Start a Business in India- A newswire by StartBizIndia


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Start a Business in India- A newswire by StartBizIndia

  1. 1. Industry of the Month “Tourism In India”eBizWire Vol . I Issue. I, February 2012 InsightBiz India News 2Biz Policy Updates 2Market Entry for Tourism Business in India 3-7Business Idea of the Month 7StartBizIndia Discussion Platform 8Upcoming Business Summit 9Contact us 10 For more info on Business setup visit Page |1 For Business setup queries email at or call at 011 40622239
  2. 2. Biz India News Headlines• India Inc raised US$ 1.6 billion through external commercial borrowings (ECBs) in India Inc raises $1.6 bn via November 2011. Under the automatic route, 78 companies raised US$ 1.3 billion. At ECBs in Nov 2011 present, the Government allows the companies to raise up to US$ 750 million under the automatic route in a year.• German luxury car maker Mercedes-Benz plans to invest Rs 1,000 crore (US$ 191.41 Mercedes plans volume million) in India. "We want to grow our sales over three-fold to 25,000 units by 2016 and models to regain top spot to 90,000 units by the end of the decade," as per Debashis Mitra, Director (Sales & Marketing), Mercedes-Benz India Ltd (MBIL).• Taj Group of hotels plans to open its doors in Yunnan Province of China. The Indian Taj plans 2 hotels in Chinas Hotels Company Ltd has signed a memorandum of co-operation for a joint venture with Yunnan province Yunnan Tourism Co Ltd to engage in the development, construction, operation and management of two hotels in Kunming Expo Garden located in Yunnan province• Moodys rating agency has upgraded its credit rating on short-term deposits in foreign Moodys upgrades Indias currency from Not Prime (NP) to P-3. P-3 denotes prime and such a rating indicates short-term foreign currency acceptable ability to repay short-term obligations, according to a statement by Ministry of rating Finance• The Government of India has approved 20 proposals of foreign direct investment (FDI) Sterlite Grid project among 20 worth Rs 1,935.24 crore (US$ 373.92 million), according to an official statement. The FDI proposals cleared approvals were given, based on the recommendations of the Foreign Investment Promotion Board (FIPB). Nippon Life picks 26% in• Nippon Life Insurance has signed a memorandum of understanding (MoU) to acquire 26 per cent stake in Reliance Capital Asset Management (RCAM) for Rs 1,450 crore (US$ Reliance AMC for Rs 1,450 cr 288.30 million). This is the largest foreign direct investment (FDI) in the Indian mutual fund sector. "India is a key element in Fords global strategy," said Alan Mulally, President and CEO, Ford Motor CompanyBiz Policy Updates Legal Headlines• RBI announced that eligible borrowers can raise foreign currency convertible bond RBI raises FCCB limit to $750 (FCCB) up to US$ 750 million or equivalent per financial year for permissible end-uses million• RBI has made it mandatory for banks to acknowledge all loan applications, submitted either manually or online, by micro, small and medium enterprise (MSME) borrowers. Banks must acknowledge, Banks have also been asked to ensure that a running serial number is recorded on the streamline MSME loan loan application form as well as the acknowledgement receipt applications: RBI For more info on Business setup visit Page |2 For Business setup queries email at or call at 011 40622239
  3. 3. Market Entry For Tourism Business In India India Travel and “The one land that all men desire to see and having seen once, by even a glimpse, would not give the glimpse for all the shows of all the rest of the globe combined” Tourism Demand Mark Twain for India Tourism Industry in India has pulled off growth of 7.2% in terms of Foreign Tourist Arrival (FTA) in 2010, more than the projected growth rate of 5% to 6% for the world by UNWTO’s. Currently in the initial six months of 2011 FTAs in India were 2.91 million with a growth of 10.9 per cent and the foreign exchange earning (FEE) was US$ 7,811 million with a growth of 14.2 per cent as compared to 2010. On the same persistence FTA in India is expected to grow with a CAGR of 7.9% along with parallel growth of FEE for the period spanning 2010-2015 whereas Domestic tourist visits is expected to increase with a CAGR of 12.29% for the period spanning 2008-2015 as per the renub research report. By 2020, Tourism in India could contribute Rs 8,50,000 crores to the GDP. (Source- WTTC). Indias share in the global medical tourism industry will reach around 3 per cent by the end of 2013. The government is making tremendous effort in the areas of investment and Source: ―Travel and tourism economic impact: India, 2010,‖ World Travel and Tourism Council infrastructure with an overall aim to boost the tourism industry. Indian government has website,, accessed 2 December given more than INR 1,000 Crore to Ministry of Tourism under union budget 2010 and the 2010. Budget for Incredible India campaign increased by INR 62.3 Crore for 2010-11 for the E: Estimate; F: Forecast promotion of tourism. Growth trend and Indian Government initiatives have flourish the investment opportunity in Indian Tourism Industry. According to World Travel and Tourism Council, India will be a tourism hotspot from 2009 -2018 having the highest 10- year growth potential Various Sectors Under1. Formation of Company and / or LLP for setting up a business Tourism Sector Each Foreign Resident can setup business in India either by registering