India is now one among the most rapidly growing economies in the world. We have huge human potential and a large market of over 1.2 billion people. Possibilities in India have gained attraction among a large amount of Foreign Direct Investment into the country. Every year the amount of FDI inflow keeps growing due to a number of foreign businesses beginning their operations in India. In this article you will be able to witness the way to set up a business in India for foreign companies.
Let’s jump on to the initial stage -How to start a business in India
The initial step in establishing a business in India is to study whether the same has been allowed or not and the same can be done very easily. It is an individual’s duty to understand the nature of his business first and then check the same as per Indian laws whether it is allowed or not.
According to the laws of India, there are two routes by which any foreign nationals or companies can invest in India.
Automatic route:
If the business you wish to run falls under this route, then you do not require any approval from the Reserve Bank or Government of India for the investment. The person can directly start the company registration process and invest the capital funds into the bank account of the company.
Approved route:
The foreign investor or the Indian company should obtain early approval of the Government of India agencies or bodies specified before investing under the approval route or government route.
Requirements for setting up a Company in India
It imposes a minimum of two persons and an address in India to establish a company in India. A private limited company in India should have a minimum of two directors (persons) and a minimum of two shareholders (can be persons or corporate entities). Moreover, the incorporation rules in India affirms that one of the Directors of the Company must be both an Indian Citizen and Indian Resident (an Indian Resident can be any person who has lived in India for over 186 days).
The approved legal entity structure for foreign companies is to set up a company with three Directors, two being foreign nationals from the parent company and one director being a local Indian citizen. Foreign nationals or entities can hold 100% of the shares of the Indian Company, since there is no need for minimum shareholding with the Indian Director.
To serve as the registered office of the Company, an address in India is essential. The city in which the registered office address of the company will be established will also impact the legal jurisdiction appropriate to the company. Many foreign companies establish their registered offices in best metros of India like Delhi, Mumbai, Bangalore, Hyderabad, Chennai, etc.,
Documents needed for registering a Company in India
Foreign nationals who will serve as Directors of the Company will have to submit a copy of their Passport along with address proof (Driver’s License, Bank Statement, etc.,) to register their company. The copy of the original documents must be notarized by a Notary in the home country or by the Indian Embassy in the country of the foreign Director.
If a corporate entity becomes a shareholder in the Indian Company, the Board Resolution from the foreign company authorizing the investment in the Indian Company would also be needed. Link the Board Resolution with the copy of the notice with the certificate of incorporation of the foreign entity.
It does not require the presence of any of the foreign Directors in India during the incorporation process. As a result, foreign citizens can effortlessly set up and function a business in India without the issues of traveling to India.
Charge for Registering a Company in India
The amount of registering a business in India is reasonably less. It can take a few weeks for the Registration of a company in India can, transforming India into an easy place to start a business.
Post Incorporation Formalities
The Indian Director can assist you to open a bank account for the company in India. The Company must make FDI reporting to the Reserve Bank of India once the bank account is opened. The methods for reporting FDI inflow into the company is easy and a person can complete smoothly by a legal or accounting professional in India. Finalizing the FDI reporting would make sure that the business is in compliance with all regulations in India and is ready to function.
