Tag Archives: Foreign company registration in India

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Foreign Direct Investment (FDI)

India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 10 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

The measures taken by the Government are directed to open new sectors for foreign direct investment, increase the sectoral limit of existing sectors and simplifying other conditions of the FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the pace of foreign investment in the country.

 

Foreign Direct Investment (FDI)

FDI because the name suggests, it’s associate degree investment directly created by a remote company into business in another country. Such investment may well be either within the kind of business enlargement in another country or may well be a results of acquisition of the corporate.

Direct Foreign investments in India approval were introduced by the then Finance Minister Dr. Manmohan Singh in 1991 under Foreign Exchange Management Act to promote such investments thereby increasing supply of domestic capital & increase the economic growth.

As per Foreign Exchange Management Act, ‘FDI’ means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000.

 

Advantages of FDI in India
There are several benefits of increasing foreign direct investment in India. First of all, with more FDI, consumers will be able to save 5 to 10 percent on their expenses because products will be available at much less rates and to top it all, the quality will be better as well. In short, it will be a win-win situation for the buyers. It is also expected that the farmers who face a lot of economic problems will also get better payment for their produce. This is a major benefit considering how many farmers have been giving up their lives lately. It is expected that their earnings will increase by 10 to 30 percent.

FDI is also supposed to have a positive effect on the employment scenario by generating approximately 4 million job opportunities. Areas like logistics will be benefited as well because of FDI and it is assumed that 6 million jobs will be created. The governments – both central and state – will be benefited because of FDI. An addition of 25-30 billion dollars to the national treasury is also expected. This is a substantial amount and can really play a major role in the development of Indian economy in the long term.
Steps Taken by Government to Promote FDI
The Indian Government has taken a number of steps to show its willingness to allow more foreign direct investment in the country. In the infrastructure development sector, it has relaxed the norms pertaining to area restriction, the laws regarding gaining a comfortable exit from a particular project and the requirements relating to minimum capitalization. If companies are ready to commit 30 percent of their investments for affordable housing, then the rules for minimum capitalization and area restriction will be waived off. It is expected that this will benefit the construction sector a lot, especially in the form of greater investment inflow.

The Indian Ministry of Finance has also proposed that 100 percent FDI will be allowed in railways-related infrastructure. However, this does not include the operational aspects. While it is true that the foreign investors will not be allowed to intervene in railway operations, they will be able to provide for high-speed trains, such as bullet train, and enhance the overall network in the process.

 

Who can invest in India?

  • A Non-resident entity means a person resident outside India.
  • Non Resident Indian or Person of Indian Origin (PIO holder) or Overseas Citizen of India (OCI holder).
  • A body corporate means a company incorporated outside India.
  • Foreign Institutional Investor (FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the Securities and Exchange Board of India (SEBI) (Foreign Institutional Investor) Regulations 1995..
  • Foreign Venture Capital Investor (FVCI) means an investor incorporated and established outside India, which is registered under the Securities and Exchange Board of India.
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How to Register Foreign Companies in India

India is one of the fastest growing economies in the world with healthy resources and a large market base. In the past few years, there is a great boost in foreign direct investment in India (FDI) because of the changed regulatory environment in the past few years. Therefore, it is very easy for foreign nationals to start a business in India.

Sometimes people get often confused in “Indian Company” and “Foreign Company”. If a foreign national incorporates a company in India then it is an Indian Company. But when a foreign company set up a branch office in India then it is known as Foreign Company.

Foreign Direct Investment (FDI)

The amount/capital to be invested by any foreign national/NRI shall be classified as FDI in India. In 1990s, there was high number of restrictions on FDI in India where as today, there are amendments in all the rules and regulations of company formation in India.

FDI is classified as

  • Business where FDI is not allowed at all.
  • Business sectors where permission is required from Foreign Investment Promotion Board(FIBP)
  • Business where no permission required.

All foreign nationals/ NRI’s must go through FDI policy before company incorporation in India in order to check any restrictions, prohibition in the proposed business activity

Entry Strategy into Indian Market

A foreign company can commence operations in India by incorporating a company under the companies Act, 1956 through registration of company or establishing a branch or liaison office.

Establishing a private limited company is the easiest and fastest way to set up in India. FDI of up to 100% into a public limited or private limited is permitted under the FDI policy wherein no approval from RBI or central government is required. For the purpose of registration or incorporation, an application has to be filed with Registrar of companies (ROC). For more information please visit http://dca.nic.in.

