Law Senate Law Firm has strong experience in handling high value foreign investment proposals from Foreign Companies and foreign investors who are investing in India.

1. Investing in
INDIA
Presented By S Ravi Shankar
Law senate Law Firm – New Delhi & Mumbai
ravi@lawsenate.com

2. Government Structure
Central
State
Regulatory
Statutory
bodies
Local

3. Government Structure in india
– Government of India
– Government of the State ( Maharashtra)
– Local Bodies (Pune Munipality)
– Statutory Bodies
– Investment Promotion Board
– Regulatory Bodies
– Securities Exchange Board of India
– Reserve Bank of India

4. Powers of the governments
– Constitution of India
– Central List (Customs Duty, Central Excise Duty, Central Value Added Tax,
Income Tax, Foreign exchange regulations, Visas etc.,)
– State List (Labour laws, Value added Tax, Electricity, Security)
– Concurrent List (Environment laws)
– Powers of Statutory Bodies (Reserve Bank of India)
– Local Body powers

5. General Business models of FDI
– Branch office
– Liasion office
– Project office
– Joint venture Company
– 100% Subsidiary of a Foreign Company

6. 100% Subsidiary of a Foreign
Company
– Permitted in all fields where 100% Foreign investment is permitted by
Government of India
– 100% export units
– Manufacturing except the items reserved for Micro & Small scale Sector
– Manufacturing except items which are reserved
– 100% profit after deduction of taxes repatriable to the Mother Company

7. Investment routes
Automatic Government

8. Join Venture Company
– Joint venture company is a Company formed by two or more share holders
– Partnership Company
– Limited Liability Partnership (LLP)
– Private Limited Company
– Public limited Company

9. Private Limited Company
– A minimum of two share holders
– A Maximum of 200 Share holders
– A minimum of two Directors
– Minimum authorised Capital 2200 USD
– Foreign Nationals also have to get a DIN (Director Identification number) to
become a Director
– Foreign Nationals can be Directors
– KYC required for all share holders
– KYC (Know your customer) norms can be full filled from any foreign country

10. Private limited company
– Shares of a Private Limited Company can not be listed in a Stock Exchange
– Required Documents Address Proof of Share holders, identity proof of share
holders, Address of the Registered office, Memorandum of Association, KYC,
DIN etc.,

11. Governing bodies of a Company
– General Body
– Board of Directors
– General Body - Forum of all share holders of the Company
– Powers of the General Body includes
– Powers to elect the Directors
– Adopt the Audited Finance Statements
– Change in Memorandum & Articles of Association
– Appointment of Auditors
– Issuance of Shares

12. Powers of the board of Directors
– Board of Directors do the Day to Day Management of the Company
– Borrowing of funds
– Investment Decisions
– Diversification decisions
– Office Management
– Reporting & Compliances
– Absence in two meetings can lead to termination of a Director from the board
– Powers of the Board can be restricted by the General Body

13. Taxation in India
– Corporate Tax- Income Tax - 30%
– Dividend Disbursement tax - 15%
– Short Term Capital Gains Tax - 30%
– Long Term Capital Gains Tax - 10-15%
– Central Excise Duty - Approx 23%
– VAT - 12-14-5%
– Customs duty – Depends on the item/ use

14. Labour Laws in India
– Regular Labours are protected by Industrial Disputes Act
– Enquiry, Disciplinary Action, Suspension, retrenchment, removal etc., are
allowed by law
– Contract Labour system is legal in India
– Industrial Disputes Act apply only to Labours (Workmen)
– There is no protection for officer category employees
– Employees provident Fund, Employees State Insurance etc., are mandatory

15. Investment Flow Chart
Investment
Joint Venture agreement
Memorandum & Articles of the Company
Incorporation of the Company

16. Government Investment
Promotion Schemes
State
Schemes
Industrial
Estates
Central
Schemes

17. Government Promotion Schemes
Tax
Holidays
• Tax Free period
• Tax
reimbursement
Rates
• Special rates for
power
• Subsidy on
investment
Others
• Discounted
Land
• Duty free
Import

18. Exit Options
– Exit options are decided and incorporated into the Investment contract
between the parties
– Shares of the Exiting Partner can be Sold to Third parties
– Shares of the Exiting Partner can be sold to JV Partners
– Liquidation of the Company
– Full amount realized from Exit can be repatriated to the country of investor.

19. Dispute Resolution options
Arbitration
Mediation
Court Litigation

20. Dispute Resolution
– International Arbitration Clauses are preferred because Court litigation takes
long time in India
– India is a New York Convention country hence India & China recognize the
arbitration awards passed in each other.
– India has good Arbitration Institutions like ICA, IDAC India, DIAC etc.,
– CITAC, SHIAC & BAC Arbitration Centre awards are recognized in India
– ICC, SIAC, HKIAC, LCIA are popular in India