Doing Business in India 26 June 2018 Nexia

Doing Business in India 26 June 2018 – Nexia Webinar by SKP

01 Speakers’ Profiles

Speaker Profiles Manoj Gidwani Partner – Global Marketing SKP Business Consulting LLP Manik Abbott Associate Director – Business Advisory SKP Business Consulting LLP Tami Hirszhorn Vice President – Global Strategy Avgol Nonwovens

Content 01 02 03 04 Speakers’ Profiles India Story Policies and Regulatory Environment Legal Entity Selection & Set-up 05 06 07 08 Taxation in India Avgol Nonwovens Introduction In Conversation with Avgol Nonwovens About SKP

02 India Story

ABC of India A B C Almighty Bollywood Cricket

India at a glance 3. 3 th 7 1. 34 Million KM 2 Largest Billion Country Population Area 26 7. 4 46+ Years Percent Billion USD Median Age GDP Growth FDI Equity Inflow in FY 2016 -17

Strong Economic Fundamentals Economy growing at a robust rate, with 7. 4% GDP growth forecast for Financial Year 2018 -19 Structural reforms to take India to its Potential GDP Growth rate of 8% - 10% in future Gross Domestic product (at 2011 – 12 prices) GDP Value (USD tn) Predicted GDP value (USD tn) Growth rate (%) Source: MOSPI (2014 – 15 to 2017 - 18), IMF World Economic Outlook Database (2018 – 19 to 2023 - 24) 14 -A 2014 - 15 2015 - 16 2016 - 17 2017 - 18 2018 - 19 2019 - 20 2020 -21 2021 - 22 2022 - 23 2023 - 24 pr 18 -A 2. 4 3. 1 pr 2. 3 2. 9 17 -A 2. 1 2. 6 10 8 6 4 2 0 Falling Overall Inflation [VALU E]% [VALU E]% E]% pr 2 1. 8 8. 1 16 -A 1. 7 6. 6 7. 9 pr 1. 6 7. 1 [VALUE] 7. 8 8. 2 pr 7. 4 8. 1 15 -A 8. 2

Young & Skilled Talent Pool Largest youth population in the world Average of an Individual (2020) India to have world’s largest youth population by 2020 45 Average Age (in years) India to be the largest supplier of university graduates in the world by 2020 50 30 47 Europe Japan 40 40 35 46 29 25 20 15 10 India has the third largest group of scientists and technicians in the world 5 0 India Source: IBEF US

Huge Domestic Market with Increasing Consumerism Rising affluence is the biggest driver of increasing consumption in India The growing purchasing power and rising influence of the social media have enabled Indian consumers to splurge on good things. 35% Internet penetration in India Smartphone penetration 28% (2016) 59% (2021 E) Average online consumer spending to grow at CAGR of 13% (2016 -2020 E) India’s e-commerce market to grow at CAGR of 34% (2016 -2020 E) India’s robust economic growth and rising household incomes are expected to increase consumer spending to USD 4 trillion by 2025 E Sources: IBEF and Secondary Sources India was the world’s 3 rd largest smartphone market in 2017 with smartphone shipments growing 14% year-on-year to 124 million units.

Attracting FDI: Driving Global Growth INDIA 2 Ranked 1 Top 10 FDI inflow countries by Project Numbers 2017 9 3 Greenfield FDI inflows, top 10 host economies, in 2016 (Billions of dollars) United States (1) 348 United Kingdom (14) 254 33 China (4) 108 Hong Kong, China (3) Netherlands (7) 69 62 71 59 64 48 Singapore (5) Brazil (8) Australia (16) 19 India (10) Russian Federation (25) 134 136 174 92 44 44 38 12 Source: UNCTAD, FDI/MNE database 2017 Report Developed economies 2016 2015 Developing and transition economies 2016 2015 391 Rank Country Projects in 2017 1 US 1627 2 UK 939 3 Germany 766 4 France 696 5 China 681 6 India 637 7 Mexico 449 8 Spain 385 9 Singapore 354 10 Poland 338 Source: FDI Intelligence

03 Policies and Regulatory Environment

Inclusive Growth Startup India Digital India 1. 2+ billion# broadband users 432 million* Skill India 20, 000+ startups*, India is the world’s 2 nd largest start-up ecosystem Jan Dhan Yojana 400+ million# skilled workers 18 million* Aadhaar Make In India 1. 1+ billion* enrolments • * 2017 Data • # Estimated by 2022 283+ million* bank accounts Sectors, processes, infrastructure and mind set

Ease of Doing Business India Climbed to the 39 th rank WEF’s Global Competitiveness Index 39 India’s ranking in the Ease of Doing Business leapt 42 ranks 100 110 120 130 71 2014 -15 140 2016 -17 150 142 130 2014 2016 India is among the top 50 countries globally on five out of 12 pillars measured by the Global Competitiveness Index. 3 rd 29 th 39 th 42 nd Market Size Innovation Institutions Business Sophistication Financial Market Development 2018 FDI Policy 2016 Goods and Services Tax IPR Policy 2016 Open Economy Single Tax from July 2017 Innovation, strict enforcement and expedited process Companies Act, 2015 Permanent Residency Bankruptcy Code Simplified Compliance PRS for Investors for 10 years Time-bound Insolvency Process