Other entry strategy as a foreign company is to open a branch office, liaison office and Project Office. In this case, approval from RBI or central government is mandatory. Therefore, the time and money required for setting up a private limited or public limited company is much less than forming such offices.

Requirements for incorporation of company in India

In order to start a company in India, a minimum of two persons and an address are required in India. A company must have a minimum of two directors and   a minimum of two shareholders. According to Indian rules and regulations, one director must be both an Indian citizen and Indian resident.

One should establish a company with three directors which includes two foreign nationals and one local citizen. In this case, 100% of the shares of the Indian company can be held by foreign nationals/ NRI. The address in India is served as the registered office of the company.  Foreign companies establish their offices in metro cities like Delhi, Bangalore, Mumbai and Chennai etc.

Cost for company registration in India

Company formation services in India are inexpensive. The company formation process can be completed within few weeks. The incorporation process can be easy with the help of tax advisors in India. It would cost you some pennies but the whole process will be easy for you.

 

 

 

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Things to consider before company formation

Before you begin to set up your company you need to decide what your business will be about. Market research is essential, to know whether your business idea is viable and whether you can make it a success. You can get this information by setting up focus groups and surveys, as well as by analysing data online or pay professionals to do this for you.

Especially important when it comes to gaining finance for your company your business plan is also a great way of analysing your company’s success.

Things to include in your  business  plan :

  •      Where you are now, what you want to do , what you want to achieve , your unique selling points and your business structure.
  •     List the roles of directors, the company secretary, management team and current employee positions, identifying the people who will fill them as well as possible future posts.
  •     Where will you be based, transport and distribution methods and any legal, regulatory or insurance obligations.
  •     Market need and highlight customers and key competitors. Take a look at market size and current trends.

Highlight your pricing and how you will promote your product or service, as well as the channels you’ll use for sales,  lay out your financial projections including sales and cash flow and any funding that is needed.

Before you start your company it’s worth learning a few of the basics like Bookkeeping and finance, Marketing including setting up and managing your website, Sales techniques, Procurement, including choosing your preferred suppliers, Your legal, regulatory and insurance obligations.

Completing a company formation may lead to many routes of finance. There are many options for finance for your company. Combined with knowledge and passion, specialisation can lead to a truly superior business that people are happy to recommend. If you know what you’re doing and you’re passionate about it this will shine through and your customers will know it. The best businesses are run by people who are experts in their area and really care.

There’s a lot of work involved and things to consider when starting a company, but once you’ve got everything in place it can be quick and easy to register as a limited company and start trading. Choose Experienced Chartered Accountants to guide you  in the process of company formation.

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How to Register a Trademark in India

When an outsider looks for startup business, the first thing they notice is the trademark. A trademark is  the identity of a business lies. It is the name and symbol under which a business undertakes its trade and commerce, which represents the company.

In India, trademarks are regulated by the Trade Marks Act of 1999. The Act aims to provide registration and better protection towards trademarks while preventing the use of fraudulent marks.

 

How to Choose a “Good” Trademark?

  • The mark(s) should be easy to remember.
  • It should be short and easy to spell and write.
  • It may be aesthetically appealing.
  • It should not ideally be descriptive in its nature.
  • It can be fanciful and coined, to avoid confusion.

 

APPLE/ASUS/DELL/HP/LENOVO” for computers are an example of a non-descriptive and arbitrary mark, which makes for good trademarks.

KODAK” for cameras is a coined term; that also makes a good trademark.

MICROSOFT” for software, “LAKME/AMWAY/AVON” for makeup, are all good examples.

 

How to Apply For a Trademark?

  • Conduct a trademark search that will let you know if there are similar trademarks that are already registered.
  • Apply for a trademark registration. You can do this by yourself through the Government website, or get a lawyer to do it for you. The procedure of application is laid down in the Trade Marks Act, 1999.
  • An application number is allotted for every pending registration, which can be tracked on the website.
  • If the application is accepted, it will be published in the Trademark Journal. If there are no oppositions, your trademark will be registered to you. However, if there are oppositions, there will be a hearing in the Trademark Hearing Office to decide on the final registration of the mark.

