WELCOME TO INDIA

1. WELCOME TO INDIA The Land of Opportunities. 1

2. Doing Business In India Preface:- This overview provides from companies decisions of doing business in and with India, a birds eye view on the investment climate, taxation, forms of business organizations, business, regulatory, cultural and accounting practice in India. The complex decision - making process involved in undertaking foreign operations requires an intimate knowledge of a country’s commercial climate, along with a realization that the climate is constantly evolving. Companies doing business in India, or planning to commence business in India, are well advised to obtain current and detailed information from experienced professionals. 2

3. Basic Statistics • Geographical Location: Between latitudes 804’ and 3706’ North and longitudes 6807’ and 97025’ East. • Land Area: 3.29 Million Square Kilometers. • Climate: Mainly tropical with temperatures ranging from 100C – 400C in most parts of the country. • Capital: New Delhi. • Population: 1.147 Billion (estimated as at March 2008). • Population growth rate: 1.606% per annum. • Population density: 348 persons / square kilometer. (Population / land area in sqkm) • Life expectancy at birth: 66.28 years, male; 71.17 years, female. • Literacy rate: 65.47% (as per 2001 Census). • Languages spoken: Eighteen principal languages; majority speak Hindi; business language: English. • Major religions: Hinduism, Islam, Christianity, Sikhism, Buddhism and Jainism. • International Airports: Ahmedabad, Amritsar, Bangalore, Chennai, Dabolim, Guwahati, Hyderabad, Kochi, Kolkata, Mumbai, Nagpur, New Delhi, Shrinagar and Thiruvananthapuram. • Major Seaports: Chennai, Ennore, Haldia, Kandla, Kochi, Kolkata, Marmagao, Mumbai, New Mangalore, Paradip, Tuticorin and Vishakhapatnam. 3

4. Topography Spread over 3 million square kilometers and located entirely in the northern hemisphere, India is the seventh largest country in the world in terms of geographical size. The Himalayas in the North, the Indian Ocean in the South, the Bay of Bengal in the east and the Arabian Sea in the west form natural boundaries for the country. India’s neighbours are Bangladesh and Myanmar in the east; Bhutan, China and Nepal in the North; Pakistan in the west and Sri Lanka in the south. Climate India has a tropical monsoon climate with the following seasons winter, spring, summer and monsoon. The intensity of the weather varies depending on the region one is in. In general, the northern and central parts of the country experience extreme temperatures during summer (above 40oC) and winter (below 5oC), while the southern and the coastal regions enjoy relatively milder weather. People As per the last census, India has a population of approx 1.217 billion, and the country is expected to overtake China and become the most populous nation by 2045. The cities having a population of more than 5 million are: Greater Mumbai (16.4million), Kolkata (13.2 million), Delhi (12.8 million) Chennai (6.4 million), Bangalore (5.7 million) and Hyderabad (5.5 million). The country’s population presents a kaleidoscope of rich and diverse culture. Language Given its cultural diversity, scores of languages and dialects are spoken in the country. Of these, 22 languages are recognized in the Indian Constitution, which include Bangla, Gujarati, Hindi, Kannada, Malayalam, Marathi, Oriya, Punjabi, Sanskrit, Tamil, Telugu and Urdu. Hindi, written in the Devanagari script, is the national language, while English is the business language. Education and Literacy India has a vast education infrastructure, broadly categorized into schools, colleges, and postgraduate technical and professional educational institutes covering a wide range of fields such as pure sciences, engineering, medicine, information technology, business management, hospitality, law, fine arts, architecture, fashion technology, etc. There are over one million schools and around 9,200 colleges in general field, 4,600 colleges in professional field and 350 universities / institutions of national importance. The professional institutes, with a combined intake of over half a million students per annum, constantly add to the country’s large pool of skilled English-speaking work force, which is a tremendous competitive advantage vis-à-vis other nations. In addition, the diplomatic missions in New Delhi and Mumbai run schools that are affiliated to the education systems of the respective countries for the children of embassy officials and foreign expatriates. Some institutions, such as the Indian Institute of Technology and the Indian Institutes of Management are reputed worldwide. 4

