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India: Market Profile

Picture: India factsheet
Picture: India factsheet

1. Overview

With a population of more than 1.3 billion people, India is the world’s largest democracy. Over the past decade, the country’s integration into the global economy has been accompanied by economic growth. Poverty has declined since 2004/05 although short-term disruptions from demonetisation and food price volatility may have moderated the pace. India has now emerged as a global player and inflation and external conditions are expected to remain stable over the medium term. The key medium-term risk is the need for recovery in private investment and reining in sub-national debt levels. Private sector investments continue to face several domestic impediments, including the corporate debt overhang and regulatory and policy challenges, along with the risk of tightening monetary policy in developed markets such as the US. Other issues confronting the Indian government include ensuring high growth levels, fostering faster job creation, addressing distress in the agricultural sector, and strengthening implementation of flagship government programs.

Source: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

May 2014
The Hindu nationalist Bharatiya Janata Party (BJP) and its candidate for Prime Minister, Narendra Modi, won the parliamentary elections by a landslide.

September 2014
Visiting Chinese President Xi Jinping and Prime Minister Modi unveiled landmark economic deals. China said it plans to build two industrial parks in India, as part of overall investment of USD20 billion dollars in the next five years.

June 2015
India and Bangladesh signed a historic deal allowing more than 50,000 people living in border enclaves to choose which of the countries they live in.

September 2015
India launched its first space laboratory Astrosat in its biggest project since its Mars orbiter mission in 2014.

November 2016
The Indian government withdrew high denomination notes from circulation.

January 2017
The Indian government reached a wide-ranging cooperation agreement with the United Arab Emirates, with a series of deals on energy, defence, trade and maritime affairs.

June 2017
Along with Pakistan, India became a full member of the Shanghai Cooperation Organisation, an inter-governmental security grouping. India's membership saw the grouping's membership expand into South Asia.

July 2017
During a visit to Uganda, Prime Minister Narendra Modi India announced that India will open 18 new embassies across Africa.

April-May 2019
National elections are scheduled for 2019.

Source: BBC Country Profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: India real GDP and inflation
Graph: India real GDP and inflation
Graph: India GDP by sector (2017)
Graph: India GDP by sector (2017)
Graph: India unemployment rate
Graph: India unemployment rate
Graph: India current account balance
Graph: India current account balance

f = forecast
Sources: Fitch Solutions, World Bank (ILO modelled estimates)

4. External Trade

4.1 Merchandise Trade

Graph: India merchandise trade
Graph: India merchandise trade

Source: WTO
Date last reviewed: August 20, 2018

Graph: India major export commodities (2017)
Graph: India major export commodities (2017)
Graph: India major export markets (2017)
Graph: India major export markets (2017)
Graph: India major import commodities (2017)
Graph: India major import commodities (2017)
Graph: India major import markets (2017)
Graph: India major import markets (2017)

Source: Trade Map, Fitch Solutions
Date last reviewed: August 15, 2018

4.2 Trade in Services

Graph: India trade in services
Graph: India trade in services

Note: all imports are listed as estimated values from WTO; exports are direct confirmed data
Source: WTO
Date last reviewed: August 20, 2018

