OPPORTUNITIES FOR INDIA

DOING BUSINESS WITH GCC

PRESENTED BY:

NIKHIL SHINDE
SHRISH CHAUDHARY
SUNNY SHARMA
DEBJANI PARUI
INDEX
 Content

1] Overview
2] Reasons for doing business in GCC
3] Inward Foreign direct investment
4] Business culture
5] Stages for setting enterprise in GCC
6] Core indicators for doing business in GCC
7] Regulation in GCC
8] Infrastructure
9] Opportunities in Major sectors in GCC
10] Milestones
 HISTORY
• Created on May 25, 1981.
• The unified economic agreement between the countries
of the Gulf Cooperation Council was signed on
November 11, 1981 in Riyadh.
• The GCC Patent Office was approved in 1992 and
established soon after.
• A GCC common market was launched on January 1,
2008.
• All GCC members and Yemen have since joined the
Greater Arab Free Trade Area (GAFTA) when that
organization was founded.
• Yemen is (currently) in negotiations for GCC
membership, and hopes to join by 2016.
 Map Indicating CCASG Members
Official languages Arabic
Type Trade bloc
Arab states of the
Membership
Persian Gulf

Leaders
Secretary-General Abdul Rahman Ibn
Hamad Al-Attiyah

Establishment
As the Gulf
Cooperation
May 25, 1981 
Council (GCC)

Population
Estimate 40,338,196
GDP (nominal)  Estimate

Total $1,103,235 million 

Per capita $22,083 
 Key indicators
GDP (mil.
Name   Capital   Inhabitants  Sq km   Currency  
US$)  
 
Bahrain
Bahrain Manama 1.046.814 716 15.354
Dinar

Qatar Doha 1.307.229 11.437 52.722 Qatari Riyal

Kuwaiti
Kuwait Kuwait City 2.460.000 17.818 95.924
Dinar
Oman Muscat 2.534.000 309.500 35.990 Omani Rial
Saudi
Riyadh 26.417.599 2.240.000 572.200 Saudi Riyal
Arabia
United
UAE
Arab Abu Dhabi 4.588.697 83.600 163.296
Dirham
Emirates
 OBJECTIVE
Among the stated objectives
are:
 Formulating similar regulations in various fields such
as economy, finance, trade, customs, tourism,
legislation and administration.
 Fostering scientific and technical progress in
industry, mining, agriculture, water and animal
resources.
 Establishing scientific research centers.
 Setting up joint ventures.
 Encouraging cooperation of the private sector.
 Strengthening ties between their peoples.
 Establishing a common currency by 2010.
 Business practice and culture
Business week - Saturday to Thursday
Weekend holiday - Friday
Working hours: Govt. - 7:30 am to 2:30 pm (Sat-Wed)
Private - 8 am to 1 pm and 4 pm to 7 pm (Sat- Wed)
- 8 am to 1 30 pm (Thurs.)
Climate - 35 to 45 °C in summer
- 18 to 28 °C in winter
Time zone - + 4 hrs GMT
Topography - Mountainous with over 1700 kms of coastline
Religion - Islam, Other religions are tolerated.
Way of life is governed by Islamic customs
Petroleum reserve - 5.5 million barrels
Natural gas - Reserves 29 trillion cubic feet
Minerals - Copper mining up to 20,000 tons a year
Chromate estimated at about 2 million tons
Possible exploration of gold, platinum, sulphides and coal
Official language - Arabic (English is widely used and understood)
 Doing Business
 Foreign companies can set up business or Industries in by establishing
a Limited Liability Company with a minimum capital of US$
390,000.
 They can own up to 70% of the share capital in the company and the
other 30% is to be owned by GCC entities.
 Foreign participation is encouraged in all the major sectors of the
economy.
 100% foreign participation is possible with a minimum paid-up capital
of US$ 1.3 billion / with the prior approval of the council of ministers.
 To establish an LLC (Limited Liability Company) with foreign
participation, an applicant must prepare a shareholders agreement
setting forth the intentions of the parties.
 Applicant then must file a constitutive contract signed by all the
members, in a prescribed format, in Arabic with Ministry of commerce
and industry (MOCI).
 The formation of the company is completed when all the shares are
fully paid up and the company is registered in the commercial register.
 Business Culture
Do's
• Be aware of all favors done for you and prepare to respond in kind.
• People are courteous, polite and the traditional Arab forms of
greetings are widely observed.
• Being Muslim country, visitors should respect local customs.

