Post on 21-Mar-2018
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Unique Characteristics of Due Diligence in India
Key Considerations When Conducting Regulatory Due Diligence in India
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Pre-Investment Due Diligence in India
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Navigating HR Due Diligence in India
Case Study: Sidestepping Due Diligence, Uber Exposes its Liabilities
www.india-briefing.com
Issue 31 • May 2016
From Dezan Shira & Associates
India’s economy has been averaging a steady seven percent growth over the past few years.
Amid the declining optimism among other emerging economics, India’s outlook remains
positive. The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government
has introduced a multitude of economic programs since 2014. Make in India remains the flagship
initiative, while all other development programs seek to complement it. The International
Monetary Fund (IMF) projects an optimistic 7.5 percent growth rate for India in the fiscal year
of 2016-2017 – up from 7.3 percent in 2015-2016.
India has replaced China as the top location for foreign direct investment (FDI) by attracting U.S.
$63 billion worth of FDI projects in 2015 with FDI increasing by 30-40 percent in the past two
years, according to Finance Minister Arjun Jaitley. However, while India represents a promising
future as an emerging market, it has various regulatory and tax issues that strongly contrast
with other emerging economies. Red tape and bureaucracy can further contribute to delays,
adding roadblocks to a company’s growth. In such a market, it is imperative for companies to
conduct due diligence to safeguard their assets and reputation.
In this issue of India Briefing Magazine, we examine issues related to pre-investment due
diligence in India. We highlight the different regulatory, tax, and socio-economic issues that
a company should be aware of before entering the Indian market. We also detail some of the
topics related to entry structures while investing in the Indian market, as well as cultural and
HR due diligence, which may differ from state to state.
Foreign companies should be quick to notice the various idiosyncrasies of India’s laws and
regulations; this India Briefing Magazine aims to prepare and guide companies to mitigate
such issues.
This Month’s Cover Art
Shampa Sircar DasTransformation
Acrylic on canvas, 36x36 Art Konsult
info@artkonsult.com+91-11-65683083
artgallery.artkonsult.com
For queries regarding the content of this magazine, please contact: editor@asiabriefing.comAll materials and contents © 2016 Asia Briefing Ltd.
ReferenceIndia Briefing and related titles are produced by Asia Briefing Ltd., a wholly owned subsidiary of Dezan Shira Group.
Content is provided by Dezan Shira & Associates. No liability may be accepted for any of the contents of this publication. Readers are strongly advised to seek professional advice when actively looking to implement suggestions made within this publication.
Introduction
With kind regards,
Adam Livermore
Adam LivermorePartner
Dezan Shira & Associates
ASIA BRIEFINGwww.asiabriefing.com www.aseanbriefing.com
VIETNAM BRIEFINGwww.vietnam-briefing.comwww.dezshira.com
www.china-briefing.com
CreditsPublisher / Chris Devonshire-EllisManaging Editor / Samuel WrestEditors / Melissa Cyrill, Pritesh Samuel & Siddhartha ThyagarajanDesign / Jessica Huang & Belén RodríguezDesign Assistant / Kking Lu & Baaria Chaudhary
Table of Contents
Unique Characteristics of Due Diligence in India
Key Considerations When Conducting Regulatory Due Diligence in India
Navigating HR Due Diligence in India
Case Study: Sidestepping Due Diligence, Uber Exposes its Liabilities
P.04
P.06
P.08
P.11This Issue’s Topic
Pre-Investment Due Diligence in India
Online Resources on Emerging Asia
An Introduction to Doing Business in India
How to Establish a Business in India: Choosing aLow-Risk Entry Model
Walmart’s Bribery Scandal Shows Legal, ReputationalRisks in India
Land Acquisition May become Easier in India, but Risks Remain
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ASIA BRIEFING Cambodia, Laos & Myanmar – 2016 Foreign Investment Outlook
Singapore Overtakes Hong Kong as Asia’s Top Financial Hub
Making Sense of China’s ‘One Belt, One Road
Proposed Increase in Business Licensing Fees on the
Horizon for 2017
4
Unique Characteristics of Due Diligence in IndiaBy: Dezan Shira & Associates
Editor: Siddhartha Thyagarajan
Due diligence essentially performs a Strengths-
Weaknesses-Opportunities-Threats (SWOT) analysis
of possible business opportunities. It involves the
holistic assessment of a business opportunity
undertaken by interested parties in the business,
including prospective buyers and partners. The
activity entails an assessment of all relevant
business information, such as assets and liabilities
in the company’s past and present, and evaluate
the financials of the business.
