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India Business Environment

India with its consistent progression and adequate profoundly skilled manpower delivers outstanding prospects for investments. India is the most populous democracy and tenth most significant economy in the world. India is the 4th most extensive economy all over the world when it comes to purchasing power parity. India features a federal system of Government with distinct demarcation of powers between the Central Government and the State Governments.

India allows a liberal, captivating, and trader friendly investment environment. India is straining on encouraging foreign investment. India posses most liberal and transparent policies on foreign direct investment (FDI) among major economies around the globe. 100% FDI is acceptable under the self-regulating approach in all sectors/activities apart from few areas, which demands prior authorization of the Government. Under self-regulating, investors are required to only notify the Reserve Bank of India within 30 days of receipt of inward remittances.

India has liberalized and articulated foreign exchange controls. Rupee is readily convertible on current accounts. For FDI- Profits earned, dividends and proceeds out of the sale of investments are fully repatriable.

India incorporates a giant socio-economic class and 55% of its population is below the age of 25.High economic growth and escalating per capita income has resulted into higher growth in the national market, which is the prime growth engine for Indian marketplace.

Government of India highly emphasizes on the development of infrastructure in highways, ports, railways, airports, power, telecom, etc. Government is constantly looking for domestic and foreign private investment, for infrastructure sector development.

General Information

India's weekend is Saturday and Sunday. Banks are open from 10 am – 4 pm though several branches are open till afternoon on Saturdays. ATM are available everywhere in the country, in hotels, market places and shopping malls.

Transport

India has state taxi service. Metropolitan cities have intercity Bus services also.

Accommodation

India’s scenic tourist places attract large no. of people from the world. India generates high revenue from its tourism, visited by globe-spanning business people and tourists; India is well serviced with world-class hotels. For more info visit: http://tourism.gov.in/ and www.incredibleindia.org

Investment Opportunities in India

India provides great avenues for investments in various sectors.

  • Automobile
  • Biotechnology
  • Cement
  • Chemicals
  • Civil Aviation
  • Defence
  • Education
  • Food processing
  • Gems & Jewelry
  • Healthcare
  • Heavy Industry
  • IT & ITeS
  • Media & Entertainment
  • Mining Oil & Gas
  • Pharmaceuticals
  • Ports
  • Power
  • Retailing
  • Roads & Highways
  • SEZ’s
  • Steel
  • Telecommunications
  • Textiles
  • Tourism and Hospitality

NRIs in India

The government acknowledges the significant role that the massive Indians residing and working in foreign lands, the Non-Resident Indians can play in reinforcing the velocity of growth in the country. The NRIs are allowed 100% investment in 34 important and infrastructure amenities on non-repatriation basis. Acceptance is given automatically on investment in certain specialized collaborations. They can buy Indian Development Bonds and get hold of or transfer any acreage in India without waiting for government approval. The Foreign Exchange Regulation Act has been amended to permit NRIs to deal in foreign exchange and they can also bring in five kg of gold. There are programs to utilize the scientific and technical skills of the NRIs together with the Council of Scientific and Industrial Research.

Gateway to Investment Routes

Foreign institutional investors can use investments in corporates, collaterals and government bond to meet margin. Investors with more than 10pct stake will be regarded as FDI foreign direct investment.

  • Foreigners can directly invest in India either on by themselves or as a joint venture, with a few exceptions with pertaining to investment limits and sectors.
  • No government acceptance is needed for FDI in virtually all sectors except a small adverse list formulated by government. Sector specific guidelines are formulated by government giving sectoral investment limitations if any.
  • If an investment does not qualify for automatic acceptance, FIPB considers the proposal.
  • Use of foreign brands names/trademarks is authorized for sales in India.
  • Indian capital market is open to FII’s and Indian companies are allowed to boost funds from international capital markets.
  • Foreign technology collaborations are allowed with agreements on Technical know-how.
  • Fees Payment for designs and drawings.
  • Payment for engineering services.
  • Other royalty payments.
  • NRI’s can invest in shares and or convertible debentures of Indian companies on a non-repatriable basis and these investments are not considered as FDI.

Entry Procedures

Liaison office:Setting up of a liaison office requires prior approval from Reserve Bank of India (RBI). Approval is usually granted for a period of three years and can be renewed thereafter.

Branch office:A prior approval from RBI is required. RBI closely examines the proposed activities to be carried out in India.Subsequently, a certificate of establishing place of business in India is required to be obtained from Registrar of Companies.

Project office:In specified cases, a project office is allowed to be set up under automatic route otherwise a prior approval is required from RBI. As in case of branch office, a certificate of establishing place of business in India is required to be obtained from Registrar of Companies.

Incorporation of a company

For registration and incorporation of a company, an application has to be filed with Registrar of Companies. Once a company has been registered and incorporated in India, it is subject to laws and regulations as applicable to other domestic companies in India.

There two types of companies that can be incorporated-

Private company:A private company has minimum of two members and a minimum paid up capital of Rs. 100,000 or a higher paid up capital as may be prescribed.

By its articles, a private company has to -

  • Restrict rights to transfer its shares, if any
  • Limit its shareholders to a number of fifty
  • Prohibit any invitation to public to subscribe any of its shares or debentures of the company
  • Prohibit any invitation to acceptance of deposits from any person other than its members, directors or their relatives.

Public company:A public company is defined as a company which is not a private company. A subsidiary of a public company is also treated as a public company. A public company should have a minimum paid up capital of Rs. 500,000 with a minimum seven members and three directors. Maximum number of directors is 12 but can be increased subject to government approval.

Incorporation procedure:

Following steps are required to incorporate a company:

  • DIN (Director Identification Number)
  • Applying for name availability
  • Draft a Memorandum of Understanding (MOU) and Articles of Association (AOA)
  • Court stamping of MOU and AOA
  • Signing MOU and AOA by first subscribers
  • Register with (ROC) Registrar of Companies
  • Vetting of MOU and AOA by ROC
  • Certificate of incorporation

Immediate Business compliances:

Following registrations would be required to be done, depending on nature of business:

PAN (Permanent Account Number):All income tax payers are required to obtain an income tax registration number i.e. PAN.

TAN (Tax Deduction Account Number): While running a business, certain payments will require the payee to withhold tax. A new business is required to obtain Tan from income tax department.

Service tax:A person/company providing specified services needs to obtain service tax registration within 30 days of providing the services.

VAT (Value Added Tax):VAT is levied on sale of goods. Any business proposing to carry out works contract or trade in goods needs to register for VAT.

Excise duty registration: Excise duty is an indirect tax levy on manufacture of goods.

FRRO(Foreigners Regional registration Office):Foreigners coming to India on employment need to register with FRRO within 14 days of their arrival.

IEC (Import Export Code):Prior to carrying out any export or import activities, it is mandatory to obtain an IEC from Directorate General of Foreign Trade.

Trade Fairs in India

  • India International Leather Fair
  • Delhi Book Fair
  • Stationery Fair
  • 15th India International Security Expo
  • India International Trade Fair
  • Energy –Tech
  • Enviro –Tech
  • Nakshatra
  • Aahar International Food Fair
  • Multi-products & décor items etc. 
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