2. 1. Identify the right export model for your business
Local presence
Liaison/ Representative office
Branch/ Project office
Wholly owned subsidiary
Channel/ distribution network
Joint venture company
Franchising
Retailing
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3. 2. Identify what industry specific regulations apply to you
Work with counsel to identify industry specific regulations/ permissions
that may apply to your goods, services and export model
FDI Policies
Industry-wise sectoral caps
Automatic Route v. Government Route
Prohibited Sectors (e.g. Atomic Energy, Gambling and Betting,
Agriculture (with several exceptions))
Foreign Exchange Management (Current Account Transactions) Rules,
2000 framed by the GOI and the Directions issued by RBI under FEMA
GOI’s Directorate General of Foreign Trade
Foreign Trade Policy and Foreign Trade Procedures
Reserve Bank of India’s Master Circular on Import of Goods and
Services
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4. 3. Use contracts and don’t just rely on LOIs/ MOUs
Written contracts should include business and legal terms:
Sets commercial expectations
Generally, Indian courts respect contracts unless the contract
or a contractual term is against Indian law or public policy
Absent a written contract:
The U.N. Convention on International Sales of Goods may
apply
Courts may determine that Indian law applies
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5. 4. Work with counsel to draft effective contracts
Alert! Don’t rely on boilerplate U.S. or Indian contract terms
Provisions may be ineffective under Indian law
Provisions may not address gaps under Indian law
Provisions need to be tailored to your export strategy
At a minimum, contracts should include:
Commercial terms (e.g., payment and delivery terms)
Protections to address intellectual property and confidential information
Risk allocation (e.g., indemnification; warranties and disclaimers; limitations on
consequential and other damages; and require insurance)
Force majeure
Termination
Dispute resolution
Governing law
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6. 5. If possible, require U.S. federal/ state law for the contract
Indian courts respect the parties’ choice of law for the contract
Choose U.S. federal/ state law or English law where possible
Caveats:
Certain U.S. or Indian laws may still apply (e.g. export laws, FCPA/
anti-corruptions laws, IP laws, antitrust/ competition laws)
Certain contracts will always be subject to Indian law:
Contracts between Indian parties (e.g. contracts between a
U.S. company’s Indian subsidiary and its Indian partners)
Contracts with Indian governmental entities
Contracts with Indian consumers/ individuals
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7. 6. Protect your intellectual property
Register your key export-related intellectual property assets in India
Require your Indian partners (including the joint venture company)
to agree to:
“no contest” terms
confidentiality obligations (note: no trade secret legislation in
India)
present assignment of derivative or new intellectual property
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8. 7. Require arbitration for dispute resolution
The Problem:
U.S. judgments are not automatically enforceable in India
Indian companies are not averse to litigation
Litigation experience can be frustrating: delays, uncertainty, and
corruption
Arbitration is a better alternative; make it a requirement of the contract
India is a member of the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958
Caveats:
Reserve court access for IPR and Confidential Information; Indian
High Courts grant injunctive relief within 48 hours
Arbitration is not available against governmental entities
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9. 8. Be aware of the web of Indian labor laws
Labor laws:
Industrial Disputes Act, 1947
Factories Act, 1948
Applicable state’s Shops and Establishments Act
More than 55 central labor laws and over 100 state labor laws
More stringent than U.S. labor protection requirements (e.g., 200 hours/
year overtime limit, 30 minutes/ 5 hour rest break, etc.)
Companies employing more than 100 workers must obtain government
approval before they can fire employees or close down
Post-termination restrictive covenants are void (e.g., non-compete and
non-solicitation clauses)
Exception: Non-compete clauses in the context of a sale of business
with goodwill for consideration and even then restriction must be
reasonable as to time, geography and other limitations
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10. 9. Ensure compliance with the FCPA
Extraterritorial jurisdiction of the U.S. Foreign Corrupt Practices Act
U.S. companies liable for acts of Indian subsidiaries and potentially for
the acts of its partners if it has knowledge
Comply with accounting and record-keeping provisions of FCPA
FCPA enforced by the SEC and DOJ. In 2010, the SEC’s Enforcement Division
created a specialized unit to further enhance its enforcement of the FCPA.
India 95th out of 182 countries in Transparency International’s Corruption
Perceptions Index
Anti-corruption best practices:
Due diligence on partners
Regular internal audit
Educate employees, partners and agents
Circulate anti-bribery policies to employees, partners and agents
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11. 10. Watch for new Indian legislation
Competition Act, 2002 & Competition Rules, 2011
IT (Amendment) Act, 2008 & Information Technology (Reasonable
Security Practices and Procedures and Sensitive Personal Data or
Information) Rules, 2011
Amendments in 1999, 2002, 2005 and 2006 to the Indian
Patent Act, 1970 & Patent Rules, 2003, amended in 2005 and
2006
In the works ….
Companies Bill, 2011 introduced to replace the Companies Act, 1956
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12. Resources
U.S. Department of Commerce’ Doing Business in India: 2012 Country Commercial Guide for U.S. Companies
http://export.gov/india/build/groups/public/@eg_in/documents/webcontent/eg_in_049379.pdf
Business Portal of India managed by the National Informatics Centre, Government of India
http://business.gov.in/default.php
GOI’s 2012 Consolidated FDI Policy along with amending Press Notes
http://www.dipp.gov.in/English/acts_rules/Press_Notes.aspx
Reserve Bank of India’s Master Circular on Import of Goods and Services
http://www.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=7315#B1
GOI’s Directorate General of Foreign Trade’s
http://www.dgft.gov.in/
Office of the Controller General of Patents, Designs and Trademarks
http://www.ipindia.nic.in/
Case Status (Status of Pending and Disposed by the Supreme Court and High Courts of India
www.courtnic.nic.in/
Franchising Association of India
http://www.fai.co.in/
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13. Questions?
Satya S. Narayan
E-mail: SNarayan@rroyselaw.com
Phone: 650.521.5745
PALO ALTO LOS ANGELES SAN FRANCISCO
1717 Embarcadero Road 11150 Santa Monica Blvd., 135 Main Street,
Palo Alto, CA 94303 Suite 1200 12th Floor
Los Angeles, CA 90025 San Francisco, CA 94105
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