India is one most thriving economies in the world with a population of 1.3 Billion and endless opportunities, it has become the market and destination for production
Any Person planning to business in India have the option of setting up a permanent establishment through incorporating in India, can chose from the following options
Any Non-Resident Individual or Foreign Entity planning to setup a permanent establishment in India.
1. A non-resident individual or foreign entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
2. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
3. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
4. In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview of the points No.2 & 3, such subsequent change in beneficial ownership will also require Government approval.
|ORGANISATION TYPE||PRIVATE LIMITED COMPANY||PUBLIC LIMITED COMPANY||LIMITED LIABILITY PARNERSHIP||FOREIGN COMPANY BRANCH/LIASION OFFICE|
|GOVERNING ACT||Companies Act, 2013||Companies Act, 2013||Limited Liability Partnership Act, 2008||Companies Act, 2013 & FEMA Act, 1999|
|FOREIGN OWNERSHIP & PRIOR APPROVAL FOR INCORPORATION||Allowed under Automatic and Approval Route, Depending on the Sector||Allowed under Automatic and Approval Route, Depending on the Sector||Allowed with prior approval of RBI and FIPB||Allowed with prior approval of RBI|
|MINIMUM CAPITAL||Rs. 1,00,000||Rs. 5,00,000||No Minimum Requirement||Not Applicable|
|MINIMUM SHAREHOLDERS/PARTNER||2||7||2||Not Applicable|
|MAXIMUM SHAREHOLDERS/PARTNER||200||Unlimited||No Limit||Not Applicable|
|MINIMUM DIRECTORS/PARTNERS||2||3||2 Designated Partners||Not Applicable|
|MAXIMUM DIRECTORS/PARTNERS||15||15||No Limit||Not Applicable|
|RESIDENT DIRECTOR/PARTNER||Compulsory||Compulsory||Compulsory||Compulsory(Resident Authorised Person)|
|SHARE TRANSFERABILITY||No Limits, Easy Transferability||No Limits, Easy Transferability||No Limits, Easy Transferability||Not Applicable|
|STATUTORY AUDIT||Compulsory, Irrespective of Turnover||Compulsory, Irrespective of Turnover||Compulsory, If Turnover Exceeds Rs.40 Lakhs or Contribution Exceeds Rs.25 Lakhs||Compulsory, Irrespective of Turnover|
|TAX AUDIT||Compulsory, if Gross Turnover Crosses INR ONE Crore and above||Compulsory, if Gross Turnover Crosses INR ONE Crore and above||Compulsory, if Gross Turnover Crosses INR ONE Crore and above||Compulsory, if Gross Turnover Crosses INR ONE Crore and above|
|GST APPLICABILITY||Compulsory, if Gross Turnover Crosses INR 40 Lakhs for Goods and 20 Lakhs for Services||Compulsory, if Gross Turnover Crosses INR 40 Lakhs for Goods and 20 Lakhs for Services||Compulsory, if Gross Turnover Crosses INR 40 Lakhs for Goods and 20 Lakhs for Services||Compulsory, if Gross Turnover Crosses INR 40 Lakhs for Goods and 20 Lakhs for Services|
Investment in India via foreign investment is allowed as per the Consolidated FDI policy, which allows investment via automatic route and government route depending each of the specified sectors.
Except for few sectors which are prohibited for any kind of foreign investment in India as per Category 4 below.
|CATEGORY 1||CATEGORY 2||CATEGORY 3||CATEGORY 4|
|100% FDI AUTOMATIC ROUTE||UPTO 100% FDI AUTOMATIC ROUTE||UPTO 100% FDI PERMITTED THROUGH GOVERNMENT ROUTE||PROHIBITED SECTORS|
|Air Transport Services (non-scheduled and other services under civil aviation sector)||Air Transport Services (Scheduled air transport services, regional air transport services) – Upto 49%||Broad Casting Content Services – 49%||Lottery Business including Government/private lottery, online lotteries, etc.*|
|Airports (Greenfield & Brownfield)||Defence – Upto 49%||Digital Media – 26%||Gambling and Betting including casinos*|
|Automobiles & Auto Components||Petroleum Refining (by PSUs) – Upto 49%||Food Products Retail Trading – 100%||Chit Funds & Nidhi Company|
|Biotechnology, Healthcare, Pharmaceuticals (Greenfield)||Telecom Services – Upto 49%||Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities – 100%||Real Estate Business or Construction of farm houses**|
|Broadcast Content Services (Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels), Broadcasting Carriage Services||Biotechnology, Healthcare, Pharmaceuticals (Brownfield)– Upto74%||Multi brand Retail Trading – 51%||Trading in Transferable Development Rights (TDRs)|
|Chemicals, Coal& Lignite, Capital Goods, Thermal Power||Print Media (Publication/ printing of scientific and technical magazines/specialty journals/ periodicals and facsimile edition of foreign newspapers) – 100%||Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco Substitutes|
|Tourism & Hospitality, Duty Free Shops, Food Processing||Print Media (Publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news and current affairs) – 26%||Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II) Railway operations(other than permitted activities mentioned Consolidated FDI policy)|
|Ports and Shipping, Railway Infrastructure, Roads and Highways||Air Transport Services (Scheduled air transport services, regional air transport services) – Above 49%|
|Petroleum and Natural Gas, Renewable Energy, Thermal Power||Defence – Above 49%|
|Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs)||Telecom Services – Above 49%|
|Construction Development: Townships, Housing, Built-up Infrastructure& Hospitals||Biotechnology, Healthcare, Pharmaceuticals (Brownfield) – Above 74%|
|E – Commerce Activities, IT and BPM,|
|Single Brand Product Retail Trading, Textile and Garments|
In sectors/ activities not listed above, FDI is permitted up to 100% on the automatic route, subject to applicable laws/regulations; security and other conditionalities.
*Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities
**Real estate business shall not include development of town shops, construction of residential/ commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations, 2014
The foreign investor or the Indian company require the government's approval to set up business in India. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance.
The foreign investor or the Indian company does not require any prior approval from the Reserve Bank or Government of India.
The APPROVAL PROCESS for foreign direct investments in India are based on a standards and plan developed by DIPP.
STEP:1 Submission of proposal and uploading document on Foreign Investment Facilitation Portal.
STEP:2 Department of Industrial Policy and Promotion (DIPP) assigns the case to the concerned Ministry within 2 working days.
STEP:3 Submission of physical copies to concerned department is not required in case of digitally signed documents.
STEP:4 For applications not digitally signed, online communication to applicant will be made to submit one signed physical copy of the proposal to the Competent Authority. Applicants are required to submit required documents within 5 days of such intimation.
STEP:5 The proposal is circulated online within 2 days to Reserve Bank of India for review from FEMA perspective. All proposals are shared with Ministry of External Affairs (MEA) and Department of Revenue (DoR) for record. Any advice/comments from above mentioned departments are directly shared with concerned Administrative Ministry/Department assigned to decide on the proposal.
STEP:6 Proposals are scrutinized within 1 week and additional information/clarifications, if required, are asked for.
STEP:7 On getting all required information, the Competent Authority is required to give out its decision in next two weeks. Approval/rejection letters are sent online to the applicant, consulted Ministries/Departments and DIPP.
STEP:8 Where total foreign equity inflow is more than Rs 5000 crore, the Competent Authority is required to place the same to Cabinet Committee on Economic Affairs for consideration within timelines.
|1||Name of proposed company||Minimum 3 Options|
|2||Place of business of the proposed company||Proof of the place of business to be submitted within 30 days df incorporation.|
|3||Shareholding pattern of the proposed company|
|4||Brief description of the business of the proposed company|
Copy of Incorporation Certificade [To be Notarized by a local Notary in Directors Resident Country and Apostilled with Indian Embassy]
Copy of Passport [To be Notarized by a local Notary in Directors Resident Country and Apostilled with Indian Embassy]
Copy of Latest Utility Bill/Bank Statement (should not be older than 2 months) [To be Notarized by a local Notary in Directors Resident Country and Apostilled with Indian Embassy]
DIR – 2, INC-9 & INC-10(After approval of name of the company) [To be Notarized by a local Notary in Directors Resident Country and Apostilled with Indian Embassy]
Copy of PAN
Copy of Aadhaar
Copy of Passport/Driving License/Voter ID
Copy of Latest Utility Bill/Bank Statement (should not be older than 2 months)
DIR – 2, INC-9 & INC-10(After approval of name of the company)
Phone Number & Email ID
Yes, It is mandatory as per Section 149(3) of the Companies Act 2013 is as follows:
“Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.”
|PERMANENT ACCOUNT NUMBER (PAN)||Compulsory, approved along with formation|
|TAX DEDUCTION ACCOUNT NUMBER (TAN)||Compulsory, approved along with formation|
|GOODS AND SERVICE TAX (GST)||Conditional, if Gross Turnover Crosses INR 40 Lakhs for Goods and 20 Lakhs for Services, For More Info (GST Registration)|
|EMPLOYEES PROVIDENT FUND (EPF)||Conditional, if Number of employees are above 20. For More Info (PF Registration)|
|EMPLOYEES STATE INSURANCE (ESI)||Conditional, if Number of employees are above 10 receiving a salary of less than Rs.15,000/- per month. For More Info (ESI Registration)|
|SHOPS AND ESTABLISHMENT ACT||Compulsory, changes state to state.|
|PROFESSIONAL TAX||Compulsory, changes state to state.|
|TRADEMARK||Optional, for logo and brand name of the organisation|
|RBI/FEMA COMPLIANCE||Compulsory, Filing of FC-GPR for the foreign funds received after formation of the organisation in India.|
|IMPORT EXPORT CODE (IEC)||Conditional, if import and export of goods are part of the business.|
|FACTORIES ACT||Conditional, if a premises whereon 10 or more persons are engaged if power is used, or 20 or more persons are engaged if power is not used, in a manufacturing process.|
|STARTUP INDIA REGISTRATION||Optional, to avail taxation and other benefits under Startup India Programme, for business engaged in new innovation and research and development.|