A SWOT analysis in India is tailored according
to the specific requirements of interested
parties. The companies interested in the due
diligence examination compile a checklist of
required information. This information may be
accessible through the records at Indian public
(government) offices, and in some scenarios, the
involved companies may need to provide specific
information that is unavailable publically. In
addition, business plans and other documents such
as payroll data and employment contracts are also
reviewed if deemed necessary by the interested
parties. Due diligence of a wider scope often also
involves procuring information from external
sources, including customers, suppliers, industry
experts, and market research firms.
Due diligence reveals considerable information
about possible business opportunities. However, it
does not reveal all information related to a business
opportunity. The purpose of due diligence is not
to learn everything about a business, but rather to
learn enough to assess the business opportunity
credibly. Due diligence thus becomes a tool to
mitigate risks and to aid sound decision making.
Due diligence in IndiaIndia presents a complex economic, regulatory, and
legal landscape for doing business. Consequently,
the success of a business venture in India is
dependent on a company’s ability to traverse the
Indian business landscape. A company’s success
is in turn linked to the risk management and
mitigation strategy that it undertakes. It is in this
regard that due diligence becomes a powerful
tool that companies may utilize when dealing with
Indian businesses. Due diligence ensures that a
company is able to manage the risk prior to entering
into a business transaction.
Companies should conduct due diligence primarily
for two reasons:
• A company that plans to trade with an Indian
company should verify that the business is
what it appears to be. This is vital in India, where
several companies sprout up every day with the
sole motive of duping prospective clients and
businesses. For example, in April 2016, pretend
chit-fund companies (institutions which promote
Professional Services
Dezan Shira & Associates is able to produce reports on regulatory and market updates for industries across states in India. For more information, please contact us at india@dezshira.com
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Issue 31 · May 2016 · IndIa BrIefIng
low interest rates and lend money for houses and
other purchases) were found to have cheated
depositors out of U.S. $12.2 billion (Rs 800 billion).
This indicates a mala fide intent in the transaction,
and while such cases might be easier to identify
in the preliminary stages of due diligence, some
scenarios require more in-depth exploration of the
business.
• The scenarios that require extended due diligence
include identifying potential “deal destroyers”. This
involves studying Indian companies’ financial
health, including their track record of bill payment,
their creditworthiness, and their standards of
compliance to national and international regulatory
and statutory requirements. Due diligence of this
nature is particularly important in India, where the
tax regime is extremely fragmented and companies
often deal with business entities from other states
within India that have different payment norms
and taxes.
A company that wants to collaborate with an Indian
company often needs to perform extensive due
diligence in comparison to trading with one. The
nature of the transaction while trading, including
selling and purchasing goods and services, acts as an
inherent check on the risks. This requires that a foreign
company undertake all aspects of due diligence
required for trading with Indian companies, such
as a thorough assessment of legal scope to check
compatibility. In addition, companies should procure
information that aids in the valuation of assets and
in negotiating price concessions. Finally, the due
diligence should verify that the proposed business
transaction complies with the mandated investment
and acquisition criteria.
The process of conducting due diligence in different
countries differs significantly, though they seek to
achieve very similar ends.
Independent reports note that countries that are more
developed on average tend to have less corruption
and more transparency, which makes it easier to verify
information that is found. In turn, the presence of
multiple government offices, which also act as public
offices of records, make information easily accessible
to a business that wishes to conduct due diligence.
However, another factor that is intricately linked to the
accessibility of information is the efficiency of such
offices in maintaining information records. This is
dependent on the archiving and filing processes that
such offices follow, as well as the level of digitization
of records that they have undertaken. Developed
countries often have an excellent record of
accomplishment on the aforementioned parameters
as they have access to superior IT infrastructure.
However, pushing towards digitization with
government initiatives such as ‘Digital India’ will help
India close the gap in terms of procuring and providing
vital information digitally.
RegulatoryIn an emerging market like India,regulations are fast-changing, making it imperative for companies to stay on top of laws to protect themselves.
InfrastructureThe level of infrastructure development is widely uneven in India. Tier I cities o�er the best infrastructure, compared to Tier II cities and rural areas.
LanguageAlthough English is the spoken language of business in India, �uency should not be taken for granted. While India has 22 o�cial languages, there are also thousands of non-o�cial ones, and it is hugely important that foreign managers be aware of how their sta� communicate.