a company or a LLP under the laws of land, however an NRI may also invest in partnership firm subject • Travel Agencies to the compliance of the applicable conditions, though the amount invested in firm shall not be eligible for repatriation outside India. • Tour operating Agencies • Tourist Transport Companies Act 1956: Either a Public or Private Company can be formed depending on the business requirements of the investors. A private Company restricts the right to Operating Agencies transfer its shares, limits to the number of shareholders to 50 (excluding employees and • Adventure Tourism former employees), Prohibit invitation to the public to subscribe to shares and debentures, Prohibits acceptance of deposits from persons other than shareholders, • Religious Tours directors and their relatives. Private Corporate Structure is suitable for businesses, • Sports and cultural where there is not larger number of shareholders and management of the company is limited only in the hands of key person and not large public interest is involved programmes Tourism For more info on Business setup visit Page |3 For Business setup queries email at or call at 011 40622239
  4. 4. Market Entry – Tourism Business In India Formation of Entity Public Limited Company does not have the restrictions as carried out in the private limited • Company companies and keeping the public interest public Companies are far more regulated than • LLP Private Companies. • Partnership Taxation: Flat rate of 30% + Surcharge of 5% of the net income exceeds Rs. 1 crore + The education cess is 2% & The Secondary and higher education cess 1% of the income tax and surcharge* Besides this Dividend Distribution Tax at an effective rate of 16.2225% would be charged in case of distribution of dividend. Entity Comparative LLP Act 2008: LLPs shall be registered under the LLP Act 2008. These are self governed form of business, but the major flaw back is FDI in LLP structure is allowed Chart under government approval route, in all sectors where 100% FDI is allowed under automatic route, so with the entity structure of LLP the investor has to seek the Entity Tax DDT government approval. Rate Company 33.99 16.2225% Taxation: Flat rate of 30% + The education cess is 2% & The Secondary and higher education cess 1% of the income tax and surcharge*. Dividend Distribution Tax : NIL LLP 30.09 Nil Partnership 30.09 Nil Partnership Firm: NRI may invest in partnership firm subject to the compliance of the applicable conditions, though the amount invested in firm shall not be eligible for repatriation outside India. Foreign Nationals are not permitted to invest in Partnerships. Taxation: Flat rate of 30% + + The education cess is 2% & The Secondary and higher education cess 1% of the income tax and surcharge*. FDI Tourism Sector Dividend Distribution Tax : NIL2. FDI in Tourism Sector in India To heighten the tourism industry in India, Indian Government has allowed 100 per cent Entity FDI Route foreign investment under the automatic route in the hotel and tourism related industry which covers travel agencies, tour operating agencies and tourist transport operating Company 100% Automatic agencies, Units providing facilities for cultural, adventure and wildlife experience to tourists, Surface, air and water transport facilities for tourists, Convention/seminar units LLP 100% Approval and organisations. Partnership 100% Approval However Foreign Investment in LLP will be allowed only after taking the approval of Ministry of Finance, Government of India. For more info on Business setup visit Page |4 For Business setup queries email at or call at 011 40622239
  5. 5. Market Entry – Tourism Business In India Foreign Technology Agreements in Tourism Industry For foreign technology agreements concerned with the tourism industry, automatic approval is granted if up to 3% of the capital cost of the project is proposed to be paid for technical and consultancy services including fees for architects, design, supervision, etc. up to 3% of net turnover is payable for franchising and marketing/publicity support fee, and up to 10% of gross operating profit is payable for management fee, including incentive fee.3. Business Registrations Registration and compliances under India taxation laws are to be ensured including Pan & Tan registration, service tax registration, vat registration (For hotel industry), while Biz Registrations considering the tax perspective the DTAA agreement with the country has crucial role to play for avoidance of double taxation. Registration under Shop and Establishment Act for the establishment of business in India differs from state to state. • PAN Registration • TAN Registration4. Licence for Tour Operator/Travels Agents • VAT Registration • Shop & Establishment The entity shall get license as Tour operators from the concerned state tourism • Licence for Tour department where it is operating. Like in NCT of Delhi no one can operate in without Operator grant of license, as per rules 2(t) and 81 of Delhi Motor Vehicles Rules, 1993 irrespective of the size of business turnover. The State Department after verification of the entity from concerned agencies, state OperationalFunctioning police authority and compliance of the specified conditions shall grant License to the entity for 5 years, subject to renewal thereof.5. Operational Functioning & Business Agreements One Staff Member having Entity shall hire employees as per the needs and requirement of the state tourism • department, like