“The Swedish government recently passed legislation to assure the continued growth in this sector. The "broadband everywhere" legislation was approved June 2000 and is designed to provide high-speed Internet access to every household in the country. The new legislation is designed to leverage the country's high-tech infrastructure, large pool of technology companies, and deep penetration of phone, cell phone, and PC use to provide a desirable environment for foreign investment. All of this activity increased Sweden's GDP by 3.8% in 1999 and Sweden's National Institute of Economic Research has forecast the 2000 GDP will grow by 4.4%—a high figure compared to many other countries in the European Union (Clapp, D.).”
Swedish workers enjoy benefits, by law or by union contract, that include five weeks of paid holiday, paid time off for illness or child care, 16 months of paid parental leave, regulated working hours, overtime compensation and pension benefits. “By law, the basic workweek is 40 hours. Overtime is limited to 48 hours over a four-week period and no more than 200 hours per year. This applies to all employees, except for those in managerial positions, people working out of their homes, and some other special categories. Deviations from the law may be made through union contracts (Invest in Sweden Agency).
India
The country of India has a government called “The Federal Republic”, which is governed under a constitution and incorporating various features of the constitutional system of the United Kingdom, the United States, and other democracies. The power of government is broken up into three branches: executive, parliament, and a judiciary headed by a supreme court. Like the United States, India is a union of states, but its federalism is slightly different (India Government 1). India’s constitution went into effect in 1950 providing civil liberties protected by a set of fundamental rights. These include free speech, assembly, association, and the exercise of religion. Echoing the United States bill of rights. The constitution also lists such principles of national policy as the duty of the government to secure equal pay for both men and women, provision of free legal aid, and protection and improvement of the environment. Since 1950 there has been many amendments to the constitution. The 73rd and 74th amendments (1993) gave constitutional permanence of local self-government to include local and city councils (India Economic News March 1998, 2). The most common form of interaction is the licensing of technology, where no equity capital is involved. The foreign firm can sell its technology for a lump sum payment and royalties based on sales. The second form of cooperation involves the direct purchase of designs and drawings. These forms of interaction are especially popular the Indian government. This satisfies government policies designed to increase the amount of technology to flow into the Indian economy (IEN, March 1998, 1-5).
The first big corporation found to make a huge investment was Microsoft. Bill Gates decided to invest $400 million in India over the next three years. Microsoft will expand its software and product development operations and make India Windows operating system and application software more widely available to the exploding new generation of computer users (The New York Time November 14, 2003, 1). Bill Gates called his company’s investment plan in India a long-term commitment, and said there were four realms in which it will invest. One is education: the company will spend $20 million to increase computer literacy in the country, with the goal of reaching 80,000 teachers and 3.5 million students in the next five years (TNYT, 2). Another focus is on the areas of interoperability and Windows NT, which is vital to the company’s future. Microsoft Windows NT and Microsoft back office technologies today are the fastest growing area for Microsoft. The majority of our development work will always be based in the United States, but we have a great deal of faith in the IT skills of India. Although this center is initially relatively small, the work will be highly valued and strategically important to Microsoft’s platform initiatives. India is strategically important to Microsoft, and the investment in a development center is a tremendous addition to the commitments we have already made,” said Bill Gates, the founder of Microsoft (The New York Times, November 14, 2003, 2)
India’s government rules for importing say most goods have become freely importable, no longer requiring import licenses, however there are three things still on a ban list, which include consumers items and computers valued at less the Rs 150,000 (US $5,000) also restricts 68 items and reserves eight products for import by public sector trading companies. The revised policy has also abolished requirements that the end user allowing imports for stock and sale by distributors and wholesalers. All shipments to India require a commercial invoice, a packing list and bill of lading. A certificate of origin is not required on imports originating in the US. India import duties are applied to almost all goods entering the country. The tariff system is based on the “Harmonized System” with most tariffs being charged on an ad valorem basis. Tariffs are in the 40 to 60 percent range for basic raw materials, 60 to 100 percent from semi-processed goods, and 100 percent and above on finished and consumer goods. Luxury items can be taxed at rates up to 100 percent. Companies should check import duties for their particular product because rates are product specific. Shipments to India require a commercial invoice, a packing list and bill of lading. A certificate of origin is not required on imports originating in the United States
India corporate tax rates are high and the pertinent laws complex. The standard corporate income tax rates are 45 percent for public companies, 65 percent for branches of foreign companies and 50 percent for all other companies. If companies utilize tax incentives available to them, the typical rates vary between 30 and 50 percent. The tax rates are the lowest for widely held companies incorporated in India. Companies are strongly encouraged to employ a tax specialist familiar with the Indian tax structure. A 25 percent tax is levied on dividends paid to non-resident is not a corporation. Interest is taxed at a rate of 25 percent, with a 3.125 percent surcharge. Royalties are taxed at a rate of 30 percent The United States and India has signed a treaty to avoid double taxation. (Indian Government, 2001, 6).
Since 1991 launch of a major economic reform program, India has taken important steps to break down long-standing and foreign investment barriers. Under a new liberalized trade policy, the Indian government has implemented vital reforms that include privatization, currency convertibility, the easing of restrictions on foreign ownership and the reduction in customs tariffs and import barriers. This has worked effectively to double the dollar amount of U.S. exports to India. The reforms are finally helping the country with a 4 percent Gross Domestic Product growth rate and a drop in inflation to below 10 percent.
On September 23, 2000 the Confederation on Indian Industry issued a seven-point agenda, stipulating what the next government must do to more than double annual foreign direct investment and fulfill the $10 billion per year target set in both the various federal regulatory agencies and with the states. India’s tiny share of world trade is .7 percent, which is a further indication of its marginal role in the world economy. Fearing that it is losing out in the struggle for markets and profits, Indian big business is emphatic that the new government must press forward with fundamental, “pro-investor” economic change (2003, 10-15)
References
(2003, August). Regulations and Procedures for import and Export - India. Retrieved March 21,2004, from http://finance.indiamart.com
Clapp, D. (2000, September). Scandanavia Back to Global Expansion: The Changing Face of Business. Retrieved March 22, 2004, http://www.facilitycity.com/busfac/de_00_09_cover8.asp
India Economic News (March 1998). New Indian Government Takes Over. , Volume IX, 2,2-7.
Indian Government (2001). Government Today. Retrieved March 22, 2004, from http://india.punjabilit.com/government.htm
Invest in Sweden Agency (2001). Working in Sweden. Retrieved March 22, 2004, http://www.scandinavica.com/culture/society/working.htm
Real Adventures (2004, January). Background Notes: Sweden. Retrieved March 22, 2004, http://www.realadventures.com/listings/1024329.htm
The New York Times (November 14, 2003). Bill Gates finds a Seattle in India. Retrieved November 14, 2003, from http://www.nytimes.com/2002/11/14/international/asia
Appendix A
Contribution of each partner
Research on India Lisa Barton
Research on Sweden Sharlene Henderson
Abstract Lisa Barton
Conclusion Sharlene Henderson
Consolidation Lisa Barton & Sharlene Henderson
