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SETTING UP BUSINESS IN INDIA
ENTRY OPTIONS
  • Any foreign investors can commence business in India as:
  • 1. **Foreign company
    • Liaison office – To represent parent company in India
    • Branch office – To undertake activities such as export, import of goods, research, consultancy etc.
    • Project office – Activities as per contract to execute project

    (for carrying out export import, research and project execution operations)
  • 2. *Indian Company:
    • Joint Venture or Wholly owned subsidiary – Any investor can enter into a JV or Wholly owned subsidiary as either Private Ltd. or Public Ltd company subject to Companies Act 2013
  • 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 via automatic route and there no FDI linked performance conditions***

    (for carrying out manufacturing/ services and other related business operations)
  • Types of permitted business establishments in India:
    • One-person company
    • Private Ltd. company
    • Public Ltd. company
    • Sole proprietorship
    • Partnership firm
    • Limited Liability Partnership
    • Foreign company
  • Note:

    *Incorporate company in India s.t. sectoral caps and requisite approvals

    **RBI guidelines regarding establishment of LO/BO/PO: https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10398&Mode=0. As per company law, a resident having PAN to be appointed for receiving notices in India for foreign company

    ***For detailed definitions, clarifications/ exceptions, please refer to Consolidated FDI Policy, effective from August 28,2017, Amendment to FDI policy in Jan 2018
LOCATION IDENTIFICATION
  • 1. Availability of Land:
    • Acquisition of land - Application to respective State DI/ State Industrial Development Corporation (SIDC)/ Infrastructure Corporation/ Small Scale Industrial Development Corporation (SSIDC)
    • Permission for land use - Applicable in case industry located outside an industrial area Concerned departments:
      • State Directorate of Industries (DI)
      • Department of Town and Country Planning
      • Local authority/ District Collector
  • 2. Types of Land Allocation:
    • Special Economic Zones, Software Technology Parks, Sector-specific Clusters, Export Oriented Unit
    • National Investment and Manufacturing Zones (NIMZs)
    • Private Land - as per FDI policy and State-specific regulations/Conversion from agricultural to non-agricultural land
    • Industrial Parks/ Zones/ Areas – Country/Industry-specific or Multi product
  • For further queries, Connect with Invest India:http://www.investindia.gov.in/contact-us
APPROVALS AND CONSTRUCTION - SETTING UP BUSINESS AS AN INDIAN COMPANY
  • Investing in India
  • 1. Check availability of name/ registered trademark for incorporation of company
  • 2. RUN - Reserve name of the proposed company through online service RUN on MCA website. Name can also be applied through SPICe form.
  • 3. DSC - Obtain Digital Signature Certificate (DSC) for at-least one proposed Directors of the company. DIN for proposed Directors can only be applied through SPICe form.
  • 4. Filing for incorporation - Form INC 32 (SPICe) to be duly filled and submitted to RoC for incorporation of company. PAN and TAN shall be auto-generated based on details
  • 5. eMOA & eAOA – Filing of electronic Memorandum of Association (eMoA – INC 32) & Articles of Association (eAOA – INC 34) in SPICe. For foreign subscribers physical MOA & AOA to be executed and attached.
  • 6. Certification/ Notarization – First of all SPICe form is uploaded and fee payment is confirmed by MCA. Secondly, Central Registration Centre (CRC) verifies/scrutinises all the documents and forms and may suggest few changes to be made in the attachments or form itself. Finally, one needs to make necessary changes accordingly and Obtain certificate of incorporation (CoI). CIN, PAN &TAN numbers are allotted at the time of registration
  • 7. 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.
  • Note:
    • Notarization & Apostilling / legalization of documents mandatory in case of foreign subscribers / Directors
    • Some registrations would be applicable based on state in which company is incorporating and nature of business entity
  • State level compliances (licenses/ approvals)
    • Registering/ categorization of unit in state
    • Industrial Entrepreneurs Memorandum (IEM) registration
    • MSME registration
    • Application to respective State DI/ State Industrial Development Corporation (SIDC)/ Infrastructure Corporation/ Small Scale Industrial Development Corporation (SSIDC)
    • Application for environment clearance (EC) need to be made at the online platform by MoEF.
    • Permission for land use in case industry is located outside the industrial area
    • Application to State Pollution Boards before commencement of construction activities and production activities under Water Act and Air Act for Consent to Establish
    • Industrial licenses are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee
    • Factory plan approval and registration, as per The Factories Act 1948, the applicant needs to submit the plans of any class/ description of factories to the Chief inspector or the State Govt.
    • As per the Boiler Act 1923, registration of Boiler is mandatory compliance.
    • An approval from development authority/ local nodal authority for sanction of building plans/ building permit under the provisions of Building Byelaws, Master plan and Local Body Acts.
    • Registration under Contract Labour Act 1970
    • Registration under BOCW Act
    • Application to State Electricity Distribution Company for sanction of power supply
    • Provisional Fire Safety Approval from State Fire and Safety department
    • Lift and escalator approval needs to be obtained from local state authority
    • Approval for water connection from to State Industrial Promotion Boards
    • GST registration
    • Registration under Shop & Establishment is provided by state government
Taxation Overview
  • 1. Overview
    • Over the last few years, the government of India (GoI) and various State (provincial) Governments have undertaken various policy reforms and process simplification towards great predictability, fairness & automation. This has consequently, lead to India’s meteoric rise to the top 100 in the World Bank’s Ease of Doing Business (EoDB) ranking in 2017.
  • 2. Key Features of India’s taxation System:
    • Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such as the Municipality and Local Government.
    • A resident company is taxed on its worldwide income. A non-resident company is taxed only on income that is received in India, or that accrues or arises, or is deemed to accrue or arise, in India. Company whether Indian or foreign is liable to taxation, under the Income Tax Act,1961.
    • Corporation tax is a tax which is levied on the incomes of registered companies and corporations. Taxes in India are primarily into 2 categories - Direct and Indirect Tax.
  • Taxes under the old regime includes:

    Central taxes:
    • Central Excise Duty (CENVAT)
    • Additional Excise Duties and the Excise Duty levied under the Medicinal and Toiletries Preparations Act, 1955
    • Service Tax
    • Additional Customs Duty (CVD)
    • Special Additional Duty of Customs (SAD)
    • Surcharges and Cesses levied by the Centre
    • Central Sales Tax

    State taxes:
    • VAT/ sales tax
    • Octroi and Entry Tax
    • Purchase Tax
    • Luxury tax
    • Taxes on lottery, gambling and betting
    • Entertainment tax (unless levied by the local bodies) Surcharges & State Cesses (related to the supply of goods and services)
  • Taxes under new regime:

    These Central and State taxes under the old regime have been replaced with Central and State GGT namely CGST and SGST under the new regime.
  • Goods & Services Tax (GST)

    Goods and Services Tax (GST) is a unified indirect tax across the country on products and services. It is a comprehensive levy on manufacture, sale and consumption. It is a destination-based consumption tax.
    • The GST, dual in nature is levied by both the Centre and State. The Central GST (CGST) is levied on intra state supply of goods and / or service by Central Government and State GST (SGST) is levied by the States.
    • Integrated GST (IGST) is levied and administered by the Centre on every inter-state supply of goods and services.
    • Import of goods or services is treated as inter-state supplies and is subject to IGST in addition to Basic Custom duty.
    • CGST, SGST and IGST is levied at uniform rates, mutually agreed upon by the Centre and the States under the aegis of the GST Council (GSTC).
    • All goods and services are covered under GST except alcohol for human consumption and specified petroleum products.
  • For further details please visit the Taxation overview page over the Invest India website https://www.investindia.gov.in/taxation
Why Invest in India
Fastest Growing Economy
  • One of the fastest growing economies in the world, India has sustained recent global downturn and also emerged as one of the leading nations in terms of GDP growth rate and FDI inflows
  • India is likely to grow at consistently higher rates (>7%) and retain its position as one of the fastest growing economies till 2020 (Source: International Monetary Fund)
  • In recent years, India has emerged as one of the most attractive destinations not only for investments but also for doing business, evident by its significant jump by 12 places in Ease of Doing Business rankings between 2014 and 2015 (Source: Ease of Doing Business, World Bank)
  • India accounted for 1.7% of global merchandise exports in 2014, compared to 0.8% in early 2000. Exports have increased at a Compound Annual Growth Rate of 11.6% in FY 2010 to USD 310 billion in FY 2015 (Source: EXIM Bank Catalyzing India’s trade and investment, July 1, 2015; WTO International Trade Statistics 2015)
  • Foreign exchange reserves have been at a comfortable level over recent years. Currently, India’s reserves stand at USD 371.279 billion (Source: Reserve Bank of India as on 9th September, 2016)
  • India ranks amongst the top 10 FDI destinations globally - surpassing USD 50 billion in FY 2015-16. India has shown a growth of 46% in FDI equity inflow and 37% in overall FDI inflow since the launch of Make in India initiative (Source: Ministry of Commerce, Government of India)
  • India’s fiscal deficit stood at 3.9 % of GDP (USD 81.85 billion) in FY 2015-16 and envisaged to come down to 3.5% of GDP by the end of FY 2016-17 (Source: https://data.gov.in/)
Demographic Advantage
  • With 356 million 10-24 year-olds, India has the world’s largest youth population (Source: UNFPA, The Power of 1.8 billion, 2014)
  • The proportion of working age population in India is likely to reach more than 64% by 2021, with a large number of young persons in the 20-35 age group (Source: Economic Survey 2014)
  • The average age of 125 billion persons will be 29 years by 2020 (Source: Economic Survey, 2014)
  • If India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world's fifth largest consumer economy by the year 2025 (Source: The Bird of Gold, McKinsey Report)
  • India is expected to be the largest supplier of university graduates in the world by 2020 (Source: Morgan Stanley Research)
  • India has 712 university level institutions, 36,671 colleges along with 11,445 standalone institutions (Source: Educational Statistics at a Glance 2014, Ministry of Human Resources Development)
Favourable Policies
  • Major FDI policy reforms have been made in a number of sectors, such as defense, construction development, pensions, broadcasting, pharmaceutical and civil aviation
  • Foreign investors can invest in India either on their own or as a joint venture, as may be required in a few sectors
  • Barring a few reserved sectors, 100% FDI is allowed through the automatic route in several sectors, without the need of government approval, namely Automobile, Food Processing, Construction etc.
  • In the Union budget 2016-17, the government has emphasized the need to increase manufacturing as a percentage of GDP
  • The Central and State governments have sector specific policies, incentives and subsidies to promote manufacturing
  • Increased allocation in the budget to improve infrastructure, which is critical in facilitating future growth
Developing Infrastructure
  • Sagarmala Project:
    The project includes modernization of ports, setting up of coastal economic zones, new major ports and fish harbors
    Capital outlay of USD 10 billion (Ministry of Shipping)
  • SMART Cities Mission:
    Developing 100 smart cities as satellite towns of larger cities and by modernizing existing cities.
    Capital outlay of USD 15 billion
  • AMRUT:
    In an effort to recast urban landscape and make urban centers more livable and inclusive.
    Capital outlay of USD 7.69 billion
  • Roads & Highways:
    Development of about 7000 km of national highways under Bharatmala Pariyojana.
    Capital outlay of USD 12 billion
  • Railways:
    Dedicated freight corridor for decongesting existing network.
    Capital outlay of USD 12.3 billion
  • Strategic location:
    India’s 7500 km coastline has 12 major ports, over 200 minor parts and is strategically located on world trade routes.
    • Some of the emerging and established markets such as Middle-East and South East Asian countries are closely located
    • India is surrounded by the Bay of Bengal, the Arabian Sea and the Indian Ocean, an arrangement that facilitates most its overseas trade in all main directions
SUPPORTING GOVERNMENT STRUCTURE
  • World’s largest democracy - India is a Sovereign Socialist Secular Democratic Republic with a Parliamentary form of government, which is federal in structure with unitary features
  • India’s robust legal and political systems ensure long-term political stability
  • The Indian political system is supported by Executive, Legislative and Judicial branches. Every major branch is independent of one another
  • Independent financial institutions for business:
    1. The Reserve Bank of India (RBI) has played a critical role in maintaining the economic stability in India despite the global economic scenario. The focus on containing inflation and ensuring that interest rate cuts are passed on by banks, is a revolutionary step and structural reform in itself. RBI has been increasing access to foreign exchange reserves, and moderating periods of extreme volatility in the currency through exchange intervention.
    2. Securities Exchange Board of India (SEBI) has been the regulator of Indian markets since it was granted legal status in 1992. Among other functions, one of SEBI’s prime objectives is ensuring the rights and safety of investors. India achieved a rank of 8 in World Bank’s Ease of Doing Business Ranking – protecting minority investors, highlighting the efficiency of the organization.
    3. The Competition Commission of India (CCI) is responsible for enforcing The Competition Act across India. Their objective is to play an overarching role as a market regulator across all sectors with focus on anti-competitive behaviour of enterprises that may distort competition.
Investing in India: Who Can Help