5. Trade Policies

  • India has been a WTO member since January 1, 1995 and a member of GATT since July 8, 1948.
  • India’s government has embarked on economic liberalisation since 1991 and continued to work towards a more open trade regime. There has been progressive elimination of quantitative restrictions, simplification of import licence application and reduction of import tariffs since 1992.
  • Trade barriers are likely to continue falling over the medium term, however, as the government continues to sign trade agreements and bring tariffs into line with the standards of other Asian states. In addition, the planned implementation of standardised nationwide duties will improve clarity and reduce costs for businesses importing into India.
  • India has preferential access, economic cooperation and Free Trade Agreements (FTA) with about 54 individual countries. India has signed bilateral trade deals in the form of Comprehensive Economic Partnership Agreement (CEPA)/Comprehensive Economic Cooperation Agreement (CECA)/FTA/Preferential Trade Agreements (PTAs) with some 18 groups/countries.
  • The Central Board of Excise and Customs (CBEC) has developed an 'integrated declaration' process leading to the creation of a single window which will provide the importers and exporters a single point interface for customs clearance of import and export goods.
  • In the Mid-Term Review of the Foreign Trade Policy (FTP) 2015-20, the Ministry of Commerce and Industry has enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), increased MEIS incentive raised for ready-made garments and made-ups by 2%, raised SEIS incentive by 2% and increased the validity of Duty Credit Scrips from 18 months to 24 months.
  • The Department of Commerce has also announced increased support for export of various products and included some additional items under the MEIS in order to help exporters to overcome the challenges faced by them.
  • The Reserve Bank of India (RBI) has simplified the rules for credit to exporters, through which they can now get long-term advance from banks for up to 10 years to service their contracts. This measure will help exporters get into long-term contracts while aiding the overall export performance.
  • All export and import-related activities are governed by the FTP, which is aimed at enhancing the country's exports and use trade expansion as an effective instrument of economic growth and employment generation.
  • As part of the FTP strategy of market expansion, India has signed a Comprehensive Economic Partnership Agreement with South Korea which will provide enhanced market access to Indian exports. These trade agreements are in line with India’s Look East Policy. To upgrade export sector infrastructure, ‘Towns of Export Excellence’ and units located therein will be granted additional focused support and incentives.
  • There is a wide range of import duties in place to protect domestic production. On the other hand, domestic taxes also favour cotton-based production rather than production based on man-made fibres, and leather footwear rather than non-leather footwear.
  • On August 7, 2018, the Indian Ministry of Finance, through Notification No. 58/2018-Customs increased the import duty on 328 tariff lines from 10 to 20%. These tariff lines include carpets, apparels, and other textile products. India has increased the import tariff on textile goods twice in the last two months, the last increase being on July 16, 2018.
  • There are also various local content requirements in the area of infrastructure and solar power provision.
  • In June 2016, the Indian Ministry of Finance imposed an export duty of 25% on raw, white and refined sugar. There are also restrictions on the export of certain types of rice and other strategic crops.
  • US Generalised System of Preferences (GSP) allows India to export apparel at reduced rates.
  • There are also various import and anti-dumping duties on manufactured goods, second-hand goods, jewellery and metals such as aluminium, steel, rubber, plastics, zinc alloys; as well as some batteries, solar panels media products and various other machine parts. On the other end of the spectrum, India's mobile tech merchants will be challenged with the boosted tariff amount on imported smart-phones, beginning April 1, 2018. In Q118, the Indian Ministry of Finance increased the import duty from 0 to 5% on "Scientific and technical instruments, apparatus, equipment, accessories, parts, components, spares, tools, mock-ups and modules, raw material and consumables required for launch vehicles and satellites and payloads".
  • In August 2018, India announced that delayed higher tariffs against some goods imported from the United States will go into force on September 18, 2018. New Delhi, in response to Washington’s refusal to exempt it from new tariffs, decided in June 2018 to raise import tax from August 4, 2018 on some US products, including almonds, walnuts and apples, and later delayed the move.
  • India has proposed to buy petroleum products from the US to help narrow the bilateral trade deficit. The US has also emerged as a top arms supplier to India and US companies are bidding for military aircraft deals worth billions of dollars.
Source: WTO - Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Trade Updates

The Indian government has become increasingly proactive in pursuing FTAs with major trade blocs and global trade hubs - including the Common Market of the South (MERCOSUR), the Association of Southeast Asian Nations (ASEAN) and Singapore - while negotiations with China and the EU are underway. This improves the ease of trading with large markets and key trade hubs, by lowering tariffs and other barriers to trade. Indian products also receive easier access to the US market through the implementation of the GSP. Nevertheless, FTAs have not yet been signed with some major trade partners, including China and Gulf Cooperation Council (GCC) states, and tariffs and other barriers remain significant for trade with these countries.

6.2 Multinational Trade Agreements

Active

  1. India is party to the South Asian Free Trade Area (SAFTA), comprising Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka - The Asian Development Bank (ADB) has estimated that inter-regional trade possessed potential of ramping up agriculture exports by USD14 billion per annum from existing level of USD8 billion to USD22 billion. The untapped potential for intra-regional trade is, therefore, USD14 billion per annum. Intra-regional trade in the bloc has the potential to increase the existing trade by over 300%. India provides maximum scope for realising its potential trade given the very low actual trade levels with Bangladesh, Pakistan, Bhutan and Nepal. Its actual trade levels with Sri Lanka are much higher than the estimated trade based on the gravity model (largely due to the Indo-Sri Lanka Free Trade Agreement).

  2. India benefits from the US GSP: The US is India's largest export market and the GSP eases access for apparel exporters.