 

Benefits of Registering Your Trademark

  • A registered trademark identifies and advertises the good/service.
  • It protects the commercial goodwill of the trader/owner of the trademark.
  • It protects consumers from buying forged or inferior goods.
  • In the case of an infringement of a registered trademark, the owner has the option of civil and criminal remedies. In the case of an unregistered trademark, the only remedy available to the owner is the option of filing a suit of passing off.

 

In India, it is not compulsory to register a trademark. However, there are certain obvious benefits of registration of the same. The benefits are enumerated as above:

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Register a Subsidiary Company in India

Establishment of subsidiary companies or the wholly-owned subsidiaries, is certainly a very elegant and preferred means for extending one’s businesses to foreign countries of choice. Therefore, the majority of multinational corporations opt for setting up their subsidiary companies in the targeted countries, for the ultimate purpose of capturing market in the destination countries. In ours this webpage, we are offering rich, exclusive, and very profitable information about the subsidiary company formation, particularly in India.

Basic Requirments For Register Subsidiary
1. Indian Resident Director – Local director can be appointed without any equity participation in the subsidiary company and
2. Principal Place of Business in India – A rented or Leased Premises will be sufficient for this purpose.

Steps In Registration Of Subsidiary
1. Obtain Digital Signature for each Director of the proposed Subsidiary Company.
2. Apply for Directors Identification Number (DIN) of each proposed director of the Company.
3. Application for approval of Name of the Company.
4. Drafting of the Article and Memorandum of Association for the proposed Subsidiary Company and preparation of other documents for Incorporation of the Company.
5. Registration of Company.

Post Incorporation Complianes
1. Obtaining Permanent Account Number (PAN);
2. Opening of Bank Account for Subsidiary Company;
3. Obtaining various registrations including VAT, Service Tax, TIN, Excise etc depending on the requirements of the business of the Company;
4. Advance Foreign Remittance Reporting (AFRR) – To be submitted to Reserve Bank of India (RBI) within one month of receipt of FDI Remittance in India;
5. Allotment of Shares to the Holding Company within 180 of receipt of FDI;
6. Submission of FC-GPR Form with RBI within 30 Days of Allotment of Shares;

Documents & Information Required For Registration Of Subsidiary
1. Requirements for DIN Application of the Foreign Directors
a) Verification letter in Form DIR-4. Duly attested by the Consulate of the India Embassy in the Home Country of the Director or Apostils* (Worksheet for procurement of DIR-4 is attached).
b) Verification of Signatures of Subscribers in Form INC 10 : 1 Photo should be pasted in the box provided in the form. Duly attested by the Consulate of the India Embassy in the Home Country of the Director or Apostille*.

2. Details of at-least two Directors / Promoters of the company for obtaining DIN (Director’s Identifications Number)
– Complete Name
– Address (including City, State, Pin Code, Country)
– Father’s Name
– Date of Birth (mandatory)
– Passport Photograph of every proposed Director.
– Nationality
– Occupation
– Educational Qualification
– Place of Birth
– Two Copy of Pan Card as a proof of identity (mandatory requirement for Indian national).
– Two Copy of Aadhar Card/Voter Id/Driving Licence/Passport (One of these Mandatory for Indian Nationals)
– Two Copy of Passport as a proof of identity (mandatory requirement for Foreign national)
– Copy of Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement as a Proof of Address.

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Why One Should Do Business In India

Reserve Bank of India recently painted quite a gloomy picture for the Indian economy and rating house Moody’s too pointed out how corruption and scams are hampering the country’s business environment.

According to research firm Dun and Bradstreet, India will become a $5.6 trillion economy by 2020. The firm has also predicted a three-fold jump in the country’s gross domestic product, from $1.7 trillion last fiscal, on the back of rapid investment and growing consumer expenditure.

1. India’s GDP is on a roll
India’s gross domestic product is reaching new heights every year. India is now the 10th biggest economy in the world.

2. India’s trade is growing steadily
India’s imports are increasing more than 25 per cent year on year (since 1960). Even if 2009 saw a small fall-back due to global recession, in 2010 imports were however again growing at 32.2 per cent (August, 2010 — year on year growth) and reached over $140 billion (2010).

3. India’s FDI is on the rise
India’s foreign direct investment has been increasing significantly since the past five years.
There are three major countries that are known to be the biggest foreign direct investors in India. Topping the list of India’s foreign direct investment ranking is the small island nation called Mauritius.
This country is located very close to India and enjoys very small tax rate.
This is the reason why many companies set up their businesses there or invest in the existing organisations.
The tax levied is no more than 3 per cent.
In the second place is Singapore, which invests funds in almost the same sectors as the United States, though Singaporeans are also interested in the transportation sector.
Coming in at third place is the United States, which bring in more than $15 billion into the country.