CasteIndia has a caste system – a religious system of social strati�cation based on birth – which can a�ect how employees interact with each other.
Cultural normsIndia di�ers vastly from state to state. Each group of people maintain their own traditions, which permeates into corporate culture. Companies must be aware of such issues to ensure productivity.
SecurityIndia is big – each state has its own issues regarding law and security. India’s security landscape is diverse. Central and eastern India both have high security risk compared to places like Leh, where risk is comparatively low.
DUE DILIGENCE CONSIDERATIONSIN INDIA AT A GLANCEIndia topped China in terms of FDI investment in 2015, at U.S. $63 billion, but a host of unique factors exist for foreign investors to consider during the due diligence process.
Oarnings+Other Capital)(excluding, amount remitted through RBI’s
NRI Schemes)
RS. 2,759,378 Crore RS. 1,424,067 Crore
US$ 408,676 Million US$ 227,954 Million
6
Key Considerations when Conducting Regulatory Due Diligence in India By Dezan Shira & Associates
Editor: Pritesh Samuel
Companies determining their market entry strategy
in India should be aware of regulations related to
foreign direct investment (FDI), foreign exchange,
security and corporate law, as well as direct and
indirect taxes. Regulatory clearances can take a
long time to obtain as several clarifications may
be required before final approval by central and
state authorities.
A company entering the Indian market must ensure
that it is in compliance with the Companies Act,
2013, and the Companies Act, 1956, as well as other
acts related to the Securities and Exchange Board
of India (SEBI), if it is listed. Under the Companies
Act, several forms are required to be submitted to
the Ministry of Corporate Affairs.
Depending on the type of company, registration
with various departments and compliance with
their individual provisions is also required. For
example, labor and human resource related
registration may require establishing a provident
fund (social security) to be in compliance. Additional
registration, such as Import Export Codes, may also
be needed.
FDICompanies must ensure that they are in compliance
with the relevant FDI laws to avoid government
censure. India offers two routes for FDI: the
automatic route (does not require pre-approval
by the government) and the government approval
route.
The Indian government recently expanded foreign
investment allowed under the automatic route
in certain sectors, in some instances up to even
100 percent. If FDI exceeds the prescribed limit in
a sector, automatic approval can convert to the
government approval route.
Foreign ExchangeForeign exchange is governed by the Foreign
Exchange Management Act (FEMA), which replaces
the Foreign Exchange Regulation Act (FERA).
The act is aimed at making external trade and
payments easier as part of the country’s economic
liberalization in the 1990s. The highest authority
regulating the law related to foreign exchange is
the Reserve Bank of India (RBI).
Corporate Law Companies must also be aware of corporate laws
in the country, which are mainly governed by
the Companies Act, 2015. The Companies Act
discusses laws related to mergers and acquisitions,
board room decision making, party transactions,
corporate social responsibility, and shareholding.
Foreign companies must carefully consider their
options for investment in India and the available
avenues for establishing a business presence. In the
graphic to the right, we outline the main investment
structures, relevant forms of taxation, and locations
for investment, all of which should form part of a
company’s due diligence process.
7
Issue 31 · May 2016 · IndIa BrIefIng
REGULATORY DUE DILIGENCE IN INDIA: WHAT A FOREIGN COMPANY SHOULD BE AWARE OF
Branch/Project O�ce/Liaison O�ce or Permanent Establishment: The �xed place of business is treated as a permanent establishment and is required to pay tax at 40 percent+surcharge+education tax.
Service Tax: This tax is paid on the values of services provided. Service tax is 14.5 percent with e�ect from June 1, 2016 (it is currently 14 percent).
Minimum Alternate Tax (MAT): This is 18.5 percent+surcharge+education cess. Indian tax law requires MAT to be paid by corporations in cases where the tax payable according to the regular tax provisions is less than 18.5 percent of their book pro�ts.
Limited Liability Partnership (LLPs): LLPs are required to pay tax at 30 percent+surcharge+education tax.
Customs Duty: This is levied on import and export of goods.
Central Sales Tax (CST): CST is levied on goods that are sold from one state to another within India. The buyer has to declare this in a form to the seller.
Wealth Tax: This is levied on some assets owned by an individual or company. The rate of wealth tax is one percent of the value of net assets after deducting the value of exempted assets and liabilities.
