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SETTING UP BUSINESS

FOREIGN DIRECT INVESTMENT IN INDIA

Government of India has permitted foreign investment in almost all sectors with a few exceptions, such as atomic energy & lottery business
In the permitted sectors, subject to sectoral caps, FDI may be via 2 routes:
- Automatic route or
- Government route (where prior approval of Government of India is required)
Equity inflow of and below USD 770 million Approval from Sectoral department in consultation with Department of Industrial Policy & Promotion (DIPP)
Equity inflow of more than USD 770 million - Approval from Cabinet Committee on Economic Affairs

ENTRY OPTIONS

Foreign Investors can commence business in India as:
1. An Indian Company:
- Joint Venture as (i) Private Limited or (ii) Public Limited Company
- Wholly owned subsidiary permissible in sectors where 100% FDI is permitted
2. A Foreign Company:
- Liaison Office to represent the parent company in India
- Branch Office activities such as Export-Import of goods; research, consultancy etc.
- Project Office activities as per contract to execute project
3. Limited Liability Partnership:
- Subject to provisions of LLP Act, 2008
- FDI permitted under the automatic route in LLPs operating in sectors/activities where 100% FDI is allowed and there are no FDI-linked performance conditions

LOCATION IDENTIFICATION

1. Availability of Land:
- Land in India is a State subject
- To set up a unit, Investors should get in touch with the respective State Industrial Corporations (IDCs) with business plans and desired land size
- Applications are reviewed and processed based on merit
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:
The national level investment promotion & facilitation agency, provides facilitation services for obtaining information on land, arranging location visits for investors and connecting them to state IDCs/SEZ/NIMZs etc. (http://www.investindia.gov.in/)

APPROVALS AND CONSTRUCTION - SETTING UP BUSINESS AS AN INDIAN COMPANY

Investing in India
1. Registering with Registrar of Companies, India (Udyog Aadhar Memorandum / Industrial Entrepreneurship Memorandum/Industrial Licensing) Single electronic form SPICe (Simplified Performa for Incorporating a Company electronically) has been recently introduced for registering private limited companies. The form provides five services in one e-Form Director Identification Number, Name Reservation, Incorporation, PAN, TAN.
2. Licenses and Permits:
- Land: Application to respective State Infrastructure Corporation/ DIC/ SIDC/ SSIDC
- Environment: Application to the Secretary, Ministry of Environment and Forests, New Delhi (Check Guidelines here)
- Consent to Establish and Consent to Operate from individual Pollution Control Boards
- Factory plan approval Application to local bodies/Chief Inspector of factories
- Power: Application to State Electricity Distribution Company for sanction of power supply for LT/ HT or Extra High Tension connection as applicable
- Water: Application to SIDC /SIPB or Central Ground Water Commission depending on source
- Fire: Provisional Fire Safety Approval from State Fire and Safety department; final approval by local State authority
- Boiler NOC
- Tax: VAT/ Service Tax/Professional Tax/Central Excise registration
- Labour Compliances

TAXATION OVERVIEW

Overview of Regulatory Compliances
1. Service Tax
- Levied on services
- Monthly/Quarterly and Half yearly reporting as applicable (e.g. to company/ society/ individual/ partnership etc.)
VAT/CST
- Levied on Sale of Goods
- monthly/ quarterly tax depending upon state legislations and VAT annual return as applicable
TDS
- Applicable to salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. wherein tax is deducted by the payer and is remitted to the Government on behalf of the payee. TDS is managed by Central Board of Direct taxes (CBDT)
Income Tax Filing
- Filing of Income Tax is mandatory for eligible individuals/companies etc. for the applicable assessment year
Custom
- Levied on all goods imported into India and few goods exported from India export duty currently exempt
Excise
- Levied on Excisable Goods manufactured in India
Useful Links:
Central Board of Direct Taxation, India: http://www.incometaxindia.gov.in/Pages/about-us/central-board-of-direct-taxation.aspx
Central Board of Excise and Customs: www.cbec.gov.in

Entry Routes & Sectoral Caps

SECTORS UNDER AUTOMATIC ROUTE (WITH CONDITIONS)

UP TO 1OO%

Agriculture, Plantation, Mining - Metal & non-metal ores; Lignite & Coal, Manufacturing, Broadcasting Carriage Services (Teleports, DTH, Cable Networks, Mobile TV, HITS), Broadcasting Content Service - Up-linking of Non-'News & Current Affairs' TV Channels/ Down-linking of TV Channels, Airports - Greenfield; Brownfield, Airport Transport Services - Non-Scheduled; Helicopter/Seaplane Services, Ground Handling Services, Maintenance and Repair Organizations; Flying and Training Institutes; Technical Training Institutions, Construction Development, Industrial Parks - New and Existing, Trading - Wholesale; B2B e-commerce, Duty Free Shops, Railway Infrastructure, Asset Reconstruction Companies, Credit Information Companies, White Label ATM Operations, Non-Banking Finance Companies, Pharma - Greenfield, Petroleum & Natural Gas - Exploration Activities of Oil and Natural Gas Fields

UP TO 49%

Petroleum Refining by PSUs, Infrastructure Company in the Securities Market, Commodity Exchanges, Insurance, Pension, Power Exchanges

SECTORS WHERE GOVERNMENT APPROVAL IS REQUIRED (as on July 8, 2016)

UP TO 1OO%

(Government approval - up to 100%)Mining and mineral separation of Titanium bearing minerals and ores, Publishing/printing of scientific and technical magazines/specialty journals/periodicals, Publication of facsimile edition of foreign newspapers, Satellites - establishment and operation, Food product retail trading

UP TO 1OO%

Up to 100% (Government approval - beyond 74%)Pharma - Brownfield

UP TO 1OO%

Up to 100% (Government approval - beyond 49%)Defence, Air Transport Service - Scheduled and Regional Air Transport Service, Telecom Services, Trading - SBRT

UP TO 74%

Up to 74% (Government approval - beyond 49%)Banking - Private Sector, Private Security Agencies

UP TO 51%

Up to 51% (Government approval - up to 51%)Trading - MBRT

UP TO 49%

Up to 49% (Government approval - up to 49%)Broadcasting Content Service

FM Radio
Uplinking of news & current affairs TV Channels

Investment by Foreign Airlines

UP TO 26%

Up to 26% (Government approval - up to 26%)Print Media - Publication of Indian editions of foreign magazines dealing with news and current affairs.; Print Media - Publishing of newspaper and periodicals dealing with news and current affairs

UP TO 2O%

Up to 20% (Government approval - up to 20%)Banking - Public Sector

CONTACT

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.

Our team of domain and functional experts provide sector-and state-specific inputs, and hand-holding support to investors through the entire investment cycle, from pre-investment decision-making to after-care. Invest India assists with location identification, expediting regulatory approvals, facilitating meetings with relevant government and corporate officials, and also provide aftercare services that include initiating remedial action on problems faced by investors. All facilitation and hand-holding support to investors under the "Make in India" programme is being provided by Invest India.

Invest India is promoted by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry (Government of India), the State Governments of India and Industry chambers in India.
E-mail: makeinindia@nic.in