be amended to this effect i. Ambulance services provided to patients
• Forwards Markets Commission to be merged with the capital markets regulator (Securities Exchange Board of India) ii. Life insurance service provided by way of Varishtha Pension Bima Yojna
to strengthen regulation of commodity forward markets and reduce speculation
iii. Services by a common effluent treatment plant operator for treatment of effluent
• Any interest payable by an Indian branch of a foreign bank to its head office to be income deemed to accrue or arise
iv. Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables
in India, also subject to withholding tax

72 73
Appendix 1 D France 10% 10% 10% 10%
Germany 10% 10% 10% 10%

DTAA Countries Georgia

Greece
10%
Taxable in the
country of source
as per domestic
10%
Taxable in the
country of source
as per domestic
10%
Taxable in the country
of source as per domestic
tax rates.
10%
No specific provision (e)

Name of the country Interest Dividend Royalty Fees for technical services
tax rates. tax rates.
Austria 10% 10% 10% 10%
Hungary 10% (f) 10% (f) 10% (f) 10% (f)
Armenia 10% 10% 10% 10%
Iceland 10% 10% 10% 10%
Australia 15% 15% 10% (b); 15% in other cases 10% (b); 15% in other cases
Indonesia 10% 10% (I); 15% in 15% No specific provision (e)
Albania 10% 10% 10% 10% other cases
Bangladesh 10% 10% ©; 10% No specific provision (e) Ireland 10% 10% 10% 10%
15% in other cases
Israel 10% 10% 10% 10%
Belarus 10% 10% (I); 15% 15%
Italy (refer to note o) 15% 15% ©; in other 20% 20%
15% in other cases
cases 25%
Belgium 10%(k); 15% 10%(f) 10%(f)
Japan 10% 10% 10% 10%
15% in other cases
Kazakhstan 10% 10% 10% 10%
Botswana 10% 7.5% (I); 10% 10%
in other cases 10% Kenya 15% 15% 20% 17.5% (for managerial,
technical, professional or
Brazil 15% 15% 25% if royalty arises from No specific provision (e) _
consultancy fees)
trademarks; 15% in other cases
Kuwait 10% 10% 10% 10%
Bulgaria 15% 15% 15% if royalty relates to 20%
copyrights of literary, Republic of Korea 10% (n); 15% in 15% (d); 15% 15%
artistic or scientific work; other cases 20% in other cases
20% in other cases Kyrgyz Republic 10% 10% 15% 15%
Canada 15% 15% ©; in other 15% (including fee for 15% (for technical fees) (q) Latvia 10% 10% 10% 10%
cases 25% included services) (q) Libya Arab Jamahriya 14% 14% 14% No specific provision (e)
Cyprus 10% 10% ©; in other 15% (including fee for 15% (for technical fees) (q) Luxembourg 10% 10% 10% 10%
cases 15% included services) (q) Grand Duchy of 10% 10% 10% 10%
China 10% 10% 10% 10% Luxembourg
Colombia 10% 5% 10% 10% Malaysia 10% 5% 10% 10%
Croatia Treaty yet to Malta 10% 10% (I); in other 15% including fee for 10% on fee for technical,
be notified. cases 15% included services (q) managerial and
Czech Republic 10% 10% 10% 10% consultancy services (q)
Denmark 10% (k); 15% in 15% (I); 25% 20% 20% Mauritius 14% 5% ©; in other 15% No specific provision (e)
other cases in other cases cases 15%
Ethiopia (refer note r) 10% 7.5% 10% 10% Mexico 10% 10% 10% 10%
Estonia 10% 10% 10% 10% Mongolia 15% 15% 15% 15%
Fiji Treaty yet to be Montenegro 10% 5% (I); in
notified. other cases 15% 10% 10%
Finland 10% 10% 10% 10% Morocco 10% 10% 10% 10%

74 75
Appendix 1 D France 10% 10% 10% 10%
Germany 10% 10% 10% 10%

DTAA Countries Georgia

Greece
10%
Taxable in the
country of source
as per domestic
10%
Taxable in the
country of source
as per domestic
10%
Taxable in the country
of source as per domestic
tax rates.
10%
No specific provision (e)

