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The past decade played a major role in shaping the Australia India foreign direct investment. The two nations have come into several collaborations even during the pandemic. India has become a prominent destination for doing business for Australia.
Sectors that attracted maximum FDI equity inflows from Australia
Many Australian companies in India have set up offices in different Indian cities like Bangalore, New Delhi and Mumbai. The companies have varied operations and have now become a part of India’s local markets.
Leading Australian Companies in India
India is big investor in the Australian economy, many Indian MNCs and start-ups have created a strong presence in the Australian Markets.
Leading Indian Companies in Australia
India’s ranked at 63rd position in 2020. The country’s ranking on the World Bank’s Doing Business Report (DBR) of 190 countries, has improved from 142nd position in 2014 to 63rd position. It has earned a place among the world’s top 10 improvers for the third year in a row.
Trade across Borders: India has simplified starting a business by incorporating electronic memorandum of association and articles of association. India currently ranks as a substantial nation for cross border trade and business investment by the World Bank Cross border trading has now been simplified with the start of post-clearance audits, upgrading port infrastructures, and enhancing the electronic submission of documents.
Custom Clearances: The Central board for excise in customs (CBEC) has simplified Indian customs single window project to facilitate trade. This enables one step submission of custom clear documents on an online portal. Only three mandatory documents are required for customs purposes. Computerized transactions have reduced risks and created a simplified system wherein, chances of inspections have been reduced.
Infrastructure Development: There has been an increase in infrastructure development projects due to reduction in the time and cost of obtaining construction permits. Various municipal corporations in metro cities of India have developed a fast-track approval permit for building projects. Cost of obtaining construction permits has reduced from 23.2% to 5.4% of the economies per capita. These provisions were enabled to ease the process of doing business in India and reaching out to investors around the globe.
Resolving Insolvency: Issues like resolving insolvency have been made easier by promoting reorganization proceedings in practice. As a part of Ease of Doing Business in India, the country has strengthened access to credit by amending its insolvency law. Secured creditors are now given absolute priority over other claims within insolvency proceedings.
As a part of ease of doing business in India, the country has strengthened minority investor protections by increasing the remedies available in cases of prejudicial transactions between interested parties. India made enforcing contracts easier by introducing the National Judicial Data Grid, which makes it possible to generate case measurement reports on local courts.
Paying Taxes: To promote ease of doing business, India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer.
The Employee State Insurance Corporation (ESIC) has developed a fully online return filing with online payment. Due to the introduction of e-verification system, there is no physical touch point for document submission with the income tax authorities.
Business Reform Action Plan (BRAP) 2019 – 372 new action plans were introduced under the BRAP 2019. It included new sectors such as Healthcare and Hospitality, Central Inspection system, Trade License, Registration under Legal Metrology, and Registration of Partnership Firms & Societies. This reform includes the future plans and growth of previous plans by the states and union territories in India.
The Government of India has worked on creating a conducive environment by streamlining the existing regulations and eliminating unnecessary requirements and procedures to help businesses grow. The focus is on reduction in compliance burden by using technology, third party assessments, and faceless human intervention.
Comprehensive Strategic Partnership in 2020: India Australia relations touched a new level with both the countries creating the Comprehensive Strategic Partnership in 2020 which involved signing some key agreements.
Key agreements under Comprehensive Strategic Partnership 2020
India-Australia CEO Forum: A developed mechanism for businesses from both nations to engage in ways to build national trade. A broad range of industry sectors like agribusiness, finance, telecommunications, IT, education and pharmaceutical come under the benefits of this program.
Online Dispute Resolution (ODR) mechanism: Australian Dispute Centre court is one of the annexed courts for ODR platforms in India. ODR is often seen to be an online version of ADR. Australian Dispute Centre provides for neutral evaluation of the case as a mechanism separate from, and in addition to, arbitration and mediation.
The center offers efficient dispute resolution through mediation, arbitration, expert determination, and conciliation. It also provides access to custom designed virtual courtrooms for better dispute resolution experience.
World Trade Organization - Dispute Settlement Body
The World Trade Organization is the only international governing body that decides the rules of trade. There are various WTO agreements signed by hundreds of nations, which form the process of trade between those nations. They aim to ensure a smooth flow of trade and provide free trade possibilities. WTO has a dispute settlement body that ensures if any trade related disputes arise, they are dealt within the organization and a free flow continues. The Dispute Settlement Body (DSB) acts as a general council for disputes settlement for its member countries. India is a leading signatory of DSB and has resolved various minor and major disputes through the DSB.
India Australia Dispute resolution
Australia-India Strategic Research Fund (AISRF): Established in 2006, the AISRF was created to support research and innovation in India and Australia. The funds under this scheme include large donations from both sides and helps support innovation and technology. The fund is a prominent support to health and environment based innovations in both the nations.
Double Taxation Avoidance between India and Australia
The Double Tax Avoidance Agreement (DTAA) was signed between India and Australia. The agreement was amended to make way for free trade and bilateral exchanges. The agreement covers tax residents of Australia and India. It covers income tax earned by the residents of both the nations. The agreement does not apply to shell companies, the shell companies are mere non-operating bodies with no real or contentious business activity records.
Any Australian company that has a permanent establishment in India; the profit attributable to the permanent establishment will be taxed only in India. And the same process will apply to any Indian company established in Australia.
With time India has created a strong space in Australia’s export import market
Australia India – Top Sectors of Export Import
Banking/Money transfer services between India and Australia
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