| Home > Resources & Insights > Articles & Whitepapers > Business Setup in India |
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Zaheda Mulla, Partner, WinLexis (Legal Consultants – Corporate)
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| What are the types of companies I can set up in India? |
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A foreign company can begin operations in India by incorporating a company under the Indian Companies Act, 1956. There are two ways to do this:
As an Indian company, through a:
- Joint Venture with an Indian partner; or
- Wholly-owned subsidiary company.
As a foreign company, through a:
- Liaison Office / Representative Office
- Project Office
- Branch Office
- Branch Office on a “standalone basis”, such as one located in a Special Economic Zone (SEZ).
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| What is the process? |
For registration of an Indian company, either by a joint venture or by way of a wholly-owned subsidiary, an application has to be filed with the Registrar of Companies (ROC). Once a company has been registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to any other domestic Indian company. For details, the website of the Ministry of Company Affairs at http://mca.gov.in is quite helpful.
Foreign companies can undertake permitted activities as granted by the Reserve Bank of India (RBI). For details, click on the RBI website at www.rbi.org.in
Some proposals may require approval from the Government of India, especially, if foreign direct investment (FDI) is involved. The Government permits FDI in select activities, subject to considerations of equity limits and/or sectoral guidelines and requirements. |
How long is the incorporation process? |
| It may take four to six weeks to be incorporated as an Indian company, but be sure to provide all the necessary documents. The first step is seeking the approval of the company name. Next, documents – such as the Memorandum and Articles of Association – have to be submitted within six months. |
What does it cost to set up a company? |
The registration fees for incorporating an Indian company having a minimum authorised capital of INR100,000 ($2125) is INR6420 ($136). The amount varies depending on the required authorised capital. |
Can you refer me to some useful websites? |
Here are the details – in tabular form – of selected agencies and departments involved in giving clearances or approvals and their websites
Subject of concern |
Ministry concerned/ Department of Govt. of India |
Website address |
Registration as a company & certificate of commencement of business |
Department of Company Affairs (Registrar of Companies) |
http://mca.gov.in |
Approval for foreign collaboration & Technology Transfer :
(i) Automatic Route
(ii) Government approval (FIPB) |
Reserve Bank of India; &
Department of Economic Affairs |
http://www.rbi.org.in
http://finmin.nic.in |
Matters relating to FDI policy and its promotion and facilitation as also promotion and facilitation of investment by Non- resident Indians (NRIs) and Overseas Corporate Bodies (OCBs) |
Department of Industrial Policy & Promotion |
http://dipp.nic.in |
Matters relating to Foreign Exchange |
Reserve Bank of India |
http://www.rbi.org.in |
- Matters relating to Taxation
- Matters relating to Direct Taxation
- Matters relating to Excise & Customs |
- Department of Revenue
- Central Board of Direct Taxes
- Central Board of Excise & Custom |
http://finmin.nic.in
http://incometaxindia.gov.in
http://www.cbec.gov.in |
Matters relating to Industrial Relations |
Ministry of Labour |
http://labour.nic.in |
Import of Goods |
Directorate General of Foreign Trade |
http://dgft.delhi.nic.in |
Matters relating to Environment & Forest clearance |
Ministry of Environment and Forests |
http://envfor.nic.in |
Overseas investment by Indians, India Investment Centre |
Department of Economic Affairs |
http://iic.nic.in |
Allotment of land / shed in industrial areas; acquisition of land; change in land use; approval of building plan; release of water connection etc. |
Departments concerned of the State Governments |
Click on ‘State Policies’ in the website –
http://dipp.nic.in |
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| What are the (local) registrations and licenses that I need to acquire? |
Registration |
Department |
Days Reqd. (Min.) |
Obtaining a Permanent Account Number (PAN) Registration |
Department of Income Tax |
15 |
Obtaining a Tax Account Number for income taxes deducted at source from the Assessing Office |
Department of Income Tax |
15 |
Obtaining registrations from the Sales Tax Officer of the ward in which the company is located – Value Added Tax (VAT),
Central Sales Tax (CST), & Professional Tax (PT) |
Department of Commercial Taxes |
12 ٭
2 ٭
2 ٭ |
Obtaining Service Tax Registration |
Department of Central Excise |
15 |
Obtaining Registration under Shops and Establishment Act |
Commissioner of Labour |
2 ٭ |
Registration with Employees' Provident Fund Organization |
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2 ٭ |
Register with ESIC (Medical Insurance) |
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1 ٭ |
Obtaining Import Export Code (optional) |
Office of the Joint Director General of Foreign Trade |
30 |
Trademark Registration (optional):
- Provisional
- Final |
Registrar of Trademarks |
30
1 year |
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*). These procedures are typical for a big city in India. The time involved and the procedure may vary with city and state and the nature of business. |
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| Can I repatriate profits? |
A Branch Office can remit the profits (net of any withholding tax) generated out of its operations in India on the production of prescribed documents, and on establishing that a net profit has been earned through the undertaking of permitted activities. The Branch Office need not retain any profits as reserves in India.
However, an Indian company has to retain a maximum of 10 % of the profits as reserves before the declaration of dividends. These reserves, inter alia, can be subsequently converted into equity by way of issue of bonus shares. Dividends are freely repatriable once investment approval is granted. |
Can I own all the equity in an Indian company? |
| An individual person cannot own all the equity shares in an Indian company. As equity shares are voting shares, a single individual cannot retain all the equity shares. However, he can retain within himself the majority of the shares and distribute the remaining shares among other shareholders / promoters. |