for Delhi, at least one staff member should have Degree/Diploma in Degree/Diploma in travel/tourism from recognized university/IITTM/Institution approved by AICTE OR 3 years working experience in the Travel and Tourism Industry. These Academic qualifications travel/tourism from may be relaxed in case of Airlines, Shipping, Transport, PR Agencies and those who have recognized university experience with MOT approved tour operators all depends on the laws of the respective approved by AICTE state of operation. Or The other agreements besides the employment agreement to be signed and contracted by the entity include agents & transporters agreement, hotel & agent agreement. An • agreement will ensure smooth functioning of the business. years working For more info on Business setup visit Page |5 For Business setup queries email at or call at 011 40622239
  6. 6. experience in the Travel and Tourism Industry declared tariff of Rs. 1000 per day and revision of service tax rates on air travel has increased the cost but the bullish tourism market is still locking theMarket Entry – Tourism Business In India investors.6. Recognition of DOT For capturing the market at massive scale in addition to the marketing efforts, the travel Companies need to be recognized by Department of Tourism. Although it is a voluntary scheme open to all travel agencies and tour operators’ enterprises but the companies recognized by DOT are entitled to incentives and constituencies granted by govt. from time to time. The Companies to be recognized by DOT shall have an IATA license of GSA (general service agent) of IATA member airlines, approved by RBI to book foreign tourist, approved by ministry of external affairs to handle document, passports, visas and such another items, recognized by railways and airways, registered under shop and establishments Act. .7. Tourism Industry Attractions The Indian government has taken up a number of initiatives to enhance the tourism and hospitality sector performance and profits. Tax Incentives or Tax holiday In the budget 2010 it has extended the benefit of 100% investment linked tax deduction on capital expenditure (excluding land, goodwill and financial instrument) for building Tax INCENTIVE and operating a new hotel from selected locations to across the country. The five year tax holiday under the Income tax Act has been provided for two, three and four star • 100% investment linked category hotels located in all united nations educational, scientific and cultural tax deduction on Capital organisations (UNESCO) world heritage sites (except Mumbai and Delhi) for hotels Expenditure starting operations from 1st April 2008 to 31st March 2013. • Five year tax holiday The State Governments in order to attract investment has taken initiatives, Uttarakhand under the Income tax State Government has launched 100 per cent tax exemption program to exempt multiplex projects, amusement parks, and other tourist facilities for a period of five years Act has been provided under the Vision 2020, Rajasthan has reduced the luxury tax level to 8 per cent from the for two, three and four existing 10 per cent levels. Kerala, Madhya Pradesh, Orissa and Gujarat have entered star category hotels at into Private Public Partnerships (PPP) to promote travel and tourism to attract tourists. selected Location Besides this Delinking credit for hotel projects from real estate by RBI, enabled hotel • 100 per cent tax projects to avail of credit at relaxed norms. exemption program to exempt multiplex However the application of Service tax on air conditioned restaurants possessing projects, amusement licenses to serve alcoholic beverages and on hotel accommodation, in excess of parks, and other tourist facilities for 5 years in For more info on Business setup visit Page |6 For Business setup queries email at or call at 011 40622239
  7. 7. Uttrakhand • Reduction of luxury tax level to 8 per cent from the existing 10 per cent levels in RajasthanMarket Entry – Tourism Business In India Tourist VISATourist Visa on Arrival • Tourist Visa on ArrivalVarious schemes have been introduced to boost the tourism industry, scheme of for citizens of 11granting Tourist Visa on Arrival (T-VoA) introduced for the citizens of 11 countries countriesincluding Finland, Japan, Luxembourg, New Zealand and Singapore. The governmenthas developed 37 destinations within the last two years, and executed of 600 projectsfor 300 tourist spots across the country with an investment of over US$24 million.The basic aim of any investor is the safe investment, Indian Government in the past fewyears has taken initiatives to gain the faith of the investors, various government portals India with the simplified laws,have been developed to check out the NRI/Foreign investment issues, simplication of specialized assistance and nolaws, various Private specialized consultancies is being offered for taking care of sector doubt with tremendous growthand state specific laws, rules and regulations that would help the investor to be focused rate will be a tourism hotspot fromon the business. 