Don'ts
• Avoid unintentional criticism of others.
• Alcohol consumptions in public other than licensed places are
prohibited.
• Careful attention has to be paid to ensure that one do not offend
local customs particularly in relation to dress code and alcohol
consumption.
 Establishing a company
 Registration procedures –
Before business entities start their business in
GCC Countries they must be registered in the
commercial register of the MOCI.
 Time required –
The time required to establish a company
depends on the extent of foreign participation.
Registration and licensing requirements
normally takes between 4-5weeks.
 STAGES FOR SETTING UP AN
ENTERPRISE IN GCC
Objective Action Plan Anticipated End Result
Stages risks and
hurdles

Familiarity with Find a right Non availability One location

Stage:1 GCC partner of complete
information
Demand analysis Get to know more Demand Sure of
about the potential and succeeding
Stage:2
production other player’s
facilities strengths
Understand legal Appoint specialists Terms are Get ready to
formalities and to draft favorable to setup
Stage:3
agreements local partners

Locate and setup Right kinds of Possible Production at

people (technical resistance if low costs
Stage:4
and managerial) Indian bosses
are appointed
Stage:5 Markets – local & Develop interior Local tariff and Reduced cost
outside markets and non-tariff and
network out of GCC barriers in competitiveness
provinces
Once the business activity is identified, the following steps leads to the
establishment of company
1. Identify the GCC partner.
2. Prepare a shareholders agreement setting forth the intentions of the parties.
3. Apply for a trade name from the Ministry of Commerce & Industry (MOCI).
4. Obtain Industrial license/environment clearance or a No objection certificate from the
concerned department, if required; or approval of the Ministry of Higher Education in
the case of setting-up educational institutions. For normal trading activity this may not
be applicable.
5. Approach the various Government-owned Industrial estates for allotment of land and
factory buildings.
6. Open bank account in the name of the company under formation and ensure that
the amount of RO 150,000/ (US$ 390,000) is deposited to facilitate the issue of
bank guarantee.
7. Apply to MOCI for obtaining Commercial registration.
8. Apply for the Chamber of Commerce certification.
9. Identifying and registering the lease agreements with the Municipal office for
setting office and name boards.
10. Apply for Import license from MOCI if goods are required to be imported.
11. Apply to Ministry of Manpower for labour clearances, if expatriate employees are
required.
12. Apply for employment visa for expatriate workers on the basis of labour clearances.
13. Apply for labour cards/ Residency permits once the employee enters the country.
 Documents required for registration of a company in
the commercial register
a. Power of Attorney issued to the person authorized to sign on behalf
of the companies abroad and a copy of the ID card / passport copy.
b. Certificate from the local bank stating that the company under
formation has deposited the required amount in their account
showing clearly the percentage of contribution amount by each of
the members/partners.
c. In the case of a foreign company, a Letter of Guarantee is required
from the Head office stating that it is responsible for all liabilities in
particular country. e g: oman
d. Board resolution of investing companies to the extent of their share-
holding and amount of investment.
e. Charter documents of the companies like the Memorandum and
Articles of Association and business licenses, if the investor is a
company.
f. The passport copy of the individual, if the investor is not a
company.
Entry visas & work permit –

 All foreigners (except GCC nationals) should have a valid entry visa.
 Foreigners on business visits are generally issued visit visas at the airport, valid
usually for one month. Express visas are also issued before-hand and are valid for 3
weeks.
 Multiple entry visas are also issued for one year but the stay each time should not
exceed 3 weeks and there should be a gap of three weeks between each visit.
 Employment visas are usually valid for 2 years and are issued on the basis of
Labour clearances granted to the employers.
 Holders of employment visas are issued Labour cards and Residency permits.

