Incorporate in India

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Incorporate in India

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About Incorporate in India

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

  • Private Limited Company,
  • Public Limited Company,
  • Branch or Liaison Office, and
  • Limited Liability Partnership
Advantages of Incorporating in India

Economic Growth

India is one of fastest growing large economies of the world, India is projected to be 3rd Largest Economy in the world.

Positive Demographics

India is one of the youngest nations with a youthful, educated and growing workforce.

Infrastructure

Over the next two decades, more than $1.5 tn investments have been planned for infrastructure.

Ease of Doing Business

India jumps 79 positions from 142nd (2014) to 63rd (2019) in ‘World Bank’s Ease of Doing Business Ranking 2020’.

Endless Market Opportunities

Home to Over 1.3 Billion People

Top 10 Host Economies

India in FY 2019-20 and recorded total FDI inflow of $73.45 Bn.

Lower Tax Regime

India has lowered its taxation for new manufacturing companies to 17% and for companies to 22%, making it one of the lowest taxation destinations among the large economies.

Applicability
  • Any Non-Resident Individual or Foreign Entity planning to setup a permanent establishment in India.
Scope
  • Company Formation
  • Bank Account Opening Support
  • Foreign Direct Investment (FDI) Compliance
  • Post Incorporation Licensing Support
  • Nominee Director
  • Legal Advisory & Regular Consultation
Frequently Asked Questions

Who can incorporate 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.

What are the various options of Incorporating in India?

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

What business are we allowed to do in India?

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) – Upto 74% 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

For any further queries please refer to the consolidated FDI policy or contact us

What is an Automatic Route?

The foreign investor or the Indian company does not require any prior approval from the Reserve Bank or Government of India, based on the listed sectors in under the Automatic Route as per the Consolidated FDI Policy.

What is an Approval Route? What is the process involved?

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 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.

What are the documents required to incorporate in India?

S.NO. DESCRIPTION REMARKS
1 Name of the 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 of incorporation.
3 Shareholding pattern of the proposed company
4 Brief description of the business of the proposed company
5 Foreign Promoters/Directors Copy of Incorporation Certificate

[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]

Phone Number & Email ID

6 Indian Promoters/Directors 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

Is it mandatory to have resident director/partner to incorporate in India?

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.”

What are the Post Incorporation Licenses? Are they compulsory?

DESCRIPTION REMARKS
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.