Visa and Tax Travails of Foreign Artists in India By Poorvi Chothani

Engaging foreign nationals in the entertainment industry has been a long time favorite with Bollywood producers. Earlier, foreign nationals were engaged as supporting performers in dance sequences or as cabaret dancers often referred to as “item girls,” a term that is not intended to be pejorative. Foreign nationals have also been involved in Bollywood as technicians and cinematographers.  As the Indian entertainment industry, with an increasing global reach, has evolved, there has been an influx of artists including actors from overseas, TV personalities, dancers, musicians, international singers and many more.   According to some industry opinions, foreign actors are attractive because they (1) offer fresh faces and international personalities, (2) command lower fees  (3) do not have impossibly busy schedules, (4) offer the mystique and charm of being “foreign,” and (5) foreign women actors tend to be less inhibited than local ones about risqué scenes.

Whatever may be the reason, Bollywood is welcoming the increased number of foreign artists into its fold, many even from directly across the border, despite strained political relationships.   In this article we will explore how these individuals may be authorized to work in India. Continue reading

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Is India Special Enough for the 301 List?

By Raj Bhala

A “Special 301 Report” is prepared every year by the Office of the United States Trade Representative (the “USTR”) under Section 301 of the Trade Act of 1974.  The report identifies trade barriers to U.S. companies and products due to the intellectual property laws of other countries.  The USTR is also required to identify “Priority Foreign Countries” (“PFCs”), which are those countries deemed to have inadequate intellectual property laws.  Being designated a PFC may subject a country to U.S. trade sanctions.  In the Spring of 2014, the USTR  came under pressure from American trade lobbies to designate India as a Priority Foreign Country.  The USTR acknowledged problems in India with respect to securing and enforcing patents, protecting trade secrets, counterfeiting trademarked goods, IP piracy, and localization rules.  Localization rules favor a domestic industry or service provider, or domestic IP, vis-à-vis foreign competitors.  While localization rules serve a legitimate purpose, such as protecting data privacy or national security, others are overtly protectionist and implemented largely to enhance the strength of domestic industry.  Unsurprisingly, the reaction in India was anger.  To Indians, the action was an American bullying tactic and unjustified legally.  In a speech delivered in March 2014 in Chicago, the Indian Ambassador to the United States, S. Jaishankar stated that “it would be a mistake [for the U.S.] to pile up public pressure, especially through a misrepresentation of the facts.”  Indrani Bagchi, India’s Fresh Attack in U.S. Trade War, The Times of India, at 19 (Mar. 4, 2014).  Did the ambassador have a point? Continue reading

Challenges in Anti-dumping Investigations in India

J.K. Dadoo and D.P. Mohapatra

The cardinal principle of the World Trade Organization (“WTO”) is trade promotion through the facilitation of the free flow of goods and services among member states with minimal tariff barriers and without non-tariff barriers. In a world where tariff and non-tariff barriers are decreasing rapidly, unfair trade practices like dumping, subsidization and sudden surges in exports,  continue to occur regularly. Thus, anti-dumping, anti-subsidy and safeguard measures are increasingly becoming major tools in the hands of member nations to protect their domestic industries against unfair trading practices. Such measures create a level playing field for domestic industries to compete more effectively in their domestic markets. Among these trade remedial measures, an Anti-dumping Duty is the most frequently used tool for the protection of the domestic industry from “dumping”, i.e. export of an article into the market of another country at a lesser price (normal value) than the price at which it is sold in the domestic market of the exporting country.

India has emerged as one of the frequent users of anti-dumping measures in recent years. The anti-dumping journey of India began in the year 1995. Over the years, India has experienced dumping of various products such as chemicals and petrochemicals, pharmaceuticals, textiles/fibers/yarns, steel and other metals, consumer goods, automotive components, plastics and plasticizers, electrical and electronic items.  Various countries, especially China, were found to be participating in these dumping practices. The anti-dumping investigations conducted by India were predominantly against China, EU member nations, Korea, and Taiwan; even though a large number of other countries were also found to be dumping goods in the Indian market. Continue reading

India’s Public Stockholding of Agricultural Products: Will Exports of Procured Food Grains Cause Trade Distortion?

By Abhijit Das

Introduction

India’s concern for securing sufficient flexibility for maintaining public stockholding of agricultural products has received significant international attention in the last few months. In the context of public stockholding for food security purposes, some countries have raised an apprehension that exports of food grains from the Food Corporation of India (FCI) stocks distort global trade (See Raul Montemayor,  “Public Stockholding for Food Security Purposes – Scenarios and Options for a Permanent Solution”,  June 2014, ICTSD Programme on Agricultural Trade and Sustainable Development, Issue Paper No. 51).  Exports from a country can be said to distort global markets under two circumstances. First, when the exports benefit from specific subsidies; and second, when the export price is lower than the price at which the product is sold in the home market of the exporting country, i.e. the product is dumped. The mere fact that the export price is lower than the prevailing prices in international markets, including the prices in the importing country, cannot be the basis for concluding that low priced exports are distorting global markets. In order to conclude that low priced exports are distorting global markets, it is necessary to establish factually that the exports are either dumped or benefit from subsidies. It is essential to bear these two considerations in mind while examining whether exports of food stuff from FCI stocks are distorting global markets.