Fee structure –

 The statutory fees for setting-up companies – For a company with registered capital
of RO. 150,000 (US $ 390,000), is not likely to exceed US $1,200.
 Each expatriate labour clearance will cost approx. US$ 560 including the fee for
labour and residency card and is issued for a period of 2 years which is to be
renewed thereafter for a similar period.
 The rent for a 3-room apartment in a moderately good locality will approx. range
from US$ 500-1000.
 Income Tax
Business organizations should file a provisional return of income with advance tax

• No personal Income tax.

• Income tax is currently charged on business entities with up to 70% foreign

participation @ 12%, if the profit exceeds the basic exemption limit of US$
78,000.

• For business enterprises with more than 70% foreign participation and branches
of foreign companies, tax rate ranges from 5% to 30% (for eg. tax is charged @
30% on the entire profit, if it exceeds US$ 260,000).

• All business entities having a commercial registration have to file business

particulars with the income tax department.

• Exemptions from income tax for 5 Years is granted .in respect of income of
industries and fisheries sector which can be extended for another five years.

• Income generated by higher educational institutions and private hospitals will be

completely tax free.
 OTHER OBLIGATIONS
• Custom duty is charged @ 5 % on imports on most of the items.
• Tender board registration is a must for Government contracts in excess of
US$ 260,000.
• Business entities having banking facilities of more than US$ 650,000/
should submit audited balance sheet to the bank within four months of the
year end to avoid freezing of bank accounts.
• Public Listed companies should audit the accounts and conduct annual
general meeting within 3 months from the year end and should comply
with corporate governance practices.
• Expatriates should not be employed unless and until a labour clearance is
obtained from the ministry of manpower.
• One cannot commence business without obtaining the commercial
registration chamber certificate and municipal certificate.
• Financial reports to be prepared in accordance with International
Accounting Standards.
 TYPES OF ORGANISATIONLS IN GENERAL
Business may be carried out in GCC in a variety of forms.

1. Sole proprietorships
2. General partnership
3. Limited partnership
4. Joint venture
5. Limited liability company (LLC)
6. Public joint stock company
7. Closed joint stock company
8. Holding company
9. Foreign companies
• Branches – Branches of foreign companies may engage only in the following
activities:
- Carry out government contracts.
- Conduct business declared by the council of ministers to be vital to the
economic development.
10. Foreign commercial representative offices – these offices engaged in trade,
industry and service sectors may not import, export or sell its products but can
promote products or services.
 Facilities and incentives offered by the Government

• Planned and serviced plots are provided for industries in the industrial estates.
• Ready built factories 25 years (renewable).
• Annual rent for land plots US$ 0.65/sq m for first 5 years and there after US$
1.30/sq m.
• Rent for built-up factory building US$ 5.2 to 10.4 /sq m.
• Electricity US$ 0.06/ KW/H.
• Water US$ 0.007/gallon
• Exemption from Customs duty is allowed on Raw materials, Plant & machinery
and spares imported for industrial production.
• Local Products are given 10% advantage over imported goods on Government
purchases.
• Oman is the only country in the whole of GCC which has its own National credit
guarantee agency.
• KOM (Knowledge Oasis Muscat) provide state of the art infrastructure facilities
with high bandwidth up to 155 Mbps to ICT firms with 100% foreign ownership,
and tax free income for 5 years subsidized Incubator facilities to IT startups and
first generation entrepreneurs.
• Foreigners can own properties in designated areas for a lease period of 99 years.
Reasons For Doing Business In GCC
FDI:
• Foreign investment into the UAE hit a high of $19.4 billion
in the past three years.
• Foreign direct investments (FDI) during 2005-2007 were
more than eight times the FDI flow into the GCC during the
previous nine years.
MARKET OPPORTUNITIES:
• Construction & Industry: Sharjah plans huge egg production
plant.
• Technology: HP brings touch technology home.
• Transportation: $4.5bn Terminal 3 to open.
• Politics & Economics: Germany slaps restrictions on wealth
funds.
• Government Incentives.
India’s Export to the GCC:
 Basmati/Non-basmati rice, tea, manmade yarn,
fabrics, made-ups, cotton yarn, primary and semi-
finished iron and steel, chemicals, plastic and
linoleum products, machinery and instruments.

