India is the trend. The Korea International Trade Association held seminars and briefing sessions in Korea and KOTRA in India respectively to enter the Indian market.
The Korea International Trade Association held the ‘Indian Market Marketing Strategy Seminar’ at the Trade Tower in Samseong-dong on the 19th. At the seminar, essential information for companies wishing to expand into India was shared, including characteristics of India's consumer market, marketing strategies, major tax laws and recent trends, logistics environment, and customs clearance strategies.
Dr. Yongsik Kim of POSCO Management Research Institute said, “India has continued to grow at a high rate of 7% since 2014 thanks to Prime Minister Modi’s strong leadership and is an attractive market with an abundant labor force of 1.3 billion people and a huge domestic market.” “There are management difficulties such as market structure, so our companies need a long-term strategy to develop Indian experts,” he emphasized.
“With the need for export diversification growing due to the recent uncertain global trade environment, India is an important market that our companies cannot afford to miss,” said Kim Hyun-cheol, head of the Global Marketing Division of the Korea International Trade Association. “We will pursue it,” he said.
Prior to this, on the 17th, KOTRA and the Korean Embassy in India held a briefing session on the revision of the Indian CSR Mandatory Act in New Delhi, India. About 20 large companies, including Samsung Electronics and LG Electronics, as well as mid-sized companies operating in India, participated in the briefing session, which was designed to listen to the voices of Korean companies operating in India and find solutions.
India is the first country in the world to implement a mandatory 'Corporate Social Responsibility (CSR)' law. With the recent introduction of punitive provisions for companies that violate their CSR spending obligations, Korean companies need to be careful. Last July, India amended its corporate law to require financial and physical sanctions for violations of CSR obligations.
CSR, which was usually promoted voluntarily by companies, was made mandatory by law in India in 2014, but until now, voluntary participation has been encouraged. In July of this year, Article 135 of the Companies Act was revised, requiring companies to spend 2% of their average net profit over the past three years on CSR activities. Otherwise, you will be forced to deposit it into a specific fund required by the government.
Additionally, if the fund funds are not used within 3 years, they will automatically be transferred to the Indian treasury. Companies that violate their obligations must pay a fine of up to 2.5 million rupees (equivalent to 40 million won), and company executives can be imprisoned for up to three years or fined up to 500,000 rupees (equivalent to 8.3 million won). This CSR law is applicable even if only one of the following criteria is met: sales (more than $100 million), net assets (more than $70 million), and net profit (more than $700,000).
Multinational companies operating in India are expressing their position that mandatory CSR measures are a kind of quasi-tax, while they are busy formulating countermeasures in response to changing conditions. Company A, who attended the briefing session, said, “It has not been mandatory so far, but a clear understanding of CSR is urgently needed due to recent law revisions.” Company B expressed the opinion, “I wish the government would support communities that can manage funds together rather than individual companies engaging in CSR activities.”
KOTRA will publish a report titled ‘Trends in Strengthening CSR Norms in India and Countermeasures’ in September and distribute it at the ‘India CSR Mandatory Act Revision Information Session’ held in Korea on the 27th.
The Korean briefing session is jointly held with the New Southern Policy Promotion Committee, and its main target audience is Korean companies wishing to invest in India. Applications for participation can be made through the KOTRA website. Information on what to keep in mind when investing in India, including entry strategies into India and mandatory CSR laws, will be provided. To this end, an Indian investment and CSR expert will appear as a speaker. The Indian expansion strategy will be announced by Park Han-soo, former head of KOTRA's Southwest Asia regional headquarters, and the mandatory CSR law will be handled by You Ji-hye (American lawyer), CEO of Buddtree Management, a local law firm in India. Jaewon Jang, managing director of Ernst & Young India, will oversee matters to note when investing in India. Kim Sang-mook, head of KOTRA's Economic and Trade Cooperation Division, said, “CSR activities tailored to the needs of local society and companies are consistent with the New Southern Policy that pursues coexistence and prosperity,” and added, “We will further activate support for entering the local market through proper understanding of CSR regulations.” “I will do it,” he said.
Reporter Kim Young-chae.