4. India is turning into an industrialised economy

India is moving from being an agriculture based economy to an industrialised and service focused economy similar to the US, Europe and other industrialised countries.
India is now the world’s biggest manufacturer of small cars.
India is ranked 12th in the world in terms of nominal factory output.
The Indian industrial sector underwent significant changes as a result of the economic reforms of 1991.

5. India’s population keeps on growing
In terms of population, India is the second largest country in the world.
By 2025, India will be the biggest country in terms of population.
Western markets like the European Union and the United States are set to benefit from a 1.15 plus billion population in India.
The population will continue to grow also in terms of disposable income and consumption of Western products.

6. There are 771 million mobile phone subscribers in India
More than half the population owns a mobile phone in India now.
India is the world’s fastest growing wireless market, with 771 million mobile phone subscribers as of February 2011.
It is also the second largest telecommunication network in the world in terms of number of wireless connections after China.

7.Wireless technology to boost India’s Internet access
Wireless Internet is going to massively increase the access of hundred of millions of Indians across the subcontinent.
A new era awaits the country’s 584 million mobile phone users, with a faster and more robust Internet, and better access to data services including e-commerce, social networking and telemedicine.
Also ready are mobile device manufacturers with a slew of 3G handsets; providers of hosting, billing and network management services with expanded offerings; and content providers selling cell phone ring tones, wallpapers and graphics.

8. India’s GNI per capita is growing
Gross National Income per capita in India in terms of purchasing power parity is increasing.
In less than 10 years, the GNI per capita doubled (from $1,560 in 2000 to $3,250 in 2009).
This means Indian consumers can now afford double as much goods and services as just 10 years back.

9. Doing business in India is getting easier
India is among the top 40 nations to have carried out the highest number of business regulation reforms in the last five years, most of these related to introduction of technology to ease business operations.
Nowadays, in just 30 days one can have one’s business up and running. Doingbusiness in India is getting easier and investor friendlier year-on-year.

10. India & China: New Economic Gravity by 2050
Andreas De Rosi mentions in his article a research paper of Danny Quah, from the London School of Economics.
Quah wrote that the world’s economic centre of gravity is projected by 2050 to locate, literally, between India and China.
Observed from the Earth’s surface, that economic centre of gravity will shift away from its 1980 location a distance of 9,300 km or 1.5 times the radius of the planet.
So doing business in India is a must for companies with a long-term view.
India will sooner or later come back to the time when it was the biggest economy in the world.
Great news for Indians, indeed!

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Developing Asia – Accelerate Growth Through Partnership

Growth Outlook
Developing Asia is facing considerable headwinds. Delayed recovery in major industrial economies and moderating prospects for the large economies of the People’s Republic of China and India weigh on region’s project growth forecasts. With the european economy meltdown, asian economy continues to grow.


Emerging : Asia leads global growth
A key factor behind Asia’s rising influence is the size of its economy. In 1990, the top five economies were not among Asia. However, now the top three economies are Japan, China and India.

Asia’s share in world GDP in real US$ purchasing power parity (PPP) was 23.2 percent. By 2014, this went up to 38.8 percent, much larger than the shares of the United States and the European Union.

In fact, Asia’s share is likely to go up in the coming years if current growth trends in key regional economies continue(forecasts by Oxford Economics put Asia’s share at nearly 45 percent by 2025 )


Growth Prospects in Asia
In 2017, 80% of regional economies are expected to post higher growth on the back of a recovery in external demand and further pickup in domestic demand.

Policies to stimulate potential growth

  • Partly offset the labor squeeze due to policy changes
  • Higher labor productivity
    1. Capital investment is crucial to catch up with the advanced economies.
      Reform can move current potential toward the frontier.
      Sound macroeconomic management is the foundation for growth.
  • Employment of the full range of policy responses
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    Slow going in a Tough Global Environment
    In 2017, growth in the region will remain steady, as continued growth moderation in the PRC will be counterbalanced by solid growth in India.

    Average inflation in the region will rise from 2.2% in 2015 to 2.5% in 2016 on strengthening domestic demand and further to 2.7% in 2017, following an expected recovery in global commodity prices.

