At the ‘India Market Marketing Strategy Seminar’ held by the Korea International Trade Association at the Trade Tower in Samseong-dong on the 19th, Kim Hyun-chul, head of the Global Marketing Headquarters of the Trade Association, is giving a welcoming speech. The seminar was filled with the audience, reflecting their interest in the Indian market. [Photo=provided by the Korea International Trade Association]

India is the trend. The Korea International Trade Association and KOTRA held seminars and briefing sessions for entering the Indian market in Korea and India, respectively.

On the 19th, the Trade Association held the ‘India Market Marketing Strategy Seminar’ at the Trade Tower in Samseong-dong. At the seminar, essential information for companies wishing to enter India, such as the characteristics of the Indian consumer market, marketing strategies, major tax laws and recent trends, logistics environment, and customs clearance strategies, was shared.

Dr. Yong-sik Kim of the POSCO Research Institute emphasized, “India has maintained high growth rates of 7% since 2014 under the strong leadership of Prime Minister Modi, and is an attractive market with a rich labor force of 1.3 billion people and a huge domestic market,” but added, “There are still management difficulties such as poor infrastructure, unstable exchange rates, and an opaque market structure, so our companies need a strategy to nurture experts in India in the long term.”

Kim Hyun-chul, head of the Global Marketing Headquarters of the Korea International Trade Association, said, “India is an important market that our companies cannot afford to miss as the need for export diversification is increasing due to the recent uncertain global trade environment,” and added, “In line with the government’s New Southern Policy, the association will also promote various projects to support entry into India.”

Ahead of this, KOTRA held a ‘India CSR Mandatory Law Revision Briefing Session’ in New Delhi, India, with the Korean Embassy in India on the 17th. The briefing session, which was held to listen to the voices of our companies that have advanced into India and find solutions, was attended by about 20 large companies such as Samsung Electronics and LG Electronics and mid-sized companies that have advanced into India.

India is the first country in the world to implement a law that mandates ‘Corporate Social Responsibility (CSR)’. As it recently introduced a penalty clause for companies that violate CSR spending obligations, our companies that have advanced into India need to be careful. In July, India revised its Companies Act to allow financial and physical sanctions for companies that violate 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, they will be forced to accumulate funds in a specific fund requested by the government.

In addition, if the funds in the fund are not used within three years, they will automatically be transferred to the Indian treasury. Companies that violate the obligations will be subject to a fine of up to 2.5 million rupees (equivalent to 40 million won), and company executives will 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 if only one of the criteria of sales (over 100 million dollars), net assets (over 70 million dollars), and net profit (over 700,000 dollars) is met.

Multinational companies operating in India are busy formulating countermeasures to the changing circumstances while asserting that the mandatory CSR measures are a kind of quasi-tax. Company A, who attended the briefing session, said, “It was not mandatory until now, but with the recent revision of the law, a clear understanding of CSR is urgently needed.” Company B expressed the opinion, “I hope the government will support communities that can operate funds together rather than companies individually conducting CSR activities.”

KOTRA plans to publish the report ‘Trends in Strengthening CSR Norms in India and Response Measures’ in September and distribute it at the ‘Indian CSR Mandatory Law Revision Briefing Session’ to be held in Korea on the 27th.

The briefing session in Korea will be held jointly with the New Southern Policy Promotion Committee and is mainly targeted at Korean companies wishing to invest in India. Applications for participation can be made through the KOTRA website. Information on Indian entry strategies and mandatory CSR laws, as well as other important points to consider when investing in India, will be provided.

For this purpose, experts in Indian investment and CSR will speak. Former KOTRA Southwest Asia Regional Headquarters Director Park Han-soo will present the Indian entry strategy, while the mandatory CSR law will be handled by U.S. Attorney Yu Ji-hye, CEO of Birdtree Management, a local Indian law firm. Ernst & Young India Managing Director Jang Jae-won will be in charge of important points to consider when investing in India.

Kim Sang-mook, head of KOTRA’s Economic and Trade Cooperation Headquarters, said, “CSR activities tailored to the needs of local society and businesses are also in line with the New Southern Policy that seeks mutual prosperity,” and added, “We will further activate support for entering the local market through proper understanding of CSR regulations.”

Reporter Kim Young-chae

Korea Trade Newspaper wtrade07@gmail.com