Attractive for outbound investments from India
While many contentions remain on the revival of the Global economy, India Inc. is showing signs of positive prospects and growth. In a definitive sign of strength, outbound investments of Indian companies are picking up again.
A most recent instance is that of Hindustan Construction Company (HCC) acquiring Switzerland based Karl Steiner AG (KSAG), a well reputed company in the Swiss real estate sector. The deal which initially started as a joint venture discussion between the two parties resulted in HCC acquiring KSAG, among other things, because HCC saw an opportunity to enter the lucrative Swiss real estate market, expand its presence in Europe and more importantly in consideration of Switzerland’s relative strength at a time when the rest of Europe faces hard times.
The trend is not only to enter the European market via the acquisition route, but also by establishing Greenfield projects from scratch. In a recent example of such a development, Venkateshwara Hatcheries (Venky’s) set up a poultry vaccine facility in Switzerland. Venky’s chose Switzerland on account of the country’s high quality standards as well as its deep-seated life science clusters. Switzerland’s sector clusters enable companies to strengthen their research and development capabilities by fostering partnership between the private sector and top class university institutions.
Attesting these facts are a number of studies that bring to light reasons that make Switzerland an attractive and substantive business location to expand European and global operations.
The Global Competitiveness Index Report of the World Economic Forum 2009 – 2010 ranks Switzerland first out of a total of 133 countries. Besides being strategically well located at the crossroads of Europe, Switzerland has the advantage of having full access to the European market (including Schengen) without facing certain disadvantages of the European Union and the Euro Zone (regulatory environment, bureaucracy, labour law, economical stability). Switzerland offers not only attractive financing conditions for business expansions due to historically low interest rates but also competitive tax rates for international trading and finance companies as well as European headquarters. Another competitive advantage is transaction security with a unique tax ruling practice which offers a fair and attractive treatment.
As per an Arthur D. Little study on “Headquarter Location in Europe”, 55% of global corporations preferred Switzerland as the most attractive place. In addition, there is a unique concentration of pharmaceutical and life science companies, a leading high tech engineering cluster as well as a globally significant commodity trade centre within the country that puts it on the map for companies considering international expansions. Ernst & Young’s ‘Swiss Attractiveness Study’ also indicates that a growing number of international companies are choosing Switzerland as the place to establish their international headquarters or principal companies in Europe. Apart from the traditional high quality of life criteria, factors such as highly skilled labour force and flexible labour laws, competitive business environment, sophisticated infrastructure with a high degree of reliability, as well as easy access of government agencies are decisive factors.
All of these features backed by consistent strong fundamentals position Switzerland almost always at the top of any international comparison. Not surprisingly more than 6500 foreign companies operating in Switzerland that were covered in Ernst & Young’s study, indicate that the country’s liberal economic policies geared towards free market and its commitment to the protection of free competition and privacy make Switzerland an advantageous location for establishing business and an attractive gateway to enter the European market. Switzerland has concluded more than 70 double tax treaty and is definitely not a tax heaven but rather a liberal business destination which offers a favourable business environment for entrepreneurs.