Name of the country Interest Dividend Royalty Fees for technical services
tax rates. tax rates.
Austria 10% 10% 10% 10%
Hungary 10% (f) 10% (f) 10% (f) 10% (f)
Armenia 10% 10% 10% 10%
Iceland 10% 10% 10% 10%
Australia 15% 15% 10% (b); 15% in other cases 10% (b); 15% in other cases
Indonesia 10% 10% (I); 15% in 15% No specific provision (e)
Albania 10% 10% 10% 10% other cases
Bangladesh 10% 10% ©; 10% No specific provision (e) Ireland 10% 10% 10% 10%
15% in other cases
Israel 10% 10% 10% 10%
Belarus 10% 10% (I); 15% 15%
Italy (refer to note o) 15% 15% ©; in other 20% 20%
15% in other cases
cases 25%
Belgium 10%(k); 15% 10%(f) 10%(f)
Japan 10% 10% 10% 10%
15% in other cases
Kazakhstan 10% 10% 10% 10%
Botswana 10% 7.5% (I); 10% 10%
in other cases 10% Kenya 15% 15% 20% 17.5% (for managerial,
technical, professional or
Brazil 15% 15% 25% if royalty arises from No specific provision (e) _
consultancy fees)
trademarks; 15% in other cases
Kuwait 10% 10% 10% 10%
Bulgaria 15% 15% 15% if royalty relates to 20%
copyrights of literary, Republic of Korea 10% (n); 15% in 15% (d); 15% 15%
artistic or scientific work; other cases 20% in other cases
20% in other cases Kyrgyz Republic 10% 10% 15% 15%
Canada 15% 15% ©; in other 15% (including fee for 15% (for technical fees) (q) Latvia 10% 10% 10% 10%
cases 25% included services) (q) Libya Arab Jamahriya 14% 14% 14% No specific provision (e)
Cyprus 10% 10% ©; in other 15% (including fee for 15% (for technical fees) (q) Luxembourg 10% 10% 10% 10%
cases 15% included services) (q) Grand Duchy of 10% 10% 10% 10%
China 10% 10% 10% 10% Luxembourg
Colombia 10% 5% 10% 10% Malaysia 10% 5% 10% 10%
Croatia Treaty yet to Malta 10% 10% (I); in other 15% including fee for 10% on fee for technical,
be notified. cases 15% included services (q) managerial and
Czech Republic 10% 10% 10% 10% consultancy services (q)
Denmark 10% (k); 15% in 15% (I); 25% 20% 20% Mauritius 14% 5% ©; in other 15% No specific provision (e)
other cases in other cases cases 15%
Ethiopia (refer note r) 10% 7.5% 10% 10% Mexico 10% 10% 10% 10%
Estonia 10% 10% 10% 10% Mongolia 15% 15% 15% 15%
Fiji Treaty yet to be Montenegro 10% 5% (I); in
notified. other cases 15% 10% 10%
Finland 10% 10% 10% 10% Morocco 10% 10% 10% 10%

