Doing Business in India                             India is one of world’s                                               ...
Check Foreign Investment PolicyIn case you are a Foreign National/ resident and are planning to setup your business either...
investment. This route is available to all sectors or activities   Business            Entities        that do not have a ...
A Limited Liability Partnership, popularly known as LLP combines            Business     Licenses       &the advantages of...
c. Social Security registrations                                       Our Gamut of Services:       These registrations re...
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Doing Business in India

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“While looking at the prospect of setting-up business in India, it would be careful to see what all options are available to a new entrepreneur. Before setting-up a business in India, an entrepreneur generally faces with the following important questions: Which form of business to set-up, Where to set-up, How to set-up, what are post set-up compliances?”
“In case you are a Foreign National/ resident and are planning to set up your business either independently or in Joint Venture with an Indian Party, it is necessary to check the Foreign Direct Investment policy of India before taking any decision.”
StartBizIndia explaining the Procedure and Legalities to Start a Business in India

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Doing Business in India

  1. 1. Doing Business in India India is one of world’s fastest growing significant economies” – Brad Wall,Over the years, India has become an attractive place for doing Premier ofbusiness in. A country rich in land, natural resources, people, Saskatchewan, Canadaculture; India has a lot to offer. And what can never go unnoticed isthe fact that India is a young country. A median age of 26.2 years Macroeconomic Snapshotsurely talks a lot about the zeal and vigor of the Indian population. • Consistent GDPReligious, cultural and regional diversity plays the biggest tool for Growth even in lightthe business class: Diverse markets. English speaking population, of impending Globalbusiness friendly government, an ever growing and eager economic slowdownconsumer base brings along the perfect combo which abusinessman can look for.Ever since India adopted the LPG (Liberalization, Privatization,Globalization) Policy in 1991 and opened up itself to othereconomies of the world; every year has been a year of progress.Statistics speak louder than anything else. The growth rate whichused to border around 4 % annually prior to LPG, jumped to almost6% in the 1990’s.Considering the past one decade, the Indian economy has seen arobust growth. India happens to be one among the very fewcountries which braved the most recent & ominous global financialcrisis and has still been growing comfortably.A stable annual growth rate, prominent capital markets, liberal FDIpolicy, 4th largest purchasing power in the world, have allcontributed to the current position India is at. With world’srenowned multinationals performing very well in India and Indianentrepreneurs making their mark in the overseas capital markets;India surely holds a lot of promise for new businesses.While looking at the prospect of setting-up business in India, itwould be careful to see what all options are available to a newentrepreneur. Before setting-up a business in India, anentrepreneur generally faces with the following important questions:Which form of business to set-up, Where to set-up, How to set-up,what are post set-up compliances? Starting a business involvesconsideration of various factors such type of organization to be setup, how & where to set-up, registrations & approval required,activities to be undertaken post set -up etc. Since it is an importantstep towards realizing your dreams and therefore it is necessary toplan and execute it rightly. Steps for doing business in India areexplained below.
  2. 2. Check Foreign Investment PolicyIn case you are a Foreign National/ resident and are planning to setup your business either independently or in Joint Venture with anIndian Party, it is necessary to check the Foreign Direct Investment Check FDIpolicy of India before taking any decision.Foreign Direct Investment is prohibited in the following activities/sectors in India; a. Retail Trading (except Single Brand Product retailing) Locational Analysis b. Lottery Business including Government/ Private Lottery, online lottery, etc. c. Gambling and Betting including casinos, etc. d. Business of Chit fund e. Nidhi Company f. Trading in Transferable Development Rights (TDRs) Registration of g. Real Estate Business or Construction of Farm Houses h. Manufacturing of cigars, cheroots, cigarillos, of tobacco or Business Entity of tobacco substitutes i. Activities/ sectors not opened to private sector investment including Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems)Besides foreign investment in any form, foreign technology Business Licenses &collaboration in any form including licensing for franchise, Registrationstrademark, brand name, management contract is also completelyprohibited for Lottery Business, Gambling & Betting activities.Foreign Investment in any company, by way of contribution toequity or instruments compulaosrily convertible into equity when itrelates to control or ownership of that company, is termed as EstablishingForeign Direct Investment. It takes one of the following two routes; Ofice & a. Approval Route Infrastructure All foreign Direct Investment proposals which satisfy any of the below mentioned conditions will require the approval of Foreign Investment Promotion Board (FIPB) of India; Hiring of • Sectors where investment is only allowed after approval of Government of India Manpower • Sectors, where the proposed investment is above the limits or prescribed sectoral cap. b. Automatic Route Arranging Funds All Foreign Direct Investment proposals which do not for Business require the approval of Foreign Direct Investment Promotion Board are allowed under Automatic Route i.e. no approval required and investor can move ahead with
  3. 3. investment. This route is available to all sectors or activities Business Entities that do not have a “sectoral cap” i.e. where 100% foreign ownership is permitted, or for investments that are within a in India sectoral cap (e.g. less than or equal to 26% share of an Insurance Company) and where automatic route is allowed. • Company However, intimation is required to be sent to RBI through the category I- Authorised Dealer within 30 days of Private Limited allotment of shares in pursuance of receipt of FDI. CompanySelection of Location of Business Public Limited CompanyLocation of the business is the most important factor influencing itssuccess or failure. It is a long-term decision which should take into • Limited Liabilityconsideration not only the present requirements of the organisationbut also its future expansion plans. Errors in deciding location may Partnershipbe very difficult and expensive to rectify. The decision of location • Proprietorshipdepends upon a large number of factors like Nature of Business • Partnershiplike Manufacturing, Trading, Services, etc., Availability of