  3. India-MERCOSUR: a PTA was signed in New Delhi on January 25, 2004 and the India-MERCOSUR PTA came into effect from June 1, 2009. The aim of this Preferential Trade Agreement is to expand and strengthen the existing relations between MERCOSUR and India and promote the expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties. Trade with Latin America is low in comparison to other regions, but still significant. India and the Latin America and Caribbean region are expected to see commercial relations elevate in the medium term as India seeks to strengthen ties with the region, benefiting the Asian country's manufacturing sector.

  4. ASEAN-India: The ASEAN-India Free Trade Area (AIFTA) is a free trade area among the ten member states of the ASEAN and India. The Framework Agreement envisages the establishment of an ASEAN-India Regional Trade and Investment Area (RTIA) as a long term objective. The initial framework agreement was signed in October 2003, the final agreement was in August 2009 and the free trade area came into effect on January 1, 2010. The ASEAN-India Trade in Goods Agreement (TIG) was signed on August 13, 2009 and came into force for India and some member states that ratified it. The signing of the ASEAN-India TIG Goods Agreement paved the way for the creation of one of the world’s largest FTAs - a market of almost 1.8 billion people with a combined GDP of USD2.8 trillion. The ASEAN-India FTA will see tariff liberalisation of over 90% of products traded between the two dynamic regions, including the so-called “special products,” such as palm oil (crude and refined), coffee, black tea and pepper. Tariffs on over 4,000 product lines will be eliminated. The ASEAN-India Trade in Services and Investment Agreements was signed on November 13, 2014 and November 12, 2014, respectively. Both Agreements entered into force on July 1, 2015 for those ASEAN Member States who have notified their ratification of the Agreements.

Under Negotiation

  1. Currently, India is negotiating FTAs with Australia, Canada, Egypt, Indonesia, Israel, New Zealand, Thailand, the GCC and the EU. India also participates in the negotiation of Regional Comprehensive Economic Partnership (RCEP).

  2. The RCEP is a mega-regional economic agreement being negotiated between the 10 ASEAN (Association of South-East Asian Nations) governments and their six FTA partners: Australia, China, India, Japan, New Zealand and South Korea. India is negotiating for the liberalisation of services, a sector that contributes over 60% to its gross domestic product, while resisting broad tariff cuts. It has agreed to provide similar tariff reductions to all RCEP members, but wants a built-in safeguard regarding China that will involve a different structure for duty cuts. The free movement of people, something India wants for highly-skilled information technology workers, remains a major sticking point for the 16-party deal, even as China pushes for an accelerated timeline to finalise the agreement. India is also seeking multiple entry visas and a single-visa card to facilitate entry to member economies, and it wants an easing of restrictions on services, such as call centres and the establishment of foreign company subsidiaries providing services in other countries.

Source: WTO Regional Trade Agreements database

7. Investment Policy

7.1 Foreign Direct Investment

Graph: India FDI stock
Graph: India FDI stock
Graph: India FDI flow
Graph: India FDI flow

Source: UNCTAD
Date last reviewed: August 20, 2018

7.2 Foreign Direct Investment Policy

  1. The Modi government undertook further reforms since 2016 to formalise the large informal economy and digitise the economy. In addition to the GST overhaul, which targets greater tax registration and digital tax reporting, the government demonetised its high-value notes. Through demonetisation, the government aimed to better track undeclared earnings for tax purposes, and increase the usage of digital payments which lags other major emerging economies.

  2. Preferential Market Access (for government procurement) has created substantial challenges for foreign firms operating in India, as Public Sector Companies and the government accord a 20% price preference to vendors utilising more than 50% local content.

  3. India plans to build a new city in Gujarat, called the Gujarat International Finance-Tech City (GIFT City), in order to give global investors greater access to its growing economy. Two stock exchanges were established in the city in 2017, and government exemptions recently made trading virtually tax-free. The city will also have its own financial regulator as part of an effort to reduce red tape and bureaucracy faced by foreign investors. The new exchanges based in the city, including one called India INX launched by the Bombay Stock Exchange, are the only ones in India to allow trading in US dollars. Government official statements suggest that the tax breaks, low property prices and other incentives mean that moving operations to GIFT City have helped some companies reduce costs by up to 80%. While in Q118, the city still consisted of just a handful of structures - its first residences will be ready by H218, and a four-tower World Trade Center complex is expected to be completed by 2020. India is hoping that this zone will emulate the growth seen in Hong Kong and Singapore.

