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Doing Business in India

Overview of commencing business in India by foreign investors

Setting Up Business in India

Foreign Investor can commence business in India as:

1. Indian Company*

Joint Venture
Wholly Owned Subsidiary

JV/ Wholly Owned Subsidiary as (i) Private Limited or (ii) Public Limited Company, s.t. Companies Act, 2013

2. Foreign Company**

Liaison Office

To represent the parent company in India
Branch Office

To undertake activities such as Export, Import, research, consultancy etc.
Project Office

Activities as per contract to execute project

3. Limited Liability Partnership

LLP

Subject to provisions of LLP Act, 2008

FDI permitted under automatic route in LLPs operating in sectors/ activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions***

Types of Permitted Business Establishments

Different business establishment in India

Min Members	2	7	1	2 Partners
Max Member	200	Unlimited	1	No Limit
Min Directors	2	3	1	2 Designated Partner
Max Directors	15*	15*	15*	NA
Resident Director	1 Mandatory	1 Mandatory	1 Mandatory	1 Designated Partner
Transfer of ownership	Ownership can be transferred	Ownership can be transferred	Ownership can be transferred to nominee in the event of death of owner	Ownership can be transferred
Subscription of shares	Public subscription not allowed	Public subscription allowed	Public subscription not allowed	Public subscription not allowed
Issue of Prospectus	Not Mandatory	**Mandatory	Not Mandatory	Not Mandatory
Managerial Remuneration	No limit for managerial personnel	Shareholder approval is required, if remuneration payable is above limits	NA	Remuneration is based on LLP agreement
Commencement of Business/ Operations	Declaration to be filed prior to commencement	Declaration to be filed prior to commencement	Declaration to be filed prior to commencement	Immediately after obtaining certificate of incorporation
Legal Status	Pvt Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	Public Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	OPC is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act	LLP is a separate legal entity registered under LLP Act, 2008. The Designated partners of LLP are liable for contraventions under the act
Governing Act/ Law	Companies Act, 2013	Companies Act, 2013	Companies Act, 2013	LLP Act, 2008
Annual Statutory Filings	Annual statement of accounts & annual return with ROC	Annual statement of accounts & annual return with ROC	Annual statement of accounts & annual return with ROC	Annual statement of solvency & annual return with ROC
Annual Filings & Audit	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory	IT return to be filed. Audit mandatory in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs

Commencing Business in india as LO/BO/PO

Eligibility

Liaison Office (LO)

Profit making track record during the immediately preceding three financial years in the home country and net worth of not less than $ 50,000 or its equivalent.

Branch Office (BO)

Profit making track record during the immediately preceding five financial years in the home country and net worth of not less than $ 100,000 or its equivalent.

Project Office (PO)

Nil

Permitted Activities

LO

LO can not undertake any commercial activity and acts as a channel of communication between the principal place of business or head office and entities in India. Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers. It can promote export/import from/to India and also facilitate technical/financial collaboration between the parent company and companies in India. It cannot earn any income in India.

BO

BO can be set up by foreign companies. The permitted activities include export/import of goods; rendering professional or consultancy services; carrying out research work, in which the parent company is engaged; promoting technical or financial collaborations between Indian companies and parent or overseas group company; representing the parent company in India and acting as buying/selling agents in India; rendering services in information technology and development of software in India; rendering technical support to the products supplied by the parent/ group companies and foreign airline/shipping company.

There is a general permission to non-resident companies for establishing BO in the Special Economic Zones (SEZs) to undertake manufacturing and service activities subject to:

BOs are functioning in those sectors where 100% FDI is permitted
BOs comply with Chapter XXII of the Companies Act, 2013
BOs function on a stand-alone basis

PO

PO can be set up to execute specific projects in India and cannot undertake or carry on any activity other than the activity relating and incidental to the execution of the project.

Remittance

LO

BO

Permitted to remit profits net of applicable taxes and on submission of requisite documents.

PO

Intermittent remittances by companies pending winding-up permitted s.t. satisfaction of AD Category 1 bank.

Validity

LO

Generally for 3 years
*except in the case of NBFCs and those entities engaged in the construction and development sectors, for whom the validity period is two years only

BO

Nil

PO

As per the tenure of the project

Check availability of name / registered trademark for the incorporation of the company. Further to this, reserve name of the proposed company through online service RUN on MCA website. The name can also be applied through SPICe+.

Obtain Digital Signature Certificate (DSC) for at least one proposed designated Directors of the Company. DIN for proposed Directors can only be applied for through form SPICe+.