rawmaterials, Proximity to the Product Market, Labour Supply,Availibility of transport facilities & Power, Government regulationsand Policies, climatic factors, etc. Taxation in IndiaRegistration of Business Entity All companies incorporated in India are deemed asIn India, you can carry a legal business with object of making profit domestic Indian companiesunder any of the following business forms like Company, LLP, for tax purposes, even ifProprietorship, and Partnership. owned by foreign nationals or foreign companies.Though under some specific statutes, it is provided that certain kindof the business can only be carried by specified business form, for Income Tax Rates ofexample a stock exchange can only be carried in form of company. Domestic Corporate & LLP Tax EffectivePractically the most credible form of business, a company is Rate tax rateregistered in accordance with the Companies Act and is a separate withlegal entity, distinct from both its shareholders, directors and Surchargmanagers. The liability of the shareholders is limited to the amount e andpaid or unpaid on issued share capital. A company has unlimited Edu cess Compan 30% 33.99%life and no limit is placed on the number of shareholders. The yCompanies Act, 1956 does, however, place many restrictions on Limited 30% 30.90%the company. It must maintain certain books of accounts, appoint Liabilityan auditor and file an annual return with the registrar of companies Partnerswhich includes the accounts as well as details of directors and hipmortgages. (LLPs) & Partners hips
  4. 4. A Limited Liability Partnership, popularly known as LLP combines Business Licenses &the advantages of both the Company and Partnership into a single Registrationsform of organization. It is hybrid structure posing the features ofboth Company and Partnership. It is alternative form of business, In order to carry on businessfor those who are not looking to form either company or in India, following types ofpartnership. LLP as the name stays is basically a partnership approvals and registrationsbetween various persons/entities who have agreed to carry on may be required;some lawful business with profitable motive with liabilities of each a. Tax Numbersperson/entity being limited to the amount agreed to be contributed There are general taxby them numbers mandatorily required after gettingWhile starting a business, one may form a sole proprietorship when the Business entitythe business is small. The problem with this kind of business is that registered which areit cannot grow beyond a certain limit. This is because a sole Permanent Accountproprietorship will not be readily sponsored by banks other sources Number (PAN) & Taxof finance. deducted Account Number (TAN).Also the amount of money that the sole proprietor can contribute to There are otherthe business “alone” is not very high. Besides this, the sole specific taxproprietor has to take wise decisions in running the business. If he registrations requiredis unable to do so, the business will not be very successful and will such as Service Taxnot grow. A sole proprietor might be an expert at marketing or might Number, if in casebe technically strong. But it is not likely that he will be strong in all you are renderingthe fields that are important for making wise and successful services, Valuebusiness decisions. Added Tax (VAT), if in case you arePartnership is combination of two or more proprietorships, who selling goods withinhave agreed to pool their resources for a common objective and the state, Centralwith a view to earn profit. Partnerships are established pursuant to Sales Tax (CST),partnership deed between the partners and they can be formed for Central Exciseparticular time duration or particular project and according to the Registration forwill of the partners. There cannot be more than 20 persons in manufacturing ofpartnership firm and with the admission or cessation of any partner, certain goods, etc.the partnership dissolves. This partnership deed may be oral or inwriting. However it is wise to make sure that the partnership deed is b. Commercialin writing so that future conflicts may be resolved. Registrations In some states inForeign Offices: India, it is necessary to register theAny foreign company (including a firm & association of persons) businessexcept partnership & proprietary concern intending to set up establishment underbusiness in India can instead of incorporating a company /LLP in Shops &India, can establish a foreign office in form of Liason Office, Branch establishment Act ofOffice or Project office. that state.
  5. 5. c. Social Security registrations Our Gamut of Services: These registrations relates to welfare of employees. It includes registration under Provident Fund Scheme and  India Entry Services Employee state Insurance Scheme.  Investment Banking d. Business Specific Approval/ Licenses  Corporate In India, it is necessary to obtain the approval of concerned Transaction Advisory regulatory authority in order to carry out certain specified business activity. Each of activity for which approval is  Corporate required is governed by separate regulation. So, it depends Restructuring upon the nature of Business, that which licenses are required to be procured.  Corporate Compliance and DueAbout us: DiligenceStartbizindia is all about doing business in India i.e. how to start it,  Deals andgrow it and in case required, to close it. We provide consultancy commercialservices to non-residents and young entrepreneurs to plan and Agreementsexecute their business set-up process smoothly. At Startbizindia,we have tried to provide solutions to all your queries on setting–up  Forex and Overseasbusiness in India in an innovative and techno manner through Transactionscustomized tools, for easy understanding.  Global BusinessCorporate Professionals is a Group best illustrated for providing a Structuring andwide range of corporate service at one stop. Within 8 years the Setupgroup has received laurels of successfully serving more than 800  Corporate andCorporate Houses for their over 2000 diverse corporate Securities Lawstransactions. Through our strong foundations and dedicated efforts advisorywe have emerged as a Leading Corporate Advisory, attaining anedge in providing services at Internationally Competitive Standards.  Many More…….Our Diversified team of professionals, who have attained expertisein delivering supreme quality corporate services, utterly justifies ourname, ‘Corporate Professionals.’ With a team of more than 100multi-faceted professionals having skills and experience oftransaction advisory related to Legal, Financial, and Taxationmatters, we endeavor to provide excellent services along withcomprehensive solutions in a professional manner.We believe that long term value creation for you lies in fulfilling notonly the stated needs but by going beyond to address the unstatedwants. We always deliver hassle-free services to our clients, byproviding end-to-end solutions at one stop.We attempt to be innovative in our approach by utilizing IT tools; ararely treaded way, in Legal and Financial Profession to the bestpossible manner in our organization and have created software-based products to interpret complex legal & financial issues

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