India is continuously emerging as a major economic centre in the world and is also evolving its economic policies to allow smooth investments in companies and less or at least smooth legal formalities for foreign nationals or companies to start a company or a manufacturing unit in India.
ANS IP Management Services with their associates Adastra IP India provides services in Intellectual property as well as assist their clients in Investing or starting a company in India.
But first, let’s have look to the core procedure and policies for starting a company in India
Types of Companies
- Private Limited Company or Limited Company – A private limited company or limited company is owned by two or private persons or organizations. In India, a private limited company is easiest and fastest to get incorporated if the documents are sufficed in time. With current shift in economic policies, the foreign direct investment in private limited for the selected fields is increased upto 100% under the automatic route, wherein no Central Government permission is required. A private limited company incorporation also gives a wider market practise in India that allows better revenue growth and investment opportunities.
- Limited Liability Partnership (LLP) – LLP is another route through a foreign investor company can establish its market in India. The rules for LLP also have been upgraded and now the foreign nationals can invest upto 100% as per new FDI rules. This further eases a documentation and establishment of foreign facilities in India.
Since, India provides a strategic access to its vast market and other markets in South Asia, Central Asia, MENA region and S.E. Asian, easing of these norms now allows the foreign nationals to reach out with increased inception in these markets. Hence, a manufacturing unit and a research facility in India serves a cost effective and revenue intensive option to the foreign companies.
Foreign Direct Investment (FDI) into an Indian Private Limited Company or Limited Company is allowed upto 100% in most sectors. Only a very few sectors require prior Central Government approval for investment by foreign company or foreign national. The following sectors require Government Approval for investment by Foreign Company or Foreign National:
- Petroleum sector (except for private sector oil refining), Natural gas / LNG pipelines.
- Investing in companies in Infrastructure
- Defence and strategic industries
- Atomic minerals
- Print Media
- Postal Services
- Courier Services
- Establishment and operation of Satellite
- Development of Integrated township
- Tea Sector
- Asset Reconstruction Companies
- Incorporation of Private Limited Company for Foreign Companies and Foreign Nationals
The foreign company or individuals shall have to go through following obligations to start a business in India:
- Define shareholding and management structure of the company:
The shareholding pattern can be as follows:
- For a 100% foreign company or individual shareholding, it is mandatory to have one or more Indian director, one or more foreign director and at least 2 foreign shareholders.
- For establishing a foreign subsidiary in India, it is mandatory to have one or more Indian director, one or more foreign director and at least 51% share of the Indian subsidiary is held by the foreign company.
- For establishing a joint venture in India, it is mandatory to have one or more Indian director, one or nil foreign director and share should be held by both Indian and Foreign company on mutually agreed terms.
- The foreign nationals or companies or directors will have to obtain digital signature to formally operate in India
- The company should go for name approval and submission of documents in Ministry of Corporate Affairs, India.
- Fulfil Necessary Legal docs for company and operating place such as land, workforce etc.
After completing all these stages, your company in India shall be ready to enter into the market.