2009–2018 having the highest 10-India with the simplified laws, specialized assistance and no doubt with tremendous year growth potential.growth rate will be a tourism hotspot from 2009–2018 having the highest 10-year growthpotential. Source: World Travel and Tourism CouncilBusiness IDEA OF THE Month SPA is a place devoted to overall well-being through variety of professional services that encourage the renewal of mind, body and spirit. SPA can be Ayurvedic Spa, Club Spa, Cruise Spa, Day Spa, Dental Spa, Garden Spa, Medical Spa or Resort/Hotel Spa. With everybody being so busy and stress-filled these days, starting a spa business is an excellent choice for a new business venture. The initial investment to get a day spa up and running is substantial. However, the income potential is outstanding. Location is probably the most important aspect of this new enterprise, so be sure to carefully research the area where you intend to open for business. Providing day spa clients with a wide variety of services such as manicures, seaweed wraps, aromatherapy and massage options is guaranteed to make the business a popular destination for new and repeat clients. You should have no problem charging top bucks for your services, provided you offer exceptional personalized service to your clients. Marketing a day spa service would be through traditional advertising media. Be sure to print and distribute two-for-one discount coupons for the initial grand opening. You may have to sacrifice some revenue, but discount coupons are a terrific way to gain interest from potential customers quickly. The income and profit potential will greatly depend on a number of factors, such as services offered, customer volumes and business location. However, attaining combined income and business profits in the range of 50, 00,000 per year is achievable. For more info on Business setup visit Page |7 For Business setup queries email at or call at 011 40622239
  8. 8. StartBizIndia Discussion Platform  How to start and implement a restaurant business in Chennai? Provide me the compliances and setting up etc? Compliances for starting a restaurant business in Chennai, India are as follows; • Incorporation & Registrations- Incorporation of business entity which can be a Company (Private or Public) Or Limited Liability Partnership Or Partnership. Tax Registrations such as PAN, TAN, Service Tax, VAT • Business Licenses & Approvals- Trade License, Food & Liquor Licence, License under Food and Drug Control Act, Medical/Health Certificate for Kitchen Staff, Shops & Establishment Certificate, Police Registration Certificate, ESIC for shop employing staff more than 10, Provident Fund Registration if number of staff is more than 20 employees • IPR Registration for Brand Name Reservation • Domain Name Registration & Web designing  IS RBI approval required to start a partnership firm? I am resident in United States and I would like to start a trading Partnership in India with my elder brother. Do I need prior approval from RBI to start a partnership firm in India? The other partner is my elder brother and he is a resident Indian. I can provide capital contribution from US account as well? A NRI/POI resident outside India can invest in the capital of partnership firm in India on non-repatriation basis provided certain conditions. However, NRIs/POIs may seek prior permission of Reserve Bank for investment in Partnership firm with repatriation basis. As far as procedure is concerned, certain documents needs to be filed with RBI in prescribed format. Your Business being, import and export of metal & water treatment equipments, you need to get Import Export Code as well. For more info on Business setup visit Page |8 For Business setup queries email at or call at 011 40622239
  9. 9. Upcoming Business Summit STARTUPS ACROSS ASIA TO MEET @ SMASHUP 2012 Smashup! Is a giant mashup of creative energy, product showcases, networking opportunities and an insightful agenda covering key startup issues & challenges. Smashup! Atmosphere and format encourages participants to bond in an informal, open, interactive culture that will enable them to share and collaborate, help them learn from experience and create new ideas. It will bring together:- • New Entrepreneurs, startups and idea stage entrepreneurs • Veteran entrepreneurs and seasoned professionals • • Angel investors and Venture capitalist Mentors & Advisors National • Smashup 2012 Date: 10th Feb 2012 • E Week India 2012 Venue: EPICENTRE, At Apparel House, Sector 44, Gurgaon E Week India 2012 Theme: Invent the Future E Week India focuses public attention on todays biggest opportunities and Inter National encourages participants to reflect on their role as leaders and innovators. The campaign is led by the National Entrepreneurship Network and • Global supported by the Wadhwani Foundation. Entrepreneurship Training The theme of E Week 2012 ‘Invent the future’ hopes to inspire all into • New Orleans Entrepreneurs Week donning the lens of an intrepid entrepreneur and delving into local issues and fundamental challenges of water scarcity, garbage, traffic problems, power, pollution, etc. Date: 11TH -18TH Feb 2012 For more info on Business setup visit Page |9 For Business setup queries email at or call at 011 40622239
  10. 10. Contact Us Visit us at Arun Gupta E: D: +91.11.40622214 A Venture of Neha Seth D- 28, South Extn. Part I New Delhi – 110049 T: 40622200 F: 91.40622201 E: D: +91.11.40622239Disclaimer:This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper is developed havebeen developed for the new startups. The author and the Company expressly disclaim all and any liability to any person who hasread this paper, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any suchperson in reliance upon the contents of this paper. For more info on Business setup visit P a g e | 10 For Business setup queries email at or call at 011 40622239