  4. Reforms introduced by Prime Minister Modi, include FDI cap relaxation and the launch of the “Make in India” Initiative. Modi launched the “Make in India” (MII) initiative in September 2014, with the aim of transforming India into the world’s manufacturing hub through actively courting foreign direct investment (FDI) in the manufacturing sector. India’s economic policies are designed to attract significant capital inflows on a sustained basis and encourage technology collaboration. Almost all sectors are open to FDI, except for atomic energy, lottery business, gambling and betting, and some forms of retail trading.

  5. The Department of Industrial Policy and Promotion (DIPP) has set up a joint venture with the Federation of Indian Chambers of Commerce and Industry (FICCI) and various state governments to promote inward FDI. Invest India is responsible for promoting and facilitating investments to India, acting as the first reference point for overseas investors to offer handholding services.

  6. Under India's foreign investment policy, two routes are available for foreign investors, depending upon the industry and the levels of investment contemplated. First method: Automatic Route - Foreign investment proposals under the automatic route do not need a prior approval by the government, provided the requisite documents are filed with the Reserve Bank of India within 30 days of receipt of funds. Qualified sectoral investment includes hotels and tourism, and courier services and similar sectors. Second Method: Government Route - All other proposals for foreign investment, which are not covered under the automatic approval route, are subject to government approval. For investment proposal below USD750 million, the proposal will be approved by the Foreign Investment Facilitation Portal (FIFP), while proposals above this amount will be approved by Cabinet Committee on Economic Affairs. More information can be found at the official website of FIFP.

  7. The government established several foreign trade zone initiatives to encourage export-oriented production. These include Special Economic Zones (SEZs), Export Processing Zones (EPZs), Software Technology Parks (STPs), and Export Oriented Units (EOUs). The newest category is the National Industrial and Manufacturing Zones (NIMZs), of which 14 are being established across India.

  8. One of Modi's key policy programmes has been to improve India's business environment and lift restrictions on FDI in order to boost the country's appeal to foreign investors, and the government has made significant progress on this. Foreign investors are now allowed up to 100% ownership of shopping centres, townships and business centres, and the restrictions on the permitted floor area of construction projects have been removed. Foreign equity limits have been raised from 74% to 100% in telecommunications, credit information firms, and chartered air transport and ground handling services. FDI is permitted up to 100% in the construction, operation and maintenance of some rail transport, such as high-speed trains, mass rapid transit, and passenger and freight terminals. Full foreign ownership is now permitted for certain agricultural enterprises producing coffee, rubber, cardamom, palm oil and olive oil, in addition to tea plantations. Foreign participation in the defence industry has been raised to 49% and may be permitted above this threshold after consideration by the Foreign Investment Promotion Board (FIPB). FDI is now permitted up to 74% in private banks and up to 49% in insurance and pension companies.
Sources: WTO - Trade Policy Review, the International Trade Administration (ITA), US Department of Commerce

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Location-based Incentives
Vary according to the industrial policies of individual states, but may include the following:

- Exemption from stamp duty
- Exemption from electricity duty
- Rebates on utilities costs
- Industrial promotion subsidies
- Subsidised interest payments on loans for the acquisition of fixed assets
Special Economic Zones
Numerous; located in major cities:

- Exemption from minimum alternative tax (MAT) for 10 years
- Tax exemption on 100% of export profits for first five years; 50% of export profits for the next five years; and 50% of export profits for a further five years if profits are reinvested. Exemption from customs duty on imported inputs and capital goods
- value-added tax (VAT) exemption
- Exemption from excise duty on procurement of domestic goods
- Exemption from sales tax on interstate purchases of goods
Tax benefits for north-eastern states (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura)- Deduction of 100% of profits for 10 years
- Refund on excise duty for 10 years

Source: US Department of Commerce, Fitch Solutions

8. Taxation – 2018

  • Value added tax: 18%
  • Corporate income tax: 30%
Source: PwC Worldwide Tax Summaries