Company: A company incorporated in India is required to pay 30 percent tax+surcharge+education tax+dividend tax on net income earned.
$
WHERE TO INVEST
Sector: Di�erent sectors are subject to di�erent sets of regulations, which will signi�cantly impact howan investment is structured. Currently, Banking, Infrastructure, Railways, Defense, Automobile, Medical Devices & Healthcare, are some of the hot industries to invest in, but this can quickly change.
Land: Acquiring land for a manufacturing facility can be complex and time-consuming. Landowners are typically hesitant to sell due to the potential for future price appreciation. Despite the passage of a new Act in 2013, media sources report that nearly U.S. $300 billion in projects remain stalled partly because of current land acquisition regulations.
Location: Due diligence necessitates that companies assess the region’s demographics, infrastructure, security, order, land availability, supply chains, competition present, and laws and taxes, among other issues.
Central Excise: The Central Excise tax is levied on the production value of goods. Excise duty needs to be paid before the product is moved out of the factory.
Note: In addition to the above, companies must also be aware of state and local taxes, which di�er according to the area where the business is set up.
Other Structures: Foreign investment or contributions in other structures, such as not for pro�t companies, are also subject to the provisions of the Foreign Contribution Regulation Act, 2010.
Joint Venture (JV): An alliance is set up with an Indian partner. There are no separate laws for joint ventures. Companies must be incorporated and will be treated as a domestic company subject to Indian laws and regulations.
Wholly Owned Subsidiaries:Foreign investors can establish wholly owned subsidiary companies (WOS) in the form of private limited companies if they operate in sectors that permit 100 percent FDI.
Extension of Foreign Entity: Can be a Liaison O�ce, Branch O�ce (BO), or Project O�ce (PO). These o�ces can undertake only the activities speci�ed by the RBI.
Sole Proprietorship/Partnership: This entity is subject to the RBI’s approval in consultation with the Government of India.
Limited Liability Partnerships (LLPs):LLPs are simple, have tax advantages, and are easier to exit the market than WOSs.
CHOOSING AN INVESTMENT VEHICLE
TAXES
8
Navigating HR Due Diligence in IndiaBy Dezan Shira & Associates
Editor: Melissa Cyrill
Foreign companies entering the Indian market
cannot fail to note the potential of the country’s
large and diversified labor pool. India is currently
coming into a unique demographic dividend
and has a high working age population, while
accelerated economic growth has increased
the demand for skilled manpower. However, it
is essential for foreign companies to conduct
thorough due diligence when navigating the
country’s human resource (HR) environment, which
is filled with a myriad of considerations that do not
exist in other emerging economies.
Typically considered a ‘soft’ concern, HR due
diligence has an expanded scope in India. It
constitutes understanding the country’s system of
employment contracts, labor laws, labor relations,
regulatory policies, work culture, and industry
standards. Identity markers such as class, caste,
gender, ideology, religion, and tribe, amongst
others, greatly influence labor relations in any of
India’s distinct regions and must be fully understood
prior to market entry.
Paying attention to HR due diligence safeguards a
venture from both operational and financial risks.
Operational risks include a high employee turnover
rate, problematic labor relations, and differences over
work culture. Firms entering India must safeguard
against risks while hiring employees, particularly in
senior positions. Conducting HR due diligence may
reveal prospective candidates to have committed
fraud (in terms of inflating their CVs, educational
qualifications, previous salary structure, and omission of
recorded instances of previous misconduct). Financial
risks involve more specific costs, including the human
resource related run-rate costs of the target company,
financial obligations of starting fresh operations or the
prospective transaction, and lack of funds for benefit
plans.
Employment Contracts and Labor LawsLabor laws in India provide for a minimum of guarantees
and benefits to all employees that can supersede the
provisions of labor contracts. For example, a termination
policy outlined within the contract should be verified
against the current law prior to it being carried out. In
India, companies that employ more than 100 workers
need the government’s permission to conduct layoffs.
There are three types of employment contracts in
India – permanent (direct) contracts, fixed contracts,
and temporary contracts. Besides company rules and
regulations, employers are advised to incorporate the
following clauses into contracts – non-disclosure,
employee poaching, unfair competition, trademarks,
patents and trade secrets.