5. Cost of Living India offers the advantage of a low cost of living, relative to American and European countries. The cost of living varies by the type of location (urban / rural), size of location (small / large / metro), etc. The standard of living is comfortable in urban areas, with the availability of well developed residential areas equipped with all utilities. Recreation India offers a wide repertoire of avenues for recreation and entertainment. Metropolitan and large cities have five star hotels, clubs, pubs, restaurants, discotheques, cinema theatres, art galleries and drama theatres. Hotels and clubs offer facilities for a wide range of sports including bowling, squash, tennis, snooker and swimming. Most large cities also have golf courses. India has a highly developed print media which publishes numerous books and magazines to suit diverse tastes. Electronic media offers a variety of national and international channels like the Door Darshan, BBC, CNN, CNBC, Discovery, HBO, AXN, National Geographic, and ESPN. Cities also have FM music channels and the satellite radio organization Worldspace too. Indian cuisine is known and loved the world over for its rich and spicy taste. Most large cities have restaurants that specialize in French, Italian, Greek, Mexican, Thai, Japanese, Chinese and Lebanese cuisines. Multinational fast food chains such as McDonald’s, Subway, Domino’s Pizza and Pizza Hut are present in the country. Shopping India is a veritable paradise for shoppers. Leading global players such as Coca Cola, Pepsi, Kellogg’s, P & G, Unilever, Colgate Palmolive, Gillette, Garnier, Sony, Panasonic, LG, Samsung, Rolex, Mont Blanc, Armani, Nokia, Luis Vuitton, Mercedes Benz, etc are present in India. Time Zone India is five and one-half hours ahead of the Greenwich Mean Time. It has not adopted daylight saving time and uses standard time countrywide throughout the year. Business Hours Normal business hours are from 10:00 am to 6:00 pm, Monday through Friday. Some commercial establishments also work on Saturdays. Banking hours are from 9:00 am to 3:00 pm although some banks have branches open till 8:00 pm. Shops are open till 9:00 pm six days a week. Sunday is the weekly holiday, which can vary from place to place. Public holidays are announced by Government. There are three national holidays – Republic Day (Jan 26th), Independence Day (Aug 15th), and Gandhi Jayanti (birthday of Mahatma Gandhi). In addition, there are several holidays for festivals, the dates of which change from year to year. 5

6. Indian Economy Overview 1). India's Gross Domestic Product (GDP) in purchasing power parity (PPP) is $ 4.726 trillion in January 2008 and is ranked 3 in the world. 2). India has joined the elite club of 12 countries with a trillion dollar economy. 3). Propellers of GDP growth : Trade, hotels, transport & communications -12.1 % Construction - 12 %. Services – 10.5 % Electricity, gas and water supply - 8.3 % Banking & Insurance Sector – 13.9 % Passenger growth in civil aviation - 32.2 %. Information technology – 30.7 %. 4). Estimates of Gross Domestic Product (GDP) growth in 2007-08 is at 8.7 %. 5). FDI flow of US$ 20.137 billion in 2007 – 08 (against US$ 11.8 billion in 2006 – 07). 6). FII’s net inflows - US$ 31 billion (compared with outflows of US $ 9.33 billion in the corresponding period of 2006-07) 7). 44 per cent of the Top 100 Fortune 500 companies are present in India. 8). India ranks number one in the Asia-Pacific region in terms of the value of private equity deals (US$ 9.9 billion) done in the year 2007. 9). Sensex has increased from 13,072 points in March 2007 to 15,644 points in March 2008. 10). India is the most attractive investment destinations in the world with an annual return of 38.36 per cent. (second highest in BRIC economies). 6

7. Continued… 11). Foreign exchange reserves - US$ 301.2 billion as at March 31, 2008 (against US$ 173 billion in 2006 -2007) 12). India among 5 countries sharing 50% of the World Production. 13). The annual inflation rate in terms of WPI – 6.68 % as of March 31, 2008 (against 5.74 % a year ago). 14). Indian Rupee Value against US $ is Rs. 39.97 / Dollar in March 31, 2008 (against Rs. 43.59 / Dollar as at March 31, 2007). 15). Number of Indian millionaires rose by 20.5 per cent from 83,000 in 2005 to 100,015 in 2007 -- making India the world's second fastest growing nation in terms of millionaires after Singapore. 16). 4 Indians have featured in the top 10 world’s wealthiest CEO’s according to Forbes. 17). 7 Indian Micro Finance Companies in the top 50’s Forbes List. 18). India has highest number of billionaires in Asia and fourth highest in the world - 36 (next only to US, Russia and Germany). 19). Merchandise exports increase for 2007 - 2008 – at a rate of 22.9 % to touch US$ 138.4 billion. 7

8. INDIA ENTRY STRATEGY 8

9. Restricted Sectors (FDI disallowed) Gambling and Betting Lottery Business Atomic Energy Retail Trading (except single branded product retailing) Agriculture Sectoral Caps on FDI in Certain Industries (illustrative list) Defense Production (26%) Insurance (26%) Telecommunication (49%) Print Media (26%) i.e. publishing of newspapers and magazines dealing with news and current affairs. Civil Aviation – Domestic Airlines Sector (49%) Trading (51%) Banking (74%) Foreign Direct Investment In Specified Industries 9