74 75
Mozambique 10% 7.5% 10% No specific provision (e) Thailand 10%(n),in other 15%(c)(h); 20%(h) 15% No specific provision (e)
Myanmar 10% 5% 10% No specific provision (e) cases 25% or (h)
Namibia 10% 10% 10% 10% Trinidad and Tobago 10% 10% 10% 10%
Nepal 10% (n); in other 5% (c); in other 15% No specific provision (e) Turkey 10%(k); in other 15% 15% 15%
cases 15% cases 10% cases 15%
Netherlands 10% (f) 10% (f) 10% (f) 10% (f) Turkmenistan 10% 10% 10% 10%
New Zealand 10% 15% 10% 10% Uganda 10% 10% 10% 10%
Norway 15% 15% (I); in 10% (f) 10% (f) Ukraine 10% 10%(I); in other 10% 10%
other cases 10% cases15%
Oman 10% 10% ©; in other 15% 15% United Arab Emirates 5%(k); in other 10% 10% No specific provision (e)
cases12.5% cases 12.5%
Philippines 10% (n); in other 15% (c); in other 15% No specific provision (e) United Arab Republic No specific No specific No specific provision (e) No specific provision (e)
cases 15% cases 20% (Egypt) provision (e) provision (e)
Poland 15% 15% 22.50% 22.50% United Kingdom 10%(n); in other 15% 10%(b); in other cases 15% 10%(b); in other cases 15%
Qatar 10% 5% ©; in other cases 15%
cases 10% 10% 10% United States of 10% 10% 10% 10%
Portugal 10% 10% (I); 15% in 10% 10% America
other cases Uruguay Treaty yet to be 10% 10% 10%
Romania 10% 10% 10% 10% notified.
Russian Federation 10% 10% 10% 10% Uzbekistan 10% 10% 10% 10%
Saudi Arabia 10% 5% 10% No specific provision (e) Vietnam 10% 10% 10% 10%
Serbia 10% 5% (I), in other 10% 10% Zambia 10% 5% (j); in other 10% on managerial and
cases 15% cases 15% 10% Consultancy fees
Singapore 10%(k); in other 10%(k); in other 10% 10%
Notes: • This is applicable if the recipient is a company owning at least 25% of the capital
cases 15% cases 15% • The Double Taxation Avoidance Agreements (treaty tax) rates on dividends are not during a period of six months before date of payment.
South Africa 10% 10% 10% 10% relevant in case of dividend paid by an Indian company, because under the current • This is applicable if paid on a loan granted by a bank or financial institution.
Spain 15% 15% 10%(f); 20% 20%(f) Indian tax legislation, dividend distribution by such companies is exempt from income • The tax rate under domestic tax laws is 20% plus surcharge at 2%; since education
tax in the hands of the recipient. cess of 3% is levied, the effective tax rate is 21.012% (applicable for payments under
Sudan 10% 10% 10% 10% • This is applicable for use of industrial, scientific or commercial equipment. the agreements entered prior to June 1, 2005 but after May 31, 1997).
Slovenia 10% 5% ©; in other 10% 10% • This is applicable if the beneficial owner is a company which holds at least 10% of the • The prescribed tax rate for royalties and FTS under domestic tax laws is 10% (plus
cases 15% capital of the company paying the dividend. surcharge at 2% and education cess of 3%, so the effective tax rate is 10.506%). The
Switzerland 10% 10% 10% 10% • This is applicable if the beneficial owner is a company which owns 20% of the capital rate would apply for payments under the agreement entered on or after June 1, 2005.
of the company paying the dividend. • This is applicable if interest is received by a bank or financial institution.
Syrian Arab Republic 10% 5% ©, in other • In the absence of a specific provision, it may be treated as business profits under • The protocol amending the tax treaty with Italy (January 2006) stipulates the rate of
cases 10% 10% No specific provision, (e) respective treaties. 10% for Dividend, Interest, Royalty and Fee for Technical Services
Taipei Treaty yet to be 10% 10% 10% • The ‘Most Favoured Nation’ clause is applicable. The protocol to the tax treaty limits • As per a Government Press Release, under an agreement signed on May 27, 2011 the
notified. the scope and rate of taxation to that specified in similar articles in the treaties signed maximum rate of tax to be charged in the country of source will not exceed a two-tier
subsequently by India with other OECD nations. 5% or 10% in the case of dividends and 10% in the case of interest and royalties. This
Tajikistan 10% 5% ©, in other 10% No specific provision, (e)
• In most of the tax treaties, the interest attributable to financing of exports, imports and is yet to be notified.
cases10% loans granted by specified institutions is subject to nil or lower withholding tax rates. • There is a separate clause for technical fees and fee for included services under the
Tanzania (p) 10% 5%(j); in other 10% 20% on management and • This is applicable if the company paying the dividend is engaged in an industrial treaty.
cases10% professional fees undertaking. • As per a Government press release, an agreement was signed on May
• This is applicable if the beneficial owner is a company which holds at least 25% of the 25, 2011, but it is yet to be notified.
shares of the company paying the dividend.