Form INC 32 (SPICe+) are to be duly filled and submitted to RoC for the incorporation of the company. PAN and TAN are shall be auto-generated based on details filed in the SPICe+ form

Filing of electronic Memorandum of Association (eMoA - INC 33) in SPICe+ . For foreign subscribers physical MoA to be executed and attached

Filing of electronic Articles of Association (eAoA- INC 34) in SPICe +. For foreign subscribers physical AoA to be executed and attached

SPICe+ upload and fee payment is confirmed by MCA

Central Registration Centre (CRC) verifies/ scrutinizes all the documents and forms and may suggest few changes to be made in the attachments or form itself. One needs to make necessary changes accordingly

Obtain the certificate of incorporation (CoI). CIN, PAN & TAN numbers are allotted at the time of registration

A company having share capital is required to file a declaration of receipt of subscription amount and verification of registered office within 182 days of incorporation and prior to commencement of business.
Note : Notarization & Apostilling/legalization of documents mandatory in case of foreign subscribers / Directors. Some registrations would be applicable based on state in which the company is incorporating and nature of the business activity. *GSTIN, ESIC registration and EPFO registration may be obtained at the time of incorporation by filing AGILE form
Obtain class 2 or class 3 Digital Signature Certificate (DSC) for designated partners of LLP

For a quick search on already existing names of LLP a facility is provided by MCA to check list of similar/closely resembling names of existing companies/LLPs. Trademark is also to be checked

Filing the proposed name of LLP for approval from the Registrar of Companies through RUN – LLP and can also be done through FiLLiP

FiLLiP is to be duly filled and submitted to RoC for incorporation of LLP. For Foreign LLP (FLLP) Form 27 is to be filed in and digitally signed by FLLP (DPIN must be obtained through FiLLiP.

Form 3 (Information with regard to LLP agreement and changes, if any made therein) to be filled within 30days of incorporation of LLP.
Note : Some registrations would be applicable based on the state in which the company is incorporating and nature of the business activity. Any "defaulting LLP" is permitted to file belated documents, which were due for filing till 31st October 2019 in accordance with the provisions of the Scheme. Refer to the LLP Settlement Agreement 2020 for further updates. This scheme has come into force from 16 March 2020 and shall remain in force till 13 June 2020.

1Approval for proposed Company Name

For companies to start a new business in India are required to apply for a name, LLP name search facility (of existing companies/ LLPs) is available on the MCA portal. The system will provide the list of similar/closely resembling names of existing companies/ LLPs based on the search criteria filled up. For registration of the name, RUN - LLP to be filed.

The applicant must file e form RUN with the Central Registration Center (CRC), India for approval of name.

The name reserved for the company shall be available for adoption of the name for a period of 20 days. In the case of laps of the said period, fresh approval needs to be taken from RUN or RUN - LLP is to be taken. For LLP name is reserved for 3 months. In case of change of name of the company, the reserved name is available for 60 days.
2Consent to establish & operate

Issue of Certificate of Incorporation by CRC - Once all the Forms are duly approved by CRC, the digitally signed “Certificate of Incorporation” is issued.

In Case of LLP, LLP agreement is required to be signed and submitted to ROC within 30 days of incorporation of LLP.

Once the Incorporation Certificate is received, LLP can start its operations.

A company having share capital is required to file a declaration of receipt of subscription amount and verification of registered office within 180 days of incorporation and prior to commencement of business.
3Digital Signature Certificate (DSC) for proposed Directors

DSC can be obtained by approaching Certifying Authorities (CAs) with original supporting documents and self-attested copies

A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.
4Filing of e-forms with CRC

SPICe is duly filled and submitted to CRC for incorporation of the company.

MCA form FiLLiP for LLP would be required

Form 27 is required for Foreign LLP (FLLP)
5Finalization of supporting documents

Filing of electronic Memorandum of Association (eMoA- INC 33) & Articles of Association (eAoA- INC 34)

Payment of stamp duty/ filing fees.

In case of foreign subscribers, physical MOA and AOA are to be filled in.
6Grant for BIS License

The applicant has to submit the application in the prescribed Form & Self Evaluation-cum-Verification Report along with prescribed documents and original test report(s) taxes) for considering grant of the license under Product Certification Scheme of BIS.

List of products that mandatory require BIS license are listed in Annexure I.
7Obtain Director Identification Number (DIN)

DIN is a unique identification number issued by the Ministry of Corporate Affairs (MCA) as a part of the business registration process, for a designated partner of an existing LLP or a person intending to become a director of a company.

DIN can be obtained by filing application Form DIR-3 online.