10. INDIA SUBSIDIARY… …Or Branch Office Or… 10

11. *FIPB – Foreign Investment Promotion Board. *RBI – Reserve Bank Of India *I–T – Income Tax Authorities *RoC – Registrar of Companies. 11

12. CORPORATE TAX CORPORATE TAX IS PAID BY COMPANIES, BRANCHES, AND PROJECT OFFICES OF OVERSEAS COMPANIES ON PROFITS AND OTHER INCOME. 1plussurcharge at 2.5 % for foreign companies if income exceeds INR 10, 000, 000 (USD 222,000 approx) and education cess of 3% 2plussurcharge at 10 % for domestic companies if income exceeds INR 10, 000, 000 (USD 222,000 approx) and education cess of 3% CORPORATE TAX Businesses need to determine their annual tax payment and ensure deposit under an installment plan referred as ADVANCE TAX by June 15th (15%), September 15th (45%), December 15th (75%) and March 15th (100%). TRANSFER PRICING Businesses having cross border dealing with related concerns fall within ambit of Indian Transfer Pricing regulations, which requires maintenance of prescribed documentation and certification by an Indian firm of chartered accountants. DOUBLE TAXATION AVOIDANCE AGREEMENT (‘DTAA’) India has a network of DTAA with over 75 countries. WITHHOLDING TAX Businesses, including Liaison Office, need to withhold tax on specified payments viz. contractual, professional, rental, etc. TAX AUDIT Businesses with annual turnover exceeding INR 4 million (USD 90, 000 approx) need to have accounts audited under specific provisions of the Indian income tax laws and certified by an Indian firm of chartered accountants. 12

13. PAYROLL TAX EMPLOYER NEED TO WITHHOLD TAXES ON EMPLOYEE EARNINGS * Surcharge at 10 % on income exceeding INR 1,000,000 (USD 25,000 approx) An employer is required to contribute and comply with a social tax namely Provident Fund. There is also an Employee State Insurance cost. Both of these primarily focus on blue collared staff. Foreign nationals deputed to work in India will be taxed on the basis of tax residential status, which is linked to the number of days stayed in India. An employment / business visa is necessary, as is registration with the Foreigners Regional Registration Officer (‘FRRO’). There are certain state specific regulations e.g. Professional Tax and Shop and Establishment Act, which apply in Indian states like Karnataka, Maharashtra, etc. FRINGE BENIFIT TAX (‘FBT’) Amenities provided to employee’s viz, car, travel, etc are classified as Fringe Benefits. A business would be liable to pay FBT on the value of the fringe benefits and ensure quarterly deposit of FBT. The value of FBT is determined as per prescribed scales. 13

14. INDIRECT TAX TAX ON GOODS AND SERVICES India aims to adopt a comprehensive Goods & Service Tax (‘GTS’) by 2010. In the meanwhile, the following indirect taxes apply EXCISE DUTY Manufacturing units need to pay an excise duty on goods produced in India. The duty varies between products and the unit is required to periodically deposit the duty on removal of products. Furthermore, these units are to maintain detailed stock records and accounts in respect of duty payable on final goods, credit claimed on inputs etc and submit annual returns. Submission dates are linked to level of operations. CUSTOMS DUTY Movement of goods across borders would need compliance to customs duty regulations. This duty varies between products. The compliance requirement includes determination and deposit of duty prior to clearance of goods by the customs authority. SERVICE TAX Businesses rendering specified services are liable to a Service Tax at 12 percent plus education cess on the billable value. They are required to monthly deposit the tax collected. CENTRAL SALES TAX (‘CST’) / VALUE ADDED TAX (‘VAT’) Businesses trading in goods between states are liable to charge CST whereas those trading within the same state are subject to VAT. The rate of VAT / CST varies between products and states. The businesses are required to deposit the tax collected and submit bi – annual / quarterly returns with the sales tax authorities. Besides, certain states of India levy entry / octroi tax on movement of goods. 14

15. REGULATORY COMPLIANCE COMPANIES Two main forms – Private Limited Company (‘PVT’) and Public Limited Company (‘LTD’). PVT is the most common form for an international subsidiary. Audited accounts are filed annually on public record with the Registrar of Companies (‘RoC’), in a format set out under the Indian law and Indian Accounting Standards, within a set time scale. Companies also file an Annual Return which gives detail of shareholders and directors. Businesses are required to follow fiscal year i.e. April 1st to March 31st, for compliance under the Indian Income tax laws. 15