8.1 Important Updates to Taxation Information

  • The Goods and Services Tax (GST) is the largest reform in India’s indirect tax structure since the market started opening up about 25 years ago. The GST is a consumption-based tax, as it is applicable where consumption takes place. The GST is levied on value-added goods and services at each stage of consumption in the supply chain. The advent of GST has subsumed all the indirect taxes in India, including VAT, service tax and excise duty. These indirect taxes or VAT were levied on each step of value addition of the product, thus creating a cascading effect. Therefore, GST was introduced to bring down unwanted inflation in the economy. Both VAT and GST are levied on the value of sale or supply of goods. The GST rates for goods are 0.25%, 3%, 5%, 12%, 18% and 28%. For services, the GST rates are 5%, 12%, 18% and 28%. Some goods and services are exempt from tax. GST compensation cess at varying rates is levied on supplies of certain specified goods and services.
  • The GST payable on the procurement of goods and services can be set off against the GST payable on the supply of goods and services, the business will pay the applicable GST rate, but can claim it back through the tax credit mechanism. There are three schedules and each schedule has its own VAT percentage. For schedule three, the VAT is 1%; for schedule two the VAT is 5%; and goods that have not been classified into any category have a VAT of 15%. The tax overhaul, which knits India into a single market for the first time, will be growth-positive in the medium term.
  • The Finance Act, 2018 has provided that Minimum alternative tax (MAT) provisions shall not apply to foreign companies where their total income is solely derived from shipping business, exploration of mineral oils, business of aircraft, or civil construction in turnkey projects, and income thereon is offered to tax as per specific provisions provided under the Act. A Special Economic Zone (SEZ) developer and a unit in an SEZ are also liable to pay MAT.

8.2 Business Taxes

Type of TaxTax Rate and Base
Corporate Income Tax for domestic firms (standard rate if turnover is over INR2.5 billion)30% basic rate for Indian companies. The rates are subject to additional levies (surcharge and cess). Highest effective rate is 31.2%.
Corporate Income Tax for Small Domestic Firms (if turnover of the domestic company in the previous year are less than INR2.5 billion)The basic tax rate is 25% (additional rates may apply due to surchages on health and cess). Surcharge is payable only where total taxable income exceeds INR10 million. Highest effective rate is 29.12%.
Corporate Income Tax for foreign firms40% on profits for foreign companies (additional rates may apply due to surcharges on health and cess). Highest effective rate is 43.68%.
Minimum Alternative Tax18.5% on profits. Including surcharge and health and education cess (effective tax rate) the highest effect rate for domestic firms is 21.58%, and for foreign firms is 20.202%.
GSTThere are multiple tax rates of 0%, 5%, 12%, 18%, and 28% while several items are exempted and exports are zero-rated (exporters can claim refunds for taxes paid on inputs that go into production process).

Source: PwC Worldwide Tax Summaries, Fitch Solutions, Indian Ministry of Finance
Date last reviewed: August 22, 2018

9. Foreign Worker Requirements

9.1 Localisation Requirements

Private sector industrial enterprises desiring to employ foreign nationals are required to apply for permission in advance.

Employment of foreign nationals is normally only considered for (skilled) jobs which local personnel are unable to fulfil.

9.2 Visa/Travel Restrictions

Work permits are required. The employment visa is required for employment purposes, including execution of a project in India. Eligibility conditions include a minimum annual salary of USD25,000 in a highly skilled role. The business visa for establishing industrial/ business ventures, or for exploring business possibilities/activities are comparatively easier to obtain. Foreign nationals entering India on a long-term visa (more than 180 days) must register with the Foreign Registration Office within 14 days of their arrival in India.

However, in India, work permits are commonly a long-term immigration solution. Therefore, immediate family members will be permitted to join the main applicant in India, although if family members wish to work, they will have to apply for their own visa.

Source: Government websites, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
Baa2 (stable)17/11/2017
Standard & Poor'sBBB- (stable)30/01/2007
Fitch Ratings
BBB- (stable)27/04/2018

Source: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators


World Ranking
201620172018
Ease of Doing Business Index
131/189
130/190
100/190
Ease of Paying Taxes Index
157/189
172/190119/190
Logistics Performance Index
35/160
N/A44/160
Corruption Perception Index
79/176
81/180N/A
IMD World Competitiveness41/6345/6344/63

Source: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World ranking
201620172018
Economic Risk Index Rank61/202
Short-Term Economic Risk Score
 67.5 69.669.8
Long-Term Economic Risk Score 65.3 62.5 62.6
Political Risk Index Rank51/202
Short-Term Political Risk Score 77.7 77.775.0
Long-Term Political Risk Score 71.9 73.4 73.4
Operational Risk Index Rank96/201
Operational Risk Index Score 46.1 49.350.1

Source: Fitch Solutions
Date last reviewed: August 15, 2018

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
Fiscal deficits remain at elevated levels, even though inflation has retreated from double-digit levels, and corporate India has seen some reprieve from improving external demand in the West. Still, relatively high foreign currency reserves and a low foreign debt stock provide some measure of support.

