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Doing Business in India

Government Agencies Dealing with Starting a Business in India

Economies outside the U.S. are becoming more and more important, both as markets for goods, sources of labor and their abundant untapped natural resources.

India’s economy has been showing growth during recent economic troubles.  Such an environment displays opportunities for foreign investment and starting a business in India.   The government has a site set up to help inform and promote foreign business and companies to these opportunities India has to offer.

The major government agency dealing with foreign business is ‘The Ministry of Commerce and Industry’, within the realm of promotion and regulation of foreign trade in India.  The major offices are the ‘Directorate General of Foreign Trade (DGFT)’, which is responsible for implementing the Foreign Trade Policy.  Its other major function and duty is to issue  licenses to exporters.

The Reserve Bank of India (RBI) is one of two major financial institutions in India.  RBI is responsible for regulating the operations of money market.  The ‘money market’ refers to short-term funds needed by businesses.

The other major financial institution is the ‘Securities and Exchange Board of India’ (SEBI).  It is in charge of the ‘capital market’, namely long-term funds.  It is given authority to supervise the functioning of the capital market.

The Indian government also offers the ability to search for small or medium sized businesses to enter into business relations with.  This can be done through the ‘Commissionerates of Industries’ which assists and guides new entrepreneurs in starting up an industrial unit in the concerned State.  Each list varies according to the state, so it is only useful when one knows the area and business they wish to establish.

While a government agency, the disclaimer of the website makes one doubt relying on the site for anything beyond the name and contact information of an Indian business.  It states that the “…Ministry will accept no responsibility and liability, of whatever nature, for the correctness of the material on Website… users are advised to verify, in their own interest, the correctness of the facts.”

By – Domenic Gabriella for IndiaExports.com

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Doing Business in India

Bureau of Indian Standards

When planning on doing business in India, one can only judge their ‘partners’ by what they observe of the business practices first hand, discussions with the owners and communicating with previous customers and business partners.  Fraud and scams by businesses happen all too often.  Within the United States and Canada, one has the Better Business Bureau (BBB), which offers its free evaluation of businesses and charities to ensure validity.  While the BBB does not possess legal and policing powers, they do frequently work closely with police, report fraud, and provide information about marketplace fraud.

Bureau of Indian Standards

For those interested in business in India, or setting up businesses in another country, there are not always reliable sources of information to gauge another business on accurately.  In India, they do possess a government organization that begins to fill such a need, the Bureau of Indian Standards (BIS).

The BIS was originally The Indian Standards Institution was  formed to ‘promote standards it needed for nationalization, orderly industrial and commercial growth, quality production and competitive efficiency.”  However, due to fast changing socio-economic standards in 1986, the Bureau of Indian Standards replaced The Indian Standards institution as the nations hallmark of standards for business in India.

The functions of the BIS is not a parallel of the Bureau of better Business in what it offers. The BIS does not directly regulate and rate a business on its actions, it only regulates the standards of the products a business can produce from its list of standards. While not as useful as the BBB standards, it does allow one to have an unbiased look at the quality of work offered, which can speak greatly towards the integrity of a business one is considering doing business with.

There are many uncertainties when dealing with a business venture overseas and determining the credibility of potential business partners is one of the larger ones.  While there is always going to be uncertainty in any decision one makes, the BIS is a good step in the direction of India’s businesses becoming more transparent to foreign investors in terms of credibility and for promoting security in international trade.

By – Domenic Gabriella for IndiaExports.com

Categories
Doing Business in India

Purchasing Business Insurance in India

As with any investment, there is risk.  Investing in India is risky, but not as risky as investing in other foreign markets such as China.  While India has rules and regulations on foreigners investing in or starting business in India, they do recognize private property and non-public entities, giving one a sense of ownership into their investment lacking in other developing nations.

Investment Risks

The larger risks of business in India are things such as the currency, variations on laws, The Ministry of Commerce and Industry, as well as the other agencies that one must have approval from.  Adding to the risk of business is the differences in laws and regulations when operating a business.  Risks such as these can be overcome with the help of businesses who thrive off of helping one transition from their own rules and regulations to those of India, such as Madaan & Co. Attorneys at law. 

Other risks are the everyday risks of business that one has so long as they are in business.  This includes accidents in deliveries, destruction of property from fires, floods, accidents, and other such disasters that an owner would not normally foresee in their day to day business activities.  To insure from such risks one needs to find an insurance company within India or a global insurance that India recognizes.

Business Insurance in India

One particular company that offers global reinsurance and risk solution is Export Credit Guarantee Corporation of India Limited (ECGC).  ECGC is a company founded in India and adheres to: The Companies Act, 1956; Insurance Act, 1938; General Insurance Business (Nationalisation) Act, 1972; General Insurance Business (Nationalisation) Amendment Act, 2002; Insurance Regulatory and Development Authority Act, 1999.

The ECGC was initially not a government entity until the General Insurance Business (Nationalization) Act, 1972 (GIBNA).  This act nationalized all of the insurance companies within India at the time.  As the main government issued insurance for investors, and the current trend to promote foreign capital into the Indian market, the insurance is reliable, but concerning as is in essence a government monopoly on domestic insurance in India.

By – Domenic Gabriella for IndiaExports.com