16. Dreaming With BRICs: The Path to 2050 SUMMARY • Over the next 50 years, Brazil, Russia, India and China—the BRICs economies—could become a much larger force in the world economy. Using the latest demographic projections and a model of capital accumulation and productivity growth, Goldman Sachs has mapped out GDP growth, income per capita and currency movements in BRICs economies until 2050. • The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6. Currently they are worth less than 15%. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050. • About two-thirds of the increase in US dollar GDP from the BRICs should come from higher real growth, with the balance through currency appreciation. The BRICs’ real exchange rates could appreciate by up to 300% over the next 50 years (an average of 2.5% a year). • The shift in GDP relative to the G6 is expected to take place steadily over the period, but is most dramatic in the first 30 years. Growth for the BRICs is likely to slow significantly toward the end of the period, with only India seeing growth rates significantly above 3% by 2050. And individuals in the BRICs are still likely to be poorer on average than individuals in the G6 economies, with the exception of Russia. China’s per capita income could be roughly what the developed economies are now (about US$30,000 per capita). • The key assumption underlying Goldman Sachs projections is that the BRICs maintain policies and develop institutions that are growth supportive. Each of the BRICs faces significant challenges in keeping development on track. This means that there is a good chance that the projections are not met, either through bad policy or bad luck. But if BRICs come anywhere close to meeting the projections set out here, the implications for the pattern of growth and economic activity could be large. • The relative importance of the BRICs as an engine of new demand growth and spending power may shift more dramatically and quickly than expected. Higher growth in these economies could offset the impact of greying populations and slower growth in the advanced economies. Higher growth may lead to higher returns and increased demand for capital. The weight of the BRICs in investment portfolios could rise sharply. Capital flows might move further in their favour, prompting major currency realignments. • Rising incomes may also see these economies move through the ‘sweet spot’ of growth for different kinds of products, as local spending patterns change. This could be an important determinant of demand and pricing patterns for a range of commodities. • As today’s advanced economies become a shrinking part of the world economy, the accompanying shifts in spending could provide significant opportunities for global companies. Being invested in and involved in the right markets—particularly the right emerging markets—may become an increasingly important strategic choice. • The list of the world’s ten largest economies may look quite different in 2050. The largest economies in the world (by GDP) may no longer be the richest (by income per capita), making strategic choices for firms more complex. 16

17. Rankings selected by region - South Asia IndiaRegion: South AsiaIncome category: Low incomePopulation: 1,109,811,147GNI per capita (US$): 820.00 Note:Doing Business 2007 rankings have been recalculated to reflect changes to the methodology and the addition of three new countries. Starting a Business The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita. 17

18. Dealing with Licenses Shown below are the procedures, time, and costs to build a warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections, and obtaining utility connections. Employing Workers The difficulties that employers face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices. Registering Property The ease with which businesses can secure rights to property is shown below. Included are the number of steps, time, and cost involved in registering property. 18

19. Getting Credit Measures on credit information sharing and the legal rights of borrowers and lenders are shown below. The Legal Rights Index ranges from 0-10, with higher scores indicating that those laws are better designed to expand access to credit. The Credit Information Index measures the scope, access and quality of credit information available through public registries or private bureaus. It ranges from 0-6, with higher values indicating that more credit information is available from a public registry or private bureau. Protecting Investors The indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. Paying Taxes The data below shows the tax that a medium-size company must pay or withhold in a given year, as well as measures of the administrative burden in paying taxes. These measures include the number of payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the percentage of their profits they must pay in taxes. 19

20. Trading Across Borders The costs and procedures involved in importing and exporting a standardized shipment of goods are detailed under this topic. Every official procedure involved is recorded - starting from the final contractual agreement between the two parties, and ending with the delivery of the goods. Enforcing Contracts The ease or difficulty of enforcing commercial contracts in is measured below. This is determined by following the evolution of a payment dispute and tracking the time, cost, and number of procedures involved from the moment a plaintiff files the lawsuit until actual payment. Closing a Business The time and cost required to resolve bankruptcies is shown below. The data identifies weaknesses in existing bankruptcy law and the main procedural and administrative bottlenecks in the bankruptcy process. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is also shown. 20

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33. Ten Top Tips for Doing Business in India • Research the market before you invest. Understand the size, potential and price dynamics - and how and where you want to enter it. Is your product or service right for the Indian markets? • Make sure that you have top management commitment and adequate resources to manage a business relationship in India. 3. Visit the market and take time to build personal relationships - be prepared to make follow up visits. • Choose your partner with care - do thorough Due Diligence and take independent advice. Consider what kind of agreement you need – and don't give away too much information in advance of finalizing any agreement. • Allow plenty of time for meetings and traveling around the market. • Don't be patronising or under-estimate how quickly India is developing. • Understand the business culture and do not be aggressive. • Don't assume anything - find ways of checking progress without causing the other party to 'lose face'. • Be patient - it always takes longer than you think! 10. Talk to your local International Trade Adviser and find out what help is available. OR Talk to WealthTree Partners. 33