India’s Major Import from the GCC:

 Petroleum and petrochemical products like LPG,
kerosene and others. Saudi Arabia is the largest
supplier of crude oil to India.
 Infrastructure in GCC
• Infrastructure construction plays a key role.
• Government is actually a partner in providing
infrastructure.
• $1.5 trillion is the likely total GCC expenditure on
infrastructure for the next decade.
• GCC infrastructure spending will be 12 times higher than
the US and 94 times higher than in India.
• Foreign lenders had increased interest in long-term
infrastructure projects in the Middle East.
• There are further 300$ billion worth of projects either
planned or under construction in Dubai.
Contd………………..
• Dubai has shown the way in developing its ports and
infrastructure.
 Communications:
Phone, satellite, internet, systems are readily available in
Special Economic Zones.
 Transportation:
 Air-- Service available from both local domestic carriers
and most international airlines.
 Ocean-- Large number of ports and harbours handling
booming export trade.
 Roads, Highways & Railways have good speed limits.
 Opportunities in Major sectors of
GCC
 Transportation service:
• Logistics services represent the nerve of Gulf and
international businesses.
• Transport and logistics services are central to regional
trade and to the exchange of goods and services.
• GCC States today is the building of road networks,
harbors, airports and state-of-the-art transportation
networks.
• Gross Domestic Product (GDP) reaching approximately
750 billion USD in 2007, double the amount recorded
five years ago. (Potential for opportunity)
 Tourism and Related Services
• GCC Countries are the exporter and importer of travel
services amongst the developing countries
• Ministry of Tourism of GCC has adopted a number of
measures to facilitate tourists.
• The governments of both countries is providing greater
facilitation for enterprises of the counterpart to start
business operations.
• The two countries are working together to promote and
developed health tourism.
 Construction and Consultancy
Services
• India has considerable experience in the field of civil
construction, engineering and manufacturing
operations .
• This provides increased growth opportunities through
Joint Ventures and Consortiums.
• With $700 billion worth of developments either under
way or in the pipeline, the GCC is now the world’s
largest finance market.
• GCC seeks to forge a stronger and more diversified
economic future in construction.
 Accounting, Auditing and Consulting
Services
• In GCC Countries there is a huge demand of
accountants, auditors and consulting
advisors with rich knowledge in international
trade practices .
• Under the multi-lateral trade system of GCC
Countries, enterprises of India can provide
such services to GCC Countries through
cross-border supply or commercial presence.
 Health Services
• Total health-care spending in the region will reach
US $60billion in 2025, up from US$12 billion today.
 The model projects follows by GCC:
 Treatment demand.
 Hospital beds.
 Cost.
 Population growth.
 Aging populations.
 Health-risk factors.
 Advertising services
• GCC has tied up with Graffiti Marketing
Communications, one of Kuwait's leading ad agencies in
order to strategically join hands to provide better
services in terms of brand development.
• Growing consumerism in GCC has led to an increased
demand for advertising services in terms of brand
building and marketing.
• Indian advertising industry is very well developed and
can provide English-speaking trained manpower in
advertising firms or can collaborate with existing firms
in GCC to provide these services.
• This would benefit the GCC industry and give Indian
industry exposure to the GCC market.
 Education Services
 The setting up of Knowledge Village, located in Dubai, UAE
is one step towards fulfilling learning and training
requirements.
 “KV” offers many gateways to obtain higher education in the
fields of business, IT, Graphics design and even Medicine.
 Arabian Gulf University located in Bahrain offers a Post-
Graduate Diploma and Master Degrees, Scientific Research
provides following specialized courses:
 Introduction to GIS.
 Introduction to Remote Sensing.
 Image Processing Application in Earth Sciences.
 Radar Interferometry.
 Constraints to trade in services
• Connectivity
• Lack of transparency
• Language barrier
• Trade barrier
• Service barrier
• Lack of knowledge
• Lack of recognition of qualifications.
THANK YOU