Labor laws in India apply according to the category
into which an employee falls. Employees may be
divided into two broad categories:
• Managerial Personnel – These are employees
who perform managerial, administrative, and
9
Issue 31 · May 2016 · IndIa BrIefIng
supervisory functions. They are governed by
the terms and conditions of their contracts of
employment, service rules, and agreements as
negotiated with their employer, and enjoy less
protection from existing labor laws as compared
to the ‘workmen’ category.
• Workmen – These are employees who perform
non-supervisory duties, which include manual,
unskilled, technical operations, and clerical work.
Workmen are specifically provided with various
protections, social security measures, and benefits
and amenities through the country’s labor laws.
Trade UnionsIndia’s trade union movement is rooted in the country’s
early acceptance of a mixed economy – incorporating
both socialist and capitalist systems. According to
the law, where the number of blue-collar workers at
a location exceeds seven, they are entitled to form
a union to improve their ability to negotiate the
remuneration and other terms of employment.
All unions in India are tracked by the Labour Bureau,
Ministry of Labour and are regulated by the Trade
Union Act (1926).
Labor Laws In India
Employment
Contract Labor (Regulation And Abolition) Act, 1970Designed to regulate the employment of contract laborers. Applies to organizations with 20 or more employees.
Industrial Relations
The Trade Unions Act, 1926 Contains rules on governance and general rights of trade unions.
The Industrial Employment (Standing Orders)Act, 1946Provides a standard model of service conditions for employees. Applies to all establishments with 50 or more workmen employees.
Shops and Establishment ActDesigned to regulate employee wages, hours of work, leave holidays, and terms of service. Each state has its own version of the Act.
The Industrial Disputes Act, 1947Provides the machinery and procedure for the investigation and settlement of industrial disputes by negotiations. The Act applies only to the organized sector.
Indian Factories Act, 1948 Designed to regulate working conditions in factories.
Wages
The Payment Of Wages Act, 1936;The Payment of Wages Rules, 1937;The Payment of Wages (Amendment)Act, 2005
Designed to regulate the payment of wages to employees. Stipulates the wage periods, time, and mode of payment of wages.
The Minimum Wages Act, 1948;The Minimum Wages (Central)Rules, 1950
Sets minimum wage levels that must be paid to skilled and unskilled workers.
The Payment Of Bonus Act, 1965; The Payment of Bonus Rules, 1970
Governs bonus payments. Seeks to provide employees a share in the profits of a company. Applies to a workplace with 20 or more employees.
Equal Remuneration Act, 1976 Provides for the payment of equal wages to men and women employees.
Health, Safety, and Social Security
Workmen Compensation Act, 1923 Regulates employee compensation for injury by accident during employment.
The Employees State Insurance Act, 1948 Regulates employee compensation for injury by accident during employment.
The Employees’ Provident Fund & Miscellaneous Provisions Act,1952; The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
Mandate the provision of the provident fund, pension fund, and deposit-linked insurance fund. Applies to establishments with 20 or more employees.
The Payment Of Gratuity Act, 1972Mandates a gratuity payment to employees in a company with ten or more people and applies to all employees regardless of salary.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Maintains that during an inquiry following a written request, an internal committee may recommend to transfer the aggrieved woman to any other workplace/grant leave of up to three months/grant other compensation.
10
IndIa BrIefIng · Issue 31 · May 2016
The latest data, released for 2012, showed an
estimated 16,154 trade unions in India, with a
combined membership of 9.18 million.
Trade unions at the firm or industry level are
often affiliated to larger federations. The largest
federations are at the national level and are called
the Central Trade Union Organizations (CTUO).
Companies should also note the significance of the
particular political and ideological affiliations of the
trade union(s) to which their employees belong.
Work Culture In India, the workplace set up is often hierarchical
with clear boundaries between management
levels. The country ’s business etiquette is a
combination of Western and Eastern practices,
but local customs do permeate relationships.
These need to be acknowledged for successful
business interactions. For instance, when giving
feedback, an understanding of honor-shame
becomes important in the Indian context, which
can otherwise be inadvertently interpreted as
unconstructive criticism.
Appealing to a person’s honor and being respectful
of each other’s roles and expertise is also important
when beginning a discussion or conducting
business with an Indian colleague or associate. Even
the traditional greeting ‘namaste’ – loosely translates
to “I bow to the divine in you” – representing a
cultural nuance that should be borne in mind.
