A Comprehensive Guide for Foreigners to Start a Business in India
3E Accounting presents a comprehensive guideline for foreigners to start a business in India.
India is a diverse, culturally complex land that can be confusing to foreign investors looking to establish their business. Considering the myriad and intricate regulatory system that governs India, the confusion is justifiable. India’s business environment can be highly lucrative for the savvy investor or a potential minefield for the clueless foreigner. A comprehensive guideline for foreigners to start a business in India sheds some light on setting things up.
Setting Up Shop in India’s Complex Market
Any foreign investor looking to start a business in India will first have to incorporate and register their company with the Ministry of Corporate Affairs (MCA). Legal structures that are suitable for a foreign investor include:
- Wholly Subsidiary Company – one director needs to be an Indian resident
- Branch Office or Representative Office or Project Office – an Indian resident must head the office
- Limited Liability Partnership (LLP)
- Limited Company
For limited and subsidiary companies, there must be a minimum of two directors. Application routes differ depending on the type of company. Limited companies or partnerships need to file their applications at the MCA. Branch or liaison office need to file with the Reserve Bank of India first, followed by the MCA.
The process will start with an application for a Digital Signature Certificate (DSC) followed by checks on company name suitability and notarization of documents, stamp duties, etc. Once these are done, you will need to register your company structure and apply for:
- DIN – Director Identification Number
- PAN – Permanent Account Number
- TAN – Tax Account Number
- GST – Goods & Services Tax for an annual turnover of more than Rs 2 lakh
Documents that are needed include:
- Defined India Business Pan.
- Notarized list of company Directors on the company letterhead.
- Proof of address of the Registered Office in India that will be used by the company.
- NOC or No Objection Certificate from the owner of the Registered Office.
- Identification document of Authorized Representative appointed by the company.
- Notarized constitutional documents of the company (e.g. articles of association, memorandum, etc.)
Once your company has been incorporated, the next step is to open a bank account, and this will require the physical presence of a stakeholder. As for financial compliance, a statutory auditor needs to be appointed within a month of incorporation. Annual General Meetings (AGMs), annual returns and corporate taxes must be filed as well. Employee’s Provident Fund Organisation and Employee’s State Insurance Corporation are other compliance issues that will need to be seen to.
It is important to note that permits and licensing must be obtained before commencing operations. Not all companies need a license while others may require multiple permits from both State and Central Government Departments.
A comprehensive guideline for foreigners to start a business in India shows that it is certainly no walk in the park to set up a successful business in India. Complex laws, regulations, bureaucracy as well as cultural knowledge can be stumbling blocks for foreign entrepreneurs. Engaging business solutions firms that are locally savvy such as 3E Accounting is the best possible decision you can make. 3E Accounting has both industry knowledge and experience to ensure seamless incorporation and start-up.
Contact 3E Accounting today for customizable solutions that work best for your business needs.