A StartUp Hub

• Published date: 07 July 2022
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Consumer Protection, Government, Public Sector, Strategy, Industry Updates & Analysis, Financial Services, Inward/ Foreign Investment, Corporate and Company Law, Education, Economic Analysis
• Law Firm: Vaish Associates Advocates
• Author: Mr Vijay Pal Dalmia

Article by Vijay Pal Dalmia, Advocate, Supreme Court of India and Delhi High Court, Partner & Head of Intellectual Property Laws Division, Vaish Associates Advocates, India

#startuplaw #startuplawyer #startup #startupcompany #startupindia #startups #startupfunding #startupecosystem #startupbusiness #startupadvice

Market Place

India is the world's largest democracy and seventh largest country in the world. In the data published by the World Bank, India is world's fifth largest economy at an astounding GDP (2021) of US$ 2,975,142.31 million (US$ 2.975 trillion)¹. However, due to Covid-19 Pandemic, the World Bank has given a GDP forecast of (-) 3.2, and for the year 2021, the World Bank has indicated an expected recovery in GDP up to (+) 3.1²

India offers high prospects for potential growth and return on investment in all areas of businesses. Other salient features of Indian economy are as follows:

• Large and growing domestic market with a huge middle class
• Large pool of young skilled labour force, which is, by and large, educated and fluent in English
• Competitive wages
• Cost-effective production facilities
• Expanding industrial base and intellectual capital
• Capacity upgradation in infrastructure
• Continuous liberalisation in the foreign investment framework and ease of doing business
• Harmonised tax rates for goods and services
• Acceleration of the privatisation process
• Investor-friendly policies

The Indian market is widely diverse, thus, tastes and preferences differ greatly among sections of consumers, creating a largely diverse and vast market for all areas of businesses.

Sectors receiving highest FDI equity inflows are Services Sector (financial and non-financial) followed by Computer Software and Hardware and Telecommunication Sector (radio paging, cellular mobile, basic telephone services). As per statistics from the Department of Industrial Policy & Promotion (DIPP) under the Ministry of Commerce and Industry, the FDI equity inflows during the financial year 2019-20 (from April 2019 to March 2020) stood at US$ 49,977 Million. Cumulative FDI inflows into India (from April 2000 to March 2020) stood at US$ 680,919 million and cumulative FDI equity inflows (from April 2000 to March 2020) stood at US$ 469,998 million.³

MANUFACTURING

Manufacturing is the backbone of the Indian economy which has emerged as a premier global manufacturing hub with the entry of a number of transnational corporations. India offers tremendous opportunity for automobiles, textiles, steel, metals, and engineering and petroleum products for the world market. India has become one of the most attractive destinations for investment in the manufacturing sector. Indian manufacturing companies are expected to benefit from global innovation and investments. The cumulative FDI in India's manufacturing sector reached US$ 88.45 billion during April 2000 to March 2020⁴. Prime Minister of India, Mr. Narendra Modi, launched the ?Make in India program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy. Under the Make in India initiative, the Government of India aims to increase the share of the manufacturing sector to the gross domestic product (GDP) to 25% (twenty five percent) by 2022, from 16% (sixteen percent), and to create 100 million new jobs by 2022⁵.

SERVICES

The service sector continues to be the largest contributor to India's GDP. In fact, more than half of the GDP is contributed by the service sector. India's services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication...