“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

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 of
business in. A country rich in land, natural resources, people, Saskatchewan, Canada
culture; India has a lot to offer. And what can never go unnoticed is
the fact that India is a young country. A median age of 26.2 years Macroeconomic Snapshot
surely talks a lot about the zeal and vigor of the Indian population.
• Consistent GDP
Religious, cultural and regional diversity plays the biggest tool for
Growth even in light
the business class: Diverse markets. English speaking population,
of impending Global
business friendly government, an ever growing and eager
economic slowdown
consumer base brings along the perfect combo which a
businessman can look for.
Ever since India adopted the LPG (Liberalization, Privatization,
Globalization) Policy in 1991 and opened up itself to other
economies of the world; every year has been a year of progress.
Statistics speak louder than anything else. The growth rate which
used to border around 4 % annually prior to LPG, jumped to almost
6% in the 1990’s.
Considering the past one decade, the Indian economy has seen a
robust growth. India happens to be one among the very few
countries which braved the most recent & ominous global financial
crisis and has still been growing comfortably.
A stable annual growth rate, prominent capital markets, liberal FDI
policy, 4th largest purchasing power in the world, have all
contributed to the current position India is at. With world’s
renowned multinationals performing very well in India and Indian
entrepreneurs 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, 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? Starting a business involves
consideration of various factors such type of organization to be set
up, how & where to set-up, registrations & approval required,
activities to be undertaken post set -up etc. Since it is an important
step towards realizing your dreams and therefore it is necessary to
plan and execute it rightly. Steps for doing business in India are
explained below.

2. Check Foreign Investment Policy
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 Check FDI
policy 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, Registrations
trademark, brand name, management contract is also completely
prohibited for Lottery Business, Gambling & Betting activities.
Foreign Investment in any company, by way of contribution to
equity or instruments compulaosrily convertible into equity when it
relates to control or ownership of that company, is termed as Establishing
Foreign 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. 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. Company
Selection of Location of Business Public Limited
Company
Location of the business is the most important factor influencing its
success or failure. It is a long-term decision which should take into
• Limited Liability
consideration not only the present requirements of the organisation
but also its future expansion plans. Errors in deciding location may Partnership
be very difficult and expensive to rectify. The decision of location • Proprietorship
depends upon a large number of factors like Nature of Business • Partnership
like Manufacturing, Trading, Services, etc., Availability of raw
materials, Proximity to the Product Market, Labour Supply,
Availibility of transport facilities & Power, Government regulations
and Policies, climatic factors, etc. Taxation in India
Registration of Business Entity All companies incorporated in
India are deemed as
In India, you can carry a legal business with object of making profit domestic Indian companies
under any of the following business forms like Company, LLP, for tax purposes, even if
Proprietorship, and Partnership. owned by foreign nationals or
foreign companies.
Though under some specific statutes, it is provided that certain kind
of the business can only be carried by specified business form, for Income Tax Rates of
example a stock exchange can only be carried in form of company. Domestic Corporate & LLP
Tax Effective
Practically the most credible form of business, a company is Rate tax rate
registered in accordance with the Companies Act and is a separate with
legal entity, distinct from both its shareholders, directors and Surcharg
managers. The liability of the shareholders is limited to the amount e and
paid 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
y
Companies Act, 1956 does, however, place many restrictions on
Limited 30% 30.90%
the company. It must maintain certain books of accounts, appoint Liability
an auditor and file an annual return with the registrar of companies Partners
which includes the accounts as well as details of directors and hip
mortgages. (LLPs) &
Partners
hips

4. A Limited Liability Partnership, popularly known as LLP combines Business Licenses &
the advantages of both the Company and Partnership into a single Registrations
form of organization. It is hybrid structure posing the features of
both Company and Partnership. It is alternative form of business, In order to carry on business
for those who are not looking to form either company or in India, following types of
partnership. LLP as the name stays is basically a partnership approvals and registrations
between various persons/entities who have agreed to carry on may be required;
some lawful business with profitable motive with liabilities of each
a. Tax Numbers
person/entity being limited to the amount agreed to be contributed
There are general tax
by them
numbers mandatorily
required after getting
While starting a business, one may form a sole proprietorship when
the Business entity
the business is small. The problem with this kind of business is that
registered which are
it cannot grow beyond a certain limit. This is because a sole
Permanent Account
proprietorship will not be readily sponsored by banks other sources
Number (PAN) & Tax
of finance.
deducted Account
Number (TAN).
Also the amount of money that the sole proprietor can contribute to
There are other
the business “alone” is not very high. Besides this, the sole
specific tax
proprietor has to take wise decisions in running the business. If he
registrations required
is unable to do so, the business will not be very successful and will
such as Service Tax
not grow. A sole proprietor might be an expert at marketing or might
Number, if in case
be technically strong. But it is not likely that he will be strong in all
you are rendering
the fields that are important for making wise and successful
services, Value
business decisions.
Added Tax (VAT), if
in case you are
Partnership is combination of two or more proprietorships, who selling goods within
have agreed to pool their resources for a common objective and the state, Central
with 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 Excise
particular time duration or particular project and according to the Registration for
will of the partners. There cannot be more than 20 persons in manufacturing of
partnership firm and with the admission or cessation of any partner, certain goods, etc.
the partnership dissolves. This partnership deed may be oral or in
writing. However it is wise to make sure that the partnership deed is b. Commercial
in writing so that future conflicts may be resolved. Registrations
In some states in
Foreign Offices: India, it is necessary
to register the
Any foreign company (including a firm & association of persons) business
except partnership & proprietary concern intending to set up establishment under
business 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 of
Office or Project office. that state.

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 Due
About us: Diligence
Startbizindia is all about doing business in India i.e. how to start it,  Deals and
grow it and in case required, to close it. We provide consultancy commercial
services to non-residents and young entrepreneurs to plan and Agreements
execute their business set-up process smoothly. At Startbizindia,
we have tried to provide solutions to all your queries on setting–up  Forex and Overseas
business in India in an innovative and techno manner through Transactions
customized tools, for easy understanding.
 Global Business
Corporate Professionals is a Group best illustrated for providing a Structuring and
wide range of corporate service at one stop. Within 8 years the Setup
group has received laurels of successfully serving more than 800
 Corporate and
Corporate Houses for their over 2000 diverse corporate
Securities Laws
transactions. Through our strong foundations and dedicated efforts
advisory
we have emerged as a Leading Corporate Advisory, attaining an
edge in providing services at Internationally Competitive Standards.  Many More…….
Our Diversified team of professionals, who have attained expertise
in delivering supreme quality corporate services, utterly justifies our
name, ‘Corporate Professionals.’ With a team of more than 100
multi-faceted professionals having skills and experience of
transaction advisory related to Legal, Financial, and Taxation
matters, we endeavor to provide excellent services along with
comprehensive solutions in a professional manner.
We believe that long term value creation for you lies in fulfilling not
only the stated needs but by going beyond to address the unstated
wants. We always deliver hassle-free services to our clients, by
providing end-to-end solutions at one stop.
We attempt to be innovative in our approach by utilizing IT tools; a
rarely treaded way, in Legal and Financial Profession to the best
possible manner in our organization and have created software-
based products to interpret complex legal & financial issues