34. Basic Etiquette at Meetings The following information will help guide you through a first meeting at an appointment with business contacts you may not have met in person. • CommunicationsRemember - Be flexible! Make appointments in advance and confirm one week before arriving and once you have arrived. Arrive on time. Businessmen appreciate punctuality though they may not always be punctual themselves. Be prepared to spend time getting to know each other before talking business. Send any agendas and back up materials in advance. Follow up the meeting with an overview of what was discussed and the next steps. • DressRemember - Be modest! Business wear is conservative for men and women. Men should wear a dark suit and tie. Women should wear a suit or dress and not show too much skin! • Business CardsRemember – Take plenty! Exchange these after the initial handshake. Put your title and any qualifications on your card. Present it formally and with your name towards the recipient so they can read it when it is handed over. 34

35. Contd… • InstructionsRemember – Talk to the most senior person first – often the oldest one there! Handshakes are normal between men. Wait for women to put out their hand before offering a handshake. English is the common language of business. • NegotiatingRemember – Be patient!Use this as a chance to build good relationships. Be punctual and expect seating to be hierarchical. Be prepared for time to be spent on general conversation at the start of the meeting. People may tell you what you want to hear and don’t assume a smiling face means acceptance. Stress your common aims. The most senior person will make the decisions. If he is not at the meeting, you are at the early stage of negotiation. Decision making can be a slow process. Don’t lose your temper as that means you lose face and are seen as untrustworthy. Concessions are expected in price and terms. Expect them in return. Concentrate on building rapport. Do not be confrontational or forceful. Don’t disagree in public with other people on your team. Politeness, praise and respect are important and don’t make people feel hurried. 35

36. Contd… • Body LanguageRemember – A smile may not mean YES!A gesture you will notice is a distinctive rotational move of the head. When done with a smile it can mean “yes” or “I understand”. A direct ‘No” can be seen as rude, so silence or “We will try” may be used instead.Don’t Point with your finger, that is rude. Whistle or wink; this is seen as impolite. Hug, hold hands or embrace in public, even at an airport, or with your partner! • Going for a mealRemember – Take this time to learn about your hosts!If you are going out for a meal, ask about the dress code. Table manners can also be formal and food may eaten with the fingers, or you may be provided with a spoon and fork. Be prepared to be invited to wash your hands before and after a meal. Bottled water, soft drinks or beer are normally drunk with food.Indians eat late. Wait to be told where to sit. Guests may be served in a particular order, with the guest of honour served first. If you uncertain about anything, ask your host how you should behave.Normally the person who gave the invitation will pay for everyone. Offering to pay will be seen favourably, but expect to be turned down. To reciprocate and show appreciation, invite your host out another time.Dietary restrictions are affected by religion, Hindus do not eat beef and many are vegetarians. Muslims do not eat pork or drink alcohol. Sikhs do not eat beef. Lamb, chicken and fish are the common main courses for non-vegetarians. 36

37. Contd… • Currency – Indian Rupees (Rs. / INR)Remember – Carry some small change!Type of Currency and Denominations available are Paper currency – One, Two, Five, Ten, Twenty, Fifty, Hundred, Five Hundred and One Thousand. Coin currency – Ten paisa, Twenty five paisa, Fifty paisa, One rupee, Two Rupees and Five Rupees. Some uniquely used Indian terms – 1 Lakh = One Hundred Thousand, 1 Crore = Ten Million. • Keep Healthy – Be SafeIn AdvanceBefore you leave your country, check with your GP if you need any immunization and make sure you take a supply of any regular medication. A small First Aid Kit is a good idea. Include some disposable needles in case of an emergency, sun cream, malaria tablets, treatment for diarrhoea and stomach problems.PreventionUse bottled water for drinking and cleaning your teeth. Avoid milk and raw foods. Eating vegetarian dishes, boiled rice and eggs are safest.In an EmergencyGo to a private hospital or clinic recommended by the High Commission or your hotel.Emergency Telephone Numbers Police: 100 Fire: 101 Ambulance: 102 37

38. Thank You S. Venkataraman (Director) venkat@wealthtree.in Mobile:- +91 9821152537 Bhavesh Kothari (Vice President) bhavesh@wealthtree.in Mobile:- +91 9820436076 38