In the above context, this article will explore the question of whether the export of food grains from the FCI stocks could distort trade? Continue reading

Recent Changes in FDI Regime for Indian Realty

By  Vivek Kohli and Anu Chowdhry

Significant changes have recently been made to the Foreign Direct Investment (FDI) regime governing India’s cash-starved realty sector, which has been witnessing declining FDI inflows.  The declining amounts are $2.94 billion in 2009-10, $1.23 billion in 2010-11, $0.73 billion in 2011-12, $0.13 billion in 2012-13, and $.12 billion in 2013-14, according to data compiled by Department of Industrial Policy and Promotion (DIPP), Government of India. In its Cabinet Note in October, 2014, the Government of India proposed numerous amendments to the Consolidated FDI Policy, 2014 (FDI Policy), aimed at increasing inflows and opportunities for growth and employment. With the release of DIPP’s Press Note No.10 on December 3, 2014, the final amendments to the FDI Policy have come into effect, and are analysed in this article. Continue reading

Introduction of Separate Regulatory Framework for Medical Devices

By Sunil Tyagi and Anu Chowdhry

In the Indo-U.S. Joint Statement released for the January 2015 visit of the U.S. President to India, bilateral collaboration in medical devices, pharmaceuticals, biotechnology and health-related information technology occupies prime position. Other healthcare agendas in the Joint Statement include completion of a Memorandum of Understanding among the Indian Ministry of Health & Family Welfare, the Indian Department of Biotechnology, the Indian Council of Medical Research, the All India Institute of Medical Sciences, the U.S National Institute of Health and National Cancer Institute and the upcoming completion of an Environmental Health, Occupational Health and Injury Prevention as well as a Control MoU between the U.S. Centres for Disease Control and Prevention and the Indian Council for Medical Research.

India’s total revenue potential for electronic medical devices is estimated at $ 6.4 billion for 2020. In an Executive Briefing in June, 2010, the United States International Trade Commission (USITC) noted that India’s market for orthopaedic devices alone is expected to touch $600 million by 2015, attributable to an increasing elderly population that is projected to reach nearly 200 million by 2025. Healthcare companies in the U.S. have begun to tap into this market by forming strategic alliances with Indian entities. For instance in October 2013, Minneapolis-based Medtronic, the world’s largest maker of heart rhythm devices, announced its entry in the kidney dialysis business in collaboration with India’s Apollo Hospitals Enterprise Limited, and dedicated an investment of $24 million towards research, development and manufacturing in India. GE Healthcare (healthcare division of American conglomerate General Electric) has set up three manufacturing plants in the State of Karnataka, invested $500 million towards R&D in these facilities and has plans to introduce low-cost portable ultrasound machines in India. Predominant factors attracting such large-scale investment include focus on health insurance coverage and preventive care, rising demand for better medical infrastructure and specialized facilities, as well as growth of medical tourism. Despite the favourable outlook for India’s medical device industry and the U.S. being considered a world leader in medical device innovation, foreign investors are yet to leverage these opportunities – a key reason being that although previous Foreign Direct Investment (FDI) policies permitted FDI in medical devices, separate norms for the sector had not been explicitly provided for. Continue reading

Case Notes – Spring 2015

By Aseem Chawla, Shamik Saha, Pranshu Goel

Bombay High Court Holds That the Issuance of Shares at Premium Does Not Per Se Yield “Income”

Vodafone India Services Private Limited (‘Company’ or ‘taxpayer’ or ‘Vodafone’), a wholly owned subsidiary of Vodafone Tele-Services (India) Holdings Ltd. (‘Holding Company’), issued 289,224 equity shares of face value of ₹10 at a premium of ₹8,509 per share. The tax payer received a total consideration of ₹2,463,800,000 at a fair market value of ₹8,519 per share computed in accordance with the methodology prescribed by the Government of India under the Capital Issues (Control) Act, 1946.

The subject transaction of allotment of equity shares along with the Arm’s Length Price (ALP) of ₹8,519 per share was reported by the taxpayer in the Accountants Report (Form 3CEB) as an international transaction.  However, the tax payer had placed his contention in FORM 3CEB by way of a note that the said international transaction was being reported only as a matter of abundant caution and would by no means affect the income of the Company. Continue reading

The Services Sector in EU-India Trade Negotiations

By Anirudh Shingal

The European Union and India launched negotiations towards a free trade agreement (a “FTA”) in June 2007.  After several rounds, these negotiations entered an intense phase following the February 2012 EU-India Summit.  Both partners would like the negotiations to conclude by the next summit.  One of the important issues in this agreement, officially called the Bilateral Trade and Investment Agreement (the “BTIA”), is the overall ambition of the services package.

The services sector is extremely important for the EU and India in the on-going trade negotiations.  Both the EU and India are predominantly service economies with more than 70% and 50% of their respective GDPs emanating from services.  Thus, any trade agreement between the two that excludes services would ipso facto exclude the most important sectors for both partners.  Moreover, there are significant barriers to services trade between the two, so that substantial coverage of services in a likely agreement could help to deliver improved access to both markets and also lead to more rapid liberalization of India’s services than can arguably be accomplished unilaterally.  While services liberalisation offers direct benefits, much like goods liberalisation, the research literature suggests the presence of more comprehensive systemic benefits via the positive impact of services liberalization on manufacturing productivity.  See, e.g.,  Arnold et. al, 2006a, b, 2007.  Thus, the benefits to both economies from services liberalization will almost certainly be larger than those from goods trade liberalisation. Continue reading