Due Diligence Checks for Business IntegrationAside from country-specific considerations, there
are several critical HR due diligence checks that
need to be performed if a foreign company is
looking to establish a JV, a business alliance, or
secure an M&A. Such checks help discover hidden
liabilities while integrating business operations,
and include:
• HR Policies and Governance, Talent M a n a g e m e n t , a n d E m p l o y m e n t Demographics – These inform the HR
organizational design, identify the top levels
of management, assessment of critical players,
deployment of appropriate resources, retention
of key people, and communications strategy
development. It is also necessary to examine
any trade union associations and collective
bargaining mechanisms of the employment
personnel.
• Compensation Structure of the Target Company – This is one of the biggest costs
incurred while conducting business. It typically
comprises a base salary, an annual incentive
and/or a long-term incentive. The change in
ownership may result in the acceleration of
payment of severance packages, and establishing
their timing and who will bear the financial
responsibility are key functions of the due
diligence process. Firms will have to agree on
the expatriate cost sharing arrangement, if
applicable.
• Benefit Plans of the Target Company – To avoid
differences on funding requirements, it is
important to agree on the company’s respective
benefit policies such as retirement benefits/
pension funds (minimum contributions v. stable
yearly amount), leave encashment, medical
insurance, etc.
Recognized Central Trade Union Organizations (Alphabetical Order, Verified 2008)
Trade Union Affiliated Political Party
All India Central Council of Trade UnionsCommunist Party of India (Marxist-Leninist Liberation)
All India Trade Union Congress Communist Party of India
All India United Trade Union Centre Socialist Unity Centre of India (Communist)
Bharatiya Mazdoor SanghRashtriya Swayamsevak Sangh (indirectly the Bharatiya Janata Party)
Centre of Indian Trade Unions Communist Party of India (Marxist)
Hind Mazdoor Sabha Unaffiliated
Indian National Trade Union Congress Indian National Congress
Labour Progressive Federation Dravida Munnetra Kazhagam
National Front of Indian Trade Unions Unaffiliated
Self Employed Women's Association Unaffiliated
Trade Union Coordination Committee All India Forward Bloc
United Trade Union Congress Revolutionary Socialist Party
11
When Uber began India operations in September
2013, the company rode a wave of positive
customer reviews and glowing media exposes. Tech
savvy consumers happily abandoned unreliable
municipal and radio taxi services; Uber quickly
expanded to eleven cities across India, growing at
an average of 35 to 40 percent a month. Indeed,
Uber grew so rapidly that it struggled to contract
enough drivers – the company began training
inexperienced drivers and even provided individual
loans for drivers to buy vehicles. However, such
issues caught up with the company. The absence
of modern e-commerce regulations, high levels of
demand, and a misunderstanding of rule of law
unearthed Uber’s lack of due diligence in India.
Uber’s problems started on December 5, 2014,
when an Uber-contracted driver sexually assaulted
a female passenger in Delhi. Within days, the media,
public, and government turned hostile to Uber.
While the taxi company had successfully managed
similar incidents in Western countries, Uber learned
that their liabilities in India were more extensive
than they imagined. The Delhi government swiftly
banned Uber and other app-based taxi providers
from operating in the National Capital Region
(NCR) three days after the sexual assault. The federal
government’s Home Minister swiftly advised state
governments across the country to ban app-based
taxi services. Media outrage against Uber didn’t help
and word spread that Uber was unsafe.
Uber suspended its Delhi operations indefinitely
from December 11. Instead of consolidating and
expanding its share of the U.S. $8 billion private
taxi market in India – which is expected to grow
at least U.S. $15 billion in the next five years – Uber
incurred significant losses with cab drivers off the
roads but still on the company’s payroll. Whether
it is because of ignorance, or a bull-headed zeal for
disruptive innovation, Uber sidestepped regulatory
and tax laws that threatened to reshape its business
model in India.
Uber learnt that India was a different and challenging
market to cater to as compared to other markets it
operates in. India was a country of many firsts for
Uber. It made several changes to its business model,
including taking cash and taking payments through
a digital wallet rather than credit cards.
In an emerging market like India, any company,
regardless of the industry, needs to conduct due
diligence and evaluate their liabilities during the
pre-investment phase, or else risk losing business
or be forced to exit the market. While Uber was able
to come back into the Indian market, others might
be unable to do so.
CASE STUDY
Sidestepping Due Diligence, Uber Exposes its LiabilitiesContributors: Adam Pitman & Pritesh Samuel
Pritesh SamuelManager, Business Intelligence
Dezan Shira & AssociatesDelhi Office
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