    Elements of Working Together

  • Build relationships first
  • Measure your success together
  • Leverage each other
  • Empower and partner beyond the communications function
  • Working beyond geographies
  • Client retention


  • Benefits of Working Together

  • Increasing speed to access knowledge
  • Reducing communication costs
  • Increasing speed to access external experts
  • Increasing satisfaction of clients, partners and external experts
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    Procedure, method and list of documents for deploying a Project workplace in Asian countries.

    RBI has liberalized and simplified the the procedures for institution of Project Offices in Asian countries. General permission has been granted to foreign entities for fitting Project Office(s) in Asian country. This permission is subject to the adherence to the provisions of Regulation four, and Regulation five of the FEMA Regulation No. twenty two that bury alia includes the subsequent conditions to be glad.

    (i) It’s secured from associate Indian company a contract to execute a project in India; and

    (ii) The project is funded by inward remittal from abroad; or

    (iii) The project is funded by a bilateral or tripartite International Finance Agency; or

    (iv) The project has been cleared by associate applicable authority; or

    (v) An organization or entity in India or Asian countries grant the contract has been granted Term Loan by a Public institution or a bank in India for the project.

    In case the on top of criteria don’t seem to be met, the foreign entity must approach the Federal Reserve Bank for approval.

    The foreign company establishing a Project workplace in India or Asian countries is needed to furnish a report through the involved AD class – I bank branch to the involved Regional workplace of Federal Reserve Bank of India below whose jurisdiction the Project workplace is ready up at intervals sixty days of multinational of the new Project workplace with the subsequent details.

    (i) Name and address of the Foreign Company,

    (ii) Reference variety and date of letter grant the contract

    (iii) Particulars of the authority grant the comes / contract,

    (iv) The full quantity of contract,

    (v) Address / e-mail address, / phone number / fax number of the Project workplace,

    (vi) Tenure of Project workplace,

    (vii) Temporary details of the Project undertaken,

    (viii) Associate endeavor to the result that the Project workplace is eligible to avail of the final Permission below Regulation five AD branch with whom the account has been opened and also the foreign currency during which the account is opened

    OPENING OF FOREIGN CURRENCY ACCOUNT

    Project Offices will through their AD class – I banks open non-interest bearing Foreign Currency Account in Asian country subject to the following:

    (i) The Project workplace has been established in Asian country, with the final / specific permission of Federal Reserve Bank, having the requisite approval from the involved Project enabling Authority.

    (ii) The contract below that the project has been sanctioned, specifically provides for payment in foreign currency.

    (iii) The permissible debits and credits within the account shall be as under:

    Debits:

    Payment of project connected expenditure.

    Credits:

    * Foreign currency receipts from the Project enabling Authority, and

    * Remittances from parent / cluster company abroad or bilateral / tripartite international funding agency.

    (iv) The responsibility of guaranteeing that solely the approved debits and credits area unit allowed within the Foreign Currency Account shall rest exclusively with the involved branch of the AD.

    (v) The Foreign Currency account is also closed at the completion of the Project.

    REPORTINGS

    Foreign entities fitting Project workplace in Asian country ought to submit a report back to the Director General of Police (DGP) of the state involved wherever the project workplace has been established at intervals 5 operating days of the PO changing into practical. just in case of quite one workplace, the report ought to be stocked to every DGP of the involved state wherever the workplace has been established. The copy of the report in ought to even be filed with AD Bank by the fresh established Project workplace.

    The Project workplace shall conjointly submit associate annual activity certificate to the AD branch.

    COMPLIANCES WITH THE REGISTRAR OF firms AND DIRECTOR GENERAL OF POLICE

    Once Project workplace has been established, the PO is additionally needed to be registered with the Registrar of firms (“ROC”) in Asian country below the provisions of the businesses Act, 2013, at intervals a amount of thirty days from such date of multinational of the LO. The registration application is to be filed in e-form FC-1. constant is to be filed on-line with the mythical monster along side the requisite documents.

    List of Documents needed for registration

    – The certificate of incorporation/ registration. Latest Audited record of the human Foreign Company.

    – Board Resolution of the Foreign Company on the corporate Letter head

    – List of administrators and Secretary of the Foreign Company, punctually echt by any of its administrators.

    – Power of professional (POA) authorize to represent the Foreign Company before the run and mythical monster.