FDI Policy in India Sectors Automatic Route Government Route Manufacturing 100% - Agriculture 100% - Civil Aviation 100% - Infrastructure 100% - Pharmaceutical: a) Greenfield b) Brownfield 100% Up to 74% Beyond 74% Trading : a) Single Brand Detailing b) Multi Brand Detailing 49% 100% Beyond 49% - Banking (Private Sector) 49% 49 – 74% Defence 49% Beyond 49% Insurance 49% - Telecommunication 49% Beyond 49% Print Media - 26% Source: DIPP, CFPC 2017 Prohibited Sectors a) Lottery b) Gambling c) Chit funds d) Nidhi company e) Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes f) Activities/sectors not open to private sector investment e. g. (I) Atomic Energy and (II) Railways

04 Legal Entity Selection & Set-up

Entry Vehicles Operates as a Foreign Company Liason Office (LO) Permitted activities Communication channel; Commercial activities not permitted Setup criteria - Profit during immediately preceding 3 years in home country - Net worth ≥USD 50, 000 Taxation on income Taxation on repatriation Not a taxable entity, required to file limited tax return giving information on business conducted by head office Project Office (PO) Execute projects Branch Office (BO) Export/import of goods/ professional service/ research activities/ No manufacturing - Profit during immediately preceding 5 financial years in home country Incorporate as Indian Company Private Limited Company Limited Liability Partnership Any activity subject to FDI policy Activities under automatic route, governed by LLP Act, 2008 - Minimum of 2 subscribers - Minimum of 2 directors No prior government approval in the case of LLPs - Net worth >USD 100, 000 Income tax @ 40% plus applicable surcharge and cess Income tax @ 30% plus applicable surcharge and cess No tax on profit repatriation Dividend repatriation subject to tax @ 20. 36% No tax on profit repatriation

05 Taxation in India

Taxation in India Corporate Tax: • Tax Rate for AY 2019 -20 (FY 2018 -19): Type of Entity Effective Corporate Tax Rate Dividend Distribution Tax Domestic Companies 26. 00% to 34. 94% 20. 56% Limited Liability Partnership 31. 20% / 34. 94% N/A 41. 60% to 43. 68% For Royalty, 52% to 54. 6% N/A International Companies • The tax rate for Domestic company would be 25% if turnover or gross receipt of the company does not exceed INR 2. 5 Billion in the previous year 2016 -17. • Health and education cess calculated at the rate of 4% of such income-tax and surcharge. Indirect Tax: • GST introduced in India in July 2017. Current rates are 0%, 5%, 12%, 18% and 28% Changing Landscape: • Simplification of revenue audits (limited scrutiny, digitisation – e-scrutiny, detailed guidelines for selection of cases of transfer pricing revenue audit) • Quick disposal of Advance Pricing Agreement (APA) • Consultative approach – implementation of circular, rules, etc. after inviting public suggestions

06 Avgol Nonwovens Introduction

Avgol Nonwoven • Avgol Nonwoven is a leading manufacturer of a comprehensive range of ultra lightweight spun-melt nonwoven fabrics across the world. Avgol Nonwoven was founded in 1953 and is currently headquartered in Tel Aviv, Israel. Avgol Industries 1953 Limited is listed on the Tel Aviv stock exchange. • Avgol focuses on serving the baby diaper, adult incontinence and feminine hygiene markets, contributing to the well being of babies, mothers and senior citizens around the globe. • Since 1988, Avgol Nonwoven has been steadily expanding its production and innovation capabilities. At present, the company has 17 production lines of which five are in United States, three in China, two in Russia, six in Israel and one in India. • Plant Locations: Particulars Commencement Location Middle East USA China Russia India 1998 Israel, new plant in Dimona 2001 2005 2008 2017 North Carolina Jingmen, China Tula Region Madhya Pradesh

Avgol Nonwoven India • Avgol India Private Limited was established in December 2011. • Avgol Nonwoven had thoughts of setting up a manufacturing facility in India but the same became reality only in early 2016, where Avgol Nonwoven decided to setup a manufacturing facility in Mandideep, Madhya Pradesh. • The facility setup was initiated in April 2016 and it became operational by October 2017, completing the setup successfully in 18 months. • The manufacturing facility in India is established over nearly 5 acres of land, employing approximately 80 persons and with a capacity of manufacturing 10, 000 MT of spun-melt non-woven fabric. • The focus of the company is to provide seamless service to their customers with high quality products in the domestic market in India and to seek for future expansion in the coming years.

07 In conversation with Avgol

08 About SKP

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