India Market Access

Import regulations and customs duties

Regulations
To carry out imports, importers should be registered in the Directorate General of External Trade, which sets up the Export and Import Policy (the last "Exim Policy" sets the rules for the period 1997-2002). There are still some non-tarrif barriers, especially a system of license concerning 40% of the imports, and covering all customs rules. There are two lists: the negative list (for about 3000 items including textiles) for which the licensing may be from a simple licensing to a complete prohibition of the item (for example second hand machines) and a second list, the "Open General Licence" concerning the rest of the products, that are not subject to a license. Furthermore, 44 products, (such as loose food-processing products) can be imported only by State monopolies and are subject to a preliminary licensing of the government (alcohol, for instance).

Another system of license was also set up to develop exports: the "Special Import License" (SIL), granted to exporters. These exporters are classified into 4 categories: Export House, Trading House, Star Trading House, Great Star Trading House, depending on their turnover from their exports. They are authorised to obtain special Import licenses that are proportional to their export turnover .

It is difficult nowadays to export textile and clothes and also a certain number of consumer goods (such as farm products for instance) to India because of the numerous administrative constraints, despite several liberalisations. Furthermore, despite the absence of Import quotas, some products, normally subject to license, are not authorised to enter the country when the authorities feel that the quantities bought were too huge.

Finally, there are certain special zones (Free Trade zones, Export Processing Zones, Electronic Technology Area and Jewellery Areas). Within these zones, companies benefit from exemptions of customs duty and local taxes under certain conditions (in proportion to the percentage of their exports).
It may however be pointed out that the big commercial "blocks" such as the European Union and the USA have begun some bilateral negotiations to soften these conditions. India therefore agreed to reduce the number of products of the negative list and according to the origin of products, it is more or less easy to obtain this license.

Distribution

The main economic zones in India are Andhra Pradesh in the South East, Rajasthan in the North, Maharashtra (Bombay region) in the South West, Haryana (New Delhi region) in the North and Punjab, also in the North.

The Business to Consumer (B to C) market

One of the main characteristics of this market is the lack of organisation, with a clear domination of small structures. There are more than 5 million retailers, for the greater part family-run businesses with an average size of 60 square meters area.

However, certain reforms starting in 1991, modified the consumers' habits, who are now looking for diversified and branded products. Some structures like Ebony or Shoppersstop departmental stores appeared, inspired by Occidental models and who favour choice of products and the brands. Franchising also appeared because it enales having a wide distributive network with lesser costs in a country with strong regional disparities. However, the Indian cultural, structural and regulation characteristics tend to slow down a sharper evolution of the distribution sector.

The Business to Business (B to B) market

The size of the market and its growth rate in recent years encouraged lots of investors to invest in India. In 1991 an open policy concerning FDI (Foreign Direct Investment) with an annual "target of USD 10 billions of FDI" was set up by the government.

Transportation of goods

By road
The road network exceeds 3 million km of roads, of which 52,000 km of highways is in a bad state but handles 60% of interurban ground traffic of goods and passengers. Various projects for the improvement of road infrastructure are currently in process with the support of the World Bank which is one of the main money providers of India as well as the Bank for Asian Development.

By rail
There is a rail network of 107,000 km length, of which 12,000 km is electrified. It connects all Indian cities, but the capacity to transport goods is weak. A project for the development of the rail network is in progress. The national company, which runs the whole rail network, is Indian Railways. They transported 410 Mt of goods in 1997. The main goods transported by rail are coal, cement, iron ore and cereals.

By sea
The sea transport handles 90% of the international transportation of goods from or to India. There are 11 important ports along the 5,560 km of Indian coasts (181 ports in total) which handle about 215 million tons of goods a year. The main ports are: Bombay, Calcutta, Chennai and Kulpi in West Bengal.
The river traffic is important, in particular on the Ganges, Brahmaputra, Narmada and Godovari.

By air
The main international airports of the country are Delhi, Calcutta, Bombay and Madras. Bombay's airport ranks 64th in the world, and handled 283,539,000 tons of freight in 1999.

The main Indian company is Air India for international flights. As far as Sahara airline and Jet airways is concerned, they handle only regional and domestic flights.

Standards

The central organisation in the Indian system of normalisation is the Bureau of Indian Standards (BIS), a private and non-profit body, that issues the license to use the BIS mark (Certification Mark) on the products. It ensures compliance of the conditions of normalisation of the products. The standards are rather similar to the American and English ones. In case of absence of an Indian standard, American or English standards are used.

Patents and brands

The organisation in charge of trademark patents and technical designs is the Indian Patent Design and Trademarks Office.

Trademarks and foreign patents do not benefit from any protection in India. The Indian rule on intellectual property is not compatible to the international rule.
In most cases, local laws only recognise patents concerning the manufacturing process.