Transfer Pricing: The Indian Experience

Since the economic reforms signaled in 1990–91, there has been a globalization and maturing of Indian economy. Each year has seen the entry of new multinationals (MNCs) into the country, and domestic companies growing into conglomerates by adding products and locations. A large number of MNCs made their presence felt on the Indian shores for the first time. Reverse has also been true, many Indian companies have also set up their operations outside the country. Sheer coincidence, technology and competition came at the center stage. These two environmental factors greatly impacted the organizational structure and culture. In the brave new world, the convergence of information, telecommunications and broadcasting has led to the spread of Internet. The web-based interconnectivity has blurred the business borders across the globe, unthinkable a few years ago. The online business has further energized the cult of MNCs and conglomerates. The transfer pricing became the key accounting issue in this backdrop.