All designated partners of the proposed LLP shall obtain “Designated Partner Identification Number (DPIN) / Director Identification Number (DIN)” through FiLLiP & proposed company through SPICe (if DIN is not available)

Note – Application for DIN (for a person proposed to be appointed as a Director of an existing company or LLP) to be filed in Form DIR-3. Change in particulars to be intimated in Form DIR-6 within 30 days.
8Obtain Permanent Account Number (PAN)

PAN number shall be allotted based on the information filled in Form SPICe at the time of incorporation of a company.
9Quality Marking Certificate

Quality Marking certificate is provided by Quality Marking Centre of the State Government.
10Registration for Tax Account Number (TAN)

TAN number shall be allotted based on the information filled in Form SPICe at the time of incorporation of a company.
11Verification of documents

After payment of all fees & stamp duties, CRC scrutinizes all forms and may suggest changes in forms and/or attachments.

1Approbation des incitations d'État (facultatif)

Demander des incitations gouvernementales / un programme personnalisé pour les méga projets conformément aux politiques de l'État (facultatif)
2Approval for State Incentives (Optional)

Apply for state government incentives/ customized package scheme for Mega projects as per state policies (Optional)
3Aprobación de incentivos estatales (opcional)

Solicite incentivos del gobierno estatal / esquema de paquete personalizado para mega proyectos según las políticas estatales (Opcional)
4Aprovação para incentivos estaduais (opcional)

Inscreva-se para incentivos do governo estadual / esquema de pacote personalizado para megaprojetos de acordo com as políticas estaduais (opcional)
5Enregistrement / catégorisation de l'unité dans l'État

Pour démarrer une unité de fabrication dans n'importe quel état, la première étape pour l'entreprise est de s'enregistrer en tant que MPME ou Mega ou Large Projects. Les critères pour classer une unité en MPME ou Mega Project ou Ultra Mega Project sont définis dans les politiques industrielles respectives des États. Cela profiterait aux unités pour demander diverses incitations disponibles dans le cadre des politiques / régimes du gouvernement de l'État en plus d'autres politiques spécifiques.
6Enregistrement IEM / EM

Toutes les entreprises industrielles exemptées des exigences de licence industrielle, y compris les unités existantes qui entreprennent une expansion substantielle, sont tenues de déposer des informations dans le formulaire prescrit pour l'Industrial Entrepreneurs Memorandum (IEM), c'est-à-dire le «formulaire IEM», auprès du Secrétariat de l'assistance industrielle (SIA) , Département de la promotion de l’industrie et du commerce intérieur (DPIIT), Gouvernement indien, et obtenir une reconnaissance. Aucune autre approbation n'est requise.
Facultatif pour toutes les micro et petites entreprises; Entreprises moyennes du secteur des services; obligatoire pour les moyennes entreprises du secteur manufacturier.
E-biz - Lien
7Genehmigung für staatliche Anreize (optional)

Beantragen Sie staatliche Anreize / maßgeschneiderte Pakete für Megaprojekte gemäß den staatlichen Richtlinien (optional).
8IEM / EM 등록

실질적인 확장을 수행하는 기존 단위를 포함하여 산업 면허 요건에서 면제되는 모든 산업 사업은 산업 지원 사무국 (SIA)에 산업 기업가 메모 (IEM)에 대해 규정 된 양식, 즉“양식 IEM”으로 정보를 제출해야합니다. , 산업 및 내부 무역 진흥부 (DPIIT), 인도 정부에서 인정을 받았습니다. 추가 승인이 필요하지 않습니다.
모든 마이크로 및 소규모 기업을위한 선택 사항입니다. 서비스 부문 중기업; 제조 부문 중기업에 필수입니다.
E-biz- 링크
9IEM / EM-Registrierung

Alle Industrieunternehmen, die von den Anforderungen der Industrielizenzierung ausgenommen sind, einschließlich bestehender Einheiten, die eine wesentliche Erweiterung vornehmen, müssen Informationen in der vorgeschriebenen Form für das Industrial Entrepreneurs Memorandum (IEM), dh „Form IEM“, beim Sekretariat für Industriehilfe (SIA) einreichen. , Ministerium für Förderung der Industrie und des Binnenhandels (DPIIT), Regierung von Indien, und erhalten eine Anerkennung. Es ist keine weitere Genehmigung erforderlich.
Optional für alle Kleinst- und Kleinunternehmen; Mittlere Unternehmen des Dienstleistungssektors; obligatorisch für mittelständische Unternehmen des verarbeitenden Gewerbes.
E-Biz - Link
10IEM / EM注册

所有豁免工业许可要求的工业企业，包括进行实质性扩张的现有单位，都必须以工业援助备忘录（IEM）的规定格式（即“ IEM表格”）的形式向工业援助秘书处（SIA）提交信息。印度政府工业和内部贸易促进部（DPIIT），并获得承认。无需进一步批准。
对所有微型和小型企业都是可选的；服务业中型企业；对制造业中型企业是强制性的。
电子商务- 链接
11IEM / EM登録

大幅な拡張を行う既存のユニットを含め、産業用ライセンスの要件を免除されるすべての産業用事業体は、産業支援の事務局（SIA）に産業起業家メモ（IEM）の所定のフォーム、つまり「フォームIEM」で情報を提出する必要があります。、インド政府産業振興局（DPIIT）、および承認を得ます。これ以上の承認は必要ありません。
すべての零細企業および小規模企業ではオプションです。サービスセクター中企業;製造業の中規模企業には必須です。
E-biz- リンク
12IEM / EM註冊

所有豁免工業許可要求的工業企業，包括進行實質性擴張的現有單位，都必須以工業援助備忘錄（IEM）的規定格式（即“ IEM表格”）的形式向工業援助秘書處（SIA）提交信息。印度政府工業和內部貿易促進部（DPIIT），並獲得承認。無需進一步批准。
對所有微型和小型企業都是可選的；服務業中型企業；對製造業中型企業是強制性的。
電子商務- 鏈接
13IEM/ EM Registration

All industrial undertakings exempt from the requirements of industrial licensing, including existing units undertaking substantial expansion, are required to file information in the prescribed form for Industrial Entrepreneurs Memorandum (IEM), i.e. “Form IEM”, with the Secretariat of Industrial Assistance (SIA), Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, and obtain an acknowledgement. No further approval is required.
Optional for all Micro and small enterprises; Service sector medium enterprises; mandatory for manufacturing sector medium enterprises.

E-biz - Link
14Inscription MSME

Règle
L'enregistrement MPME est un enregistrement facultatif en vertu de la loi MSMED qui offre aux micro, petites et moyennes entreprises une multitude d'avantages et un accès à des subventions et à des programmes.
Critères MPME
Les industries sont classées en entreprises de fabrication et de services:
Des lignes directrices:
Les MPME peuvent être enregistrées en remplissant le mémorandum Udyog Aadhaar . Il s'agit d'un numéro Aadhaar à 12 chiffres attribué à MSME par DIC
L'enregistrement Udyog Aadhaar peut être effectué en ligne par les individus eux-mêmes au cas où ils auraient un numéro Aadhaar. Cependant, dans tous les cas exceptionnels, y compris ceux de ne pas avoir de numéro Aadhaar, peuvent toujours déposer le mémorandum Udyog Aadhaar, en mode hors ligne (c'est-à-dire sur papier), auprès du directeur général (GM) du District Industries Center (DIC) concerné. Les articles non couverts par la loi MSMED 2006 pour l'enregistrement du mémorandum Udyog Aadhaar sont répertoriés dans le lien .
Une unité peut demander la RPC pour tout article qui ne nécessite pas de licence industrielle, c'est-à-dire les articles énumérés dans l'annexe III et les articles non énumérés dans l'annexe I ou l'annexe II de la notification d'exemption de licence. Les unités employant moins de 50/100 travailleurs avec / sans électricité peuvent demander l'enregistrement même pour les articles inclus dans l'annexe II. Une fois que l'unité commence la production, elle doit demander un enregistrement permanent sur le formulaire prescrit.
15MSME Registration

Rule

MSME Registration is an optional registration under the MSMED Act that provides Micro, Small and Medium sized enterprises with a host of benefits and access to subsidies and schemes.

MSME criteria

Industries are categorized into manufacturing & service enterprises:

Guidelines:

MSME can be registered by filling Udyog Aadhaar Memorandum. It is a 12 digit Aadhaar number allotted to MSME by DIC

The Udyog Aadhaar Registration can be done online by individuals themselves in case they have an Aadhaar number. However, in all exceptional cases, including those of not having Aadhaar number, can still file Udyog Aadhaar Memorandum, in offline mode(i.e. on paper form), with the General Manager (GM) of the concerned District Industries Centre (DIC). Articles not covered under the MSMED Act 2006 for registration of Udyog Aadhaar Memorandum are listed in the link.

A unit can apply for PRC for any item that does not require industrial license which means items listed in Schedule-III and items not listed in Schedule-I or Schedule-II of the licencing Exemption Notification. Units employing less than 50/100 workers with/without power can apply for registration even for those items included in Schedule-II. Once the unit commences production, it has to apply for permanent registration on the prescribed form.

Winding up of business

Prepare declaration of solvency and hold board meeting
Obtain shareholders, creditors approval & appoint liquidator
Public notice inviting claims
Intimate Statutory authorities and banker
Submit preliminary report on verification of claims by liquidator
Realise assets, discharge liabilities and repatriate funds if any
Filing application for winding up
NCLT to pass dissolution order

Doing Business in India