Invest India is the first port of call for potential investors. It is the official investment promotion and facilitation agency of the Government of India, mandated to facilitate investments into India.

Experts provide sector- and state-specific inputs, and handholding support to investors through the entire investment cycle, from pre-investment decision-making to aftercare.

The team assists with:
  • Market strategy
  • Business plan advisory
  • Location identification
  • Expediting regulatory approvals
  • Facilitating meetings with relevant government and corporate officials
  • Initiating remedial action on problems faced by investors
Invest India
WHO ARE THE STAKEHOLDERS OF INVEST INDIA?

Invest India is promoted by the Department for promotion of industry and internal trade (DPIIT), Ministry of Commerce and Industry (Government of India), the State Governments of India and the Federation of Indian Chambers of Commerce & Industry (FICCI).

DOES INVEST INDIA HAVE ANY FOREIGN ASSOCIATIONS?

Invest India has signed Memoranda of Understanding/Framework for Investment Cooperation with select Investment Promotion Agencies in select countries. These are:

  • JETRO (Japan),
  • Invest in America (USA),
  • UK Trade & Invest and UK India Business Council (UK),
  • Invitalia (Italy),
  • UBIFrance & Invest in France (France),
  • KOTRA (South Korea),
  • BOI Mauritius (Mauritius),
  • Czech Invest (Czech Republic),
  • Kaznex Invest (Republic of Kazakhstan),
  • Saudi Arabian General Investment Authority (Saudi Arabia).

Invest India is also working closely with Indian missions abroad, foreign missions in India and bilateral/ multilateral agencies.

DOES INVEST INDIA HAVE ANY INTERNATIONAL OFFICES OR REPRESENTATIVES?

Invest India functions out of its Headquarters in New Delhi, India. However, for any investment related queries you may get in touch with the commercial representatives of the Indian Embassies/Consulates in your country

DOES INVEST INDIA CHARGE FOR THE SERVICES?

No. Invest India is a Section 8, Not-For-Profit organisation. The services provided are completely free of charge. For more specific information, do fill out our investor query form.

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