Intertrust N : Local knowledge is key to seizing the huge opportunities on offer in India

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India has become a top target for multinational companies seeking opportunities and exceptional value. The rapid growth of its private sector and its strong ties to developed economies have, in combination, enabled it to emerge as a global player.

Many international companies are now setting up businesses in the country or buying stakes in Indian companies to benefit from this huge potential. Technology, real estate, healthcare and manufacturing are the key sectors benefiting from foreign investment inflows.

And business-friendly government reforms and initiatives helped India to jump 14 places, up to 63rd, in the Ease of Doing Business rankings in the World Bank's Doing Business 2020 study.

Measures to revive and stimulate the economy post Covid-19

Now, amid the continuing economic disruption of the Covid-19 pandemic, the Indian government has announced a 21 trillion-rupee stimulus package - equivalent to 10% of GDP. More flexible labour laws, the largest youth population in the world and a growing middle class also contribute to the unrivalled value and opportunity India offers.

This is no longer a secret, however. Foreign Direct Investment into the country reached a record $81.72 in the 2020-21 fiscal year, up 10% on the previous year. Meanwhile, the Indian government's production-linked incentive scheme for large-scale electronics manufacturing, instituted in April 2020, has begun to boost domestic manufacturing and attract large investments. The National Infrastructure Pipeline plan - covering more than 7,000 projects across different sectors - will be crucial for reaching the target of a $5tn economy by 2025.

Many international companies have already invested in India, with many more taking steps to set up shop there. Yet establishing and maintaining a presence requires navigating a complex system of tax requirements, compliance and other fiscal obligations.

Understanding these is key to the success of any venture as failure to adhere can damage a company's reputation on an international scale. Parties that fall foul of the rules and regulations also face fines and additional taxation.

Opportunities and risks

US funds wanting to establish an enterprise in India are legally required to partner with a local service provider to be able to operate.

There are grants and government incentives to support incorporation in India, but it has to be done correctly to avoid fines and censure. The partner you choose to help you navigate Indian regulations must have both local and international expertise and knowledge.

And the rules change constantly, so it is also essential that your local partner really understands the local culture and mindset.

Some service providers in India do not meet the high standards US-based funds expect and need in terms of levels of service and responsiveness. Many simply do not understand what American clients require.

Whether setting up for the first time or looking to expand already established interests, it is important that you harness the expertise of a partner who can provide the levels of service you are used to.

This matters because there is potential for litigation against firms that don't adhere to corporate governance regulations. At both local and international levels this can affect investor confidence and carries reputational risk. And this carries huge implications in financial services that can reach well beyond local difficulties.

A trusted partner with you all the way

Although India has made efforts to simplify some processes for foreign investors, trying to navigate these complex legal and financial structures on your own can be very time consuming.

Intertrust Group can help you every step of the way, advising on where and how to establish your investment, as well as the rules governing compliance, labour laws, tax, reporting and fiscal issues.

Intertrust Group is a publicly listed company with more than 65 years of experience in providing world-class trust and corporate services to clients around the world. Our team in India includes experts specialising in administration services dedicated to servicing multinational, private equity and alternative fund clients.

We can advise corporate clients looking to invest initially or to expand and grow within India, providing a one-stop solution with a full suite of services.

Why Intertrust Group?

• Expertise on the ground with more than 900 experts in India
• Three India locations
• Over 30 years of experience
• A suite of services including IT, tax regulatory services, entity management including accounting and reporting, asset assurance services, transaction support and risk advisory services.
• One of the top choices for global institutional clients and investors
• Customised solution, even in complex situations