Dubai – India’s healthcare sector not only caters to the medical needs of 1.3 billion Indians, but also meets the demand of many countries around the world, including Africa and South America.

Question: Everyone talks about creating a startup. My young son, who has just finished college, wants to go back to India because he feels he has entrepreneurial talent. Will it work and what is the best investment opportunity right now?

Answer: According to a Startup Outlook report, around 16 startups emerged as unicorns in 2021, each of them valued at over $1 billion. Several fintech companies have invested in Indian startups. The number of financing transactions concluded during the quarter ended September 30, 2021 increased by 83% compared to the June quarter, 2021. Approximately 84% of financing activity was driven by transactions in the growth phase and in advanced stage. The average deal size was $1.6 billion. Bengaluru and the National Capital Region continue to be India’s top startup cities, accounting for 76% of total fundraising activity. The best prospect for new startups is in the healthcare sector. This encompasses a whole range of medical services. India’s healthcare sector not only caters to the medical needs of 1.3 billion Indians, but also meets the demand of many countries around the world, including Africa and South America.

Question: With the global economy slowing down due to the pandemic, India’s exports are stagnating and the trade deficit is high according to recent reports. Are measures being taken to reverse the trend?

Answer: The latest figures, as of December 2021, show that there has been a dramatic increase in exports. While the average monthly figure was $30 billion, December’s figure of $37.3 billion marks a 25% increase. According to government trade data, the sectors that saw an increase were chemicals, engineering, textiles, gemstones and jewellery. The trade deficit is mainly due to an increase in imports of petroleum and petroleum products indicating an increase in industrial activity in India. By March 31, 2022, exports are expected to cross the $400 billion mark. The increase in exports is mainly due to the fact that India has become a manufacturing hub for many industries, especially in the automotive and automotive component sectors. The export of computer-related services also shows a strong increase. The initiative of the Indian government to establish strategic economic partnerships with the United Arab Emirates, the United Kingdom, Australia and Canada is largely responsible for India’s export boom.

Question: I have been advised that the best way to plan for succession is to create a trust. Many large professional firms in India now specialize in this branch of services. What are the pros and cons of creating a trust?

Answer: Estate plans are being developed through private trusts by a new generation of wealthy people. This is not simply done to guard against possible collection of inheritance tax, which was abolished in India in 1985, but is mainly done to protect assets and pass them on to subsequent generations. However, the creation of a trust would entail compliance costs. A private trust is recognized under income tax law and its income is taxable in the hands of the trustees who are assessed as an “association of persons”. The trust would have its own permanent account number and bank and account accounts can be opened in the name of the trust. Once the assets are transferred to the trust, the settlor or donor loses control of the assets and appointed trustees appointed by the settlor manage the trust based on what is specified by the settlor in the trust deed. The names of the beneficiaries are also specified as well as the percentage of the annual income that would be distributed to them. Once a trust is created, the legal battle for inheritance is avoided because the assets that are settled on the trust would no longer belong to the deceased person.

— HP Ranina is a practicing lawyer specializing in India’s tax management and foreign exchange laws.