76 77
Mozambique 10% 7.5% 10% No specific provision (e) Thailand 10%(n),in other 15%(c)(h); 20%(h) 15% No specific provision (e)
Myanmar 10% 5% 10% No specific provision (e) cases 25% or (h)
Namibia 10% 10% 10% 10% Trinidad and Tobago 10% 10% 10% 10%
Nepal 10% (n); in other 5% (c); in other 15% No specific provision (e) Turkey 10%(k); in other 15% 15% 15%
cases 15% cases 10% cases 15%
Netherlands 10% (f) 10% (f) 10% (f) 10% (f) Turkmenistan 10% 10% 10% 10%
New Zealand 10% 15% 10% 10% Uganda 10% 10% 10% 10%
Norway 15% 15% (I); in 10% (f) 10% (f) Ukraine 10% 10%(I); in other 10% 10%
other cases 10% cases15%
Oman 10% 10% ©; in other 15% 15% United Arab Emirates 5%(k); in other 10% 10% No specific provision (e)
cases12.5% cases 12.5%
Philippines 10% (n); in other 15% (c); in other 15% No specific provision (e) United Arab Republic No specific No specific No specific provision (e) No specific provision (e)
cases 15% cases 20% (Egypt) provision (e) provision (e)
Poland 15% 15% 22.50% 22.50% United Kingdom 10%(n); in other 15% 10%(b); in other cases 15% 10%(b); in other cases 15%
Qatar 10% 5% ©; in other cases 15%
cases 10% 10% 10% United States of 10% 10% 10% 10%
Portugal 10% 10% (I); 15% in 10% 10% America
other cases Uruguay Treaty yet to be 10% 10% 10%
Romania 10% 10% 10% 10% notified.
Russian Federation 10% 10% 10% 10% Uzbekistan 10% 10% 10% 10%
Saudi Arabia 10% 5% 10% No specific provision (e) Vietnam 10% 10% 10% 10%
Serbia 10% 5% (I), in other 10% 10% Zambia 10% 5% (j); in other 10% on managerial and
cases 15% cases 15% 10% Consultancy fees
Singapore 10%(k); in other 10%(k); in other 10% 10%
Notes: • This is applicable if the recipient is a company owning at least 25% of the capital
cases 15% cases 15% • The Double Taxation Avoidance Agreements (treaty tax) rates on dividends are not during a period of six months before date of payment.
South Africa 10% 10% 10% 10% relevant in case of dividend paid by an Indian company, because under the current • This is applicable if paid on a loan granted by a bank or financial institution.
Spain 15% 15% 10%(f); 20% 20%(f) Indian tax legislation, dividend distribution by such companies is exempt from income • The tax rate under domestic tax laws is 20% plus surcharge at 2%; since education
tax in the hands of the recipient. cess of 3% is levied, the effective tax rate is 21.012% (applicable for payments under
Sudan 10% 10% 10% 10% • This is applicable for use of industrial, scientific or commercial equipment. the agreements entered prior to June 1, 2005 but after May 31, 1997).
Slovenia 10% 5% ©; in other 10% 10% • This is applicable if the beneficial owner is a company which holds at least 10% of the • The prescribed tax rate for royalties and FTS under domestic tax laws is 10% (plus
cases 15% capital of the company paying the dividend. surcharge at 2% and education cess of 3%, so the effective tax rate is 10.506%). The
Switzerland 10% 10% 10% 10% • This is applicable if the beneficial owner is a company which owns 20% of the capital rate would apply for payments under the agreement entered on or after June 1, 2005.
of the company paying the dividend. • This is applicable if interest is received by a bank or financial institution.
Syrian Arab Republic 10% 5% ©, in other • In the absence of a specific provision, it may be treated as business profits under • The protocol amending the tax treaty with Italy (January 2006) stipulates the rate of
cases 10% 10% No specific provision, (e) respective treaties. 10% for Dividend, Interest, Royalty and Fee for Technical Services
Taipei Treaty yet to be 10% 10% 10% • The ‘Most Favoured Nation’ clause is applicable. The protocol to the tax treaty limits • As per a Government Press Release, under an agreement signed on May 27, 2011 the
notified. the scope and rate of taxation to that specified in similar articles in the treaties signed maximum rate of tax to be charged in the country of source will not exceed a two-tier
subsequently by India with other OECD nations. 5% or 10% in the case of dividends and 10% in the case of interest and royalties. This
Tajikistan 10% 5% ©, in other 10% No specific provision, (e)
• In most of the tax treaties, the interest attributable to financing of exports, imports and is yet to be notified.
cases10% loans granted by specified institutions is subject to nil or lower withholding tax rates. • There is a separate clause for technical fees and fee for included services under the
Tanzania (p) 10% 5%(j); in other 10% 20% on management and • This is applicable if the company paying the dividend is engaged in an industrial treaty.
cases10% professional fees undertaking. • As per a Government press release, an agreement was signed on May
• This is applicable if the beneficial owner is a company which holds at least 25% of the 25, 2011, but it is yet to be notified.
shares of the company paying the dividend.

76 77
 Additional Chief Secretary to Government of Tamil Nadu
TAMIL NADU
GLOBAL INVESTORS MEET 2015
I N V E S T O R S’ PA R A D I S E
Industries Department
Phone: 91-44-25671383 Fax: 91-44-25670822
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Phone: 91-44-2855 4421
Email: [email protected]

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