OPERATIONAL RISK
India's main appeal lies in its large market and high-growth potential, with the country benefiting from significant natural resources, diverse service sectors and an expanding industrial base. Since 2014, the Indian economy has broadly benefitted from the reforms undertaken by the government, and we expect the administration led by Prime Minister Narendra Modi to continue to enact incremental reforms over the coming years, which should be positive for the economy. Long-term economic growth will be supported by the large and rapidly growing working age population, as well as robust infrastructure development that will boost the country's logistics profile. However, over the short- to medium term, the country will remain encumbered by some significant structural risks underpinned by the stuttering pace of reform and less robust utilities infrastructure compared to regional giant, China.

Source: Fitch Solutions
Data last reviewed: August 21, 2018

10.5 Fitch Solutions Political & Economic Risk Indices

Graph: India short term political risk index
Graph: India short term political risk index
Graph: India long term political risk index
Graph: India long term political risk index
Graph: India short term economic risk index
Graph: India short term economic risk index
Graph: India long term economic risk index
Graph: India long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Economic and Political Risk Indices
Date last reviewed: August 21, 2018

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
India Score50.1
44.651.0
61.9
42.8
South Asia Average41.843.738.944.040.5
South Asia Position (out of 8)24114
Asia Average48.950.647.747.150.1
Asia Position (out of 35)152313823
Global Average49.749.850.049.349.9
Global Position (out of 201)961319449120

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: India vs global and regional averages
Graph: India vs global and regional averages
Country
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Secruity Risk Index
Bhutan51.7
44.5
48.551.2
62.5
India50.1
44.651.0
61.9
42.8
Sri Lanka
49.4
45.0
46.3
57.7
48.4
Maldives
48.6
50.3
43.440.9
59.9
Bangladesh
38.6
50.1
29.8
38.9
35.5
Nepal38.2
40.9
35.4
35.5
41.1
Pakistan
34.9
36.9
36.844.3
21.4
Afghanistan22.7
37.3
20.1
21.1
12.3
Regional Averages41.8
43.7
38.9
44.0
40.5
Emerging Markets Averages46.8
48.0
47.545.8
46.0
Global Markets Averages49.7
49.8
50.0
49.349.9

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: August 21, 2018

11. Hong Kong Connection

11.1 Hong Kong’s Trade with India

Graph: Major export commodities to India (2017)
Graph: Major export commodities to India (2017)
Graph: Major import commodities from India (2017)
Graph: Major import commodities from India (2017)
Graph: Merchandise exports to India
Graph: Merchandise exports to India
Graph: Merchandise imports from India
Graph: Merchandise imports from India

Exchange Rate HK$/US$, average
7.76 (2013)
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
Source: Hong Kong Census and Statistics Department, Fitch Solutions


2017
Growth rate (%)
Number of Indian residents visiting Hong Kong392,853
-18.3
Number of Indians residing in Hong Kong18,285
N/A

2017
Growth rate (%)
Number of Asia Pacific residents visiting Hong Kong54,482,538
3.5
Number of South Asia residents residing in Hong Kong36,680
N/A

Visitor Source: Hong Kong Tourism Board
Resident Source: The United Nations Global migration database

11.2 Commercial Presence in Hong Kong


2016
Growth rate (%)
Number of Indian companies in Hong Kong67N/A
- Regional headquarters11
- Regional offices15
- Local offices41

Source:Hong Kong Census and Statistics Department

11.3 Treaties and agreements between Hong Kong and India

Hong Kong signed a comprehensive double taxation agreement (DTA) with India on March 19, 2018. The DTA will enter into force when both jurisdictions have completed their formal ratification procedures.

The Hong Kong- India DTA does not confer any specific exemption for most capital gains on Hong Kong residents investing in India. Such gains will continue to be taxed in accordance with Indian domestic tax law.

11.4 Chamber of Commerce (or Related Organisations) in Hong Kong

The Indian Chamber of Commerce Hong Kong
Address: 2/F, Hoseinee House, 69 Wyndham Street, Hong Kong
Email: indcham@icchk.org.hk
Tel: (852) 2523 3877, 2845 4612, 2525 0138, 2525 0139

Source: The Indian Chamber of Commerce Hong Kong

Indian Consulate General in Hong Kong
Address: Unit A, 16/F, United Centre, 95 Queensway, Admiralty, Hong Kong
Email: consular.hongkong@mea.gov.in
Tel: (852) 3970 9900

Source: Consulate General of India, Hong Kong

Content provided by Picture: Fitch Solutions – BMI Research