India is among the fastest growing economies in the world with immense human potential and a large market comprising of over 1.2 billion people. Opportunities in India has attracted a large amount of Foreign Direct Investment into the country and each year the amount of FDI inflow keeps increasing due to more number of foreign businesses starting their operations in India. In this post, the way to setup a business is in India is detailed for foreign companies.
Incorporation of a private limited company is the easiest and the fastest type of India entry strategy for the foreign nationals and for the foreign companies. Foreign direct investment of up to 100% into a private limited company or a limited company is under the automatic route, in which no permission form the Central Government is required. Hence, the incorporation of a private limited company as a wholly owned subsidiary of a foreign company or a joint venture is the cheapest, the easiest and the fastest entry strategy for the foreign companies and the foreign nationals into India.
Cost for Registering a Company in India
The cost for registering a business in India is relatively inexpensive. Registration of a company in India can also be completed within a few weeks, making India an easy place to start a business.
Mandatory documents required for Company Registration in India
In order to register a company in India, the foreign nationals are supposed to submit a copy of their passport along with an address proof (Driver’s License, Bank Statement etc.).
The copy of the original documents should be notarized by a Notary in the home country or by the Indian Embassy in the respective country where the foreign Director belongs to.
In case a corporate entity is aiming to become a shareholder in the Indian Company then the Board Resolution from the foreign company should authorize the investment in the Indian Company.
The Board Resolution that has been decided upon mutually among the Directors should be attached with a notarized copy of the incorporation certificate of the foreign company.
This is to be noted that the presence of any of the foreign Directors is not mandatory required in India at the time of incorporation in India. Thus, the foreign nationals have the flexibility of establishing and operating a business in India without even travelling to India.
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Nearly two decades of economic liberalization, coupled with robust domestic demand, a growing middle class, a young population and a high return on investment, make India a credible investment destination. India jumped 30 places higher in World Bank’s recent ease of doing business report and is aiming to be in the top 50.
Invest India is scheme started by the government’s foreign investment promotion agency, which is planning to actively promote the country as an investment destination and has drawn up a list of 200 companies not present in India that it wants to target. There are 33 identified investment sectors on the government website, including IT & BPM, Construction, Automobile, Food processing, Healthcare and Telecommunications, which aim to provide the required information for investing in the particular area, highlighting the statistics, the growth driver, the FDI policy, the Sector policy, the investment opportunities, foreign investors, agencies, financial support and achievements.
Some reasons why investment in India is lucrative are as follows:
Fast growing economy
- India is likely to grow at consistently higher rates (over 7%) and retain its position as one of the fastest growing economies till 2020 (International Monetary Fund).
- Foreign exchange reserves have been at a comfortable level over recent years. India’s reserves stood at USD 371.279 billion (Reserve Bank of India as on 9th September, 2016).
- India ranks amongst the top 10 FDI destinations globally – surpassing USD 50 billion in FY 2015-16.
- India has shown a growth of 46% in FDI equity inflow and 37% in overall FDI inflow since the launch of Make in India initiative (Ministry of Commerce, Government of India).
- The proportion of working age population in India is likely to reach more than 64% by 2021, with a large number of young persons in the 20-35 age group(Economic Survey 2014).
- The average age of 125 billion persons will be 29 years by 2020 (Economic Survey, 2014).
- If India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world’s fifth largest consumer economy by the year 2025 (McKinsey Report).
- Major FDI policy reforms have been made in a number of sectors, such as defence, construction development, pensions, broadcasting, pharmaceutical and civil aviation.
- Government of India has permitted foreign investment in almost all sectors with a few exceptions, such as atomic energy & lottery business.
- 100% FDI is allowed through the automatic route in several sectors, without the need of government approval, namely Automobile, Food Processing, and Construction etc.
- The Central and State governments have sector specific policies, incentives and subsidies to promote manufacturing.
- Foreign investors can invest in India either on their own or as a joint venture, as may be required in a few sectors.
If you are new to the entire investment scenario, it is advised to seek professional help. Professionals can advise on the available range of viable investments and will help you chalk out your entire investment plan. AJSH & Co LLP can also assist you with company registration process and tax advisory services.
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