Start Business in India

Non-Resident Individuals and Business Incorporated outside India are permitted to start a business in India subject to provisions of Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) Regulations. Submit Requirements

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Different Options to Start Business In India


A Non-Indian National / Business incorporated outside India has the following options to setup up a new business in India:

  • Limited Company
  • Limited Liability Partnership (LLP)
  • Branch Office or Liaison/Representative Office, Project Office

A. LIMITED COMPANY

A non-resident Indians and businesses incorporated outside India can incorporate Company in India a under the Companies Act, 2013, as a Joint Venture (JV) or a Wholly Owned Subsidiary.

Foreign Direct Investment (FDI) is freely permitted in Limited Companies subject to the FDI Policy in almost all sectors. Under the FDI Scheme, non-residents can make investments in shares/convertible debentures/preference shares issued by an Indian company through two routes:

  • Automatic route: The foreign investor or the Indian company does not require prior approval from the RBI or the Government of India.
  • Government route: Prior approvals required from the Government of India

B. LIMITED LIABILITY PARTNERSHIP (LLP)

An LLP is an incorporated business form that combines the features of partnership and the company form of business. The LLP form of organization was introduced in India in April 2009 through the Limited Liability Partnership Act, 2008.

Foreign Direct Investment (FDI) is freely permitted in Limited Liability Partnership subject to the FDI Policy in almost all sectors.

C.BRANCH OFFICE / LIAISON OFFICE /PROJECT OFFICE

Business entities registered outside India (Foreign Company) can establish business operations in India without creating and registering a subsidiary company.

Subject to the RBI guidelines, a foreign company can open a Branch Office or Liaison Office in India. The scope of operations of such offices is typically limited to activities and functions such as country representative office, sourcing, technical and/or marketing support, import and export, etc.

Procedure to Start a Business In India


Define the India Business Plan

A Foreign National or a Business Registered outside India has to define the India Business Plan first. Depends on the business operations Plan, one has to select the best suited Business entity option start business in India.

Choose Best Suited Business Option

Choose best suited business from different options such as Limited Company, Limited Liability Partnership (LLP), Branch Office & Liaison Office or Project Office etc.

Documentation

Depends on the chosen Business option, the documentation process will also differ. Generally, any document executed outside India or a copy of document produced from outside India must be notarized and apostatized or attested by the Indian Embassy in their respective countries as per Hague Convention guidelines.

Application to respective Authorities

Again, depends on the chosen Business option, the application process shall also differ. In case of Limited Companies and Limited Liability partnerships, application is required to be filed with the Registrar of Companies (ROC), Ministry of Corporate Affairs. In case of Branch office / Liaison Office the application is required to be filed with the Reserve Bank of India and after obtaining the approval from the RBI, the entity is required to be registered with Registrar of Companies (ROC) Delhi, Ministry of Corporate Affairs

Obtain the Registration and proceed to Business Start-up Formalities

After obtaining the Business entity registration, the business can proceed to open bank account and proceed to appoint people and start business. Also, the busies is required to obtain other required registrations such as Goods and Service Tax Registration (GST), Professional Tax and Shops and Establishment Registration etc and start employing people

Starting a Business In India by Non-Residents


Documents Required


Documents Required from Foreign Body Corporate

If a Foreign Company is a Shareholder/ partner, the business Incorporation documents such as Certificate of Registration and Charter Documents with

  • a. The Board Resolution / formal authorisation for use of name of Foreign Body Corporate

  • b. Board Resolution / formal authorisation for use of Trademark of Foreign Body Corporate, if any

  • c. Board Resolution / Authorisation for execution to an individual for execution of Company Incorporation Documents.

Branch/ Liaison office - Steps

  • STAGE 1 : Seeking RBI approval through an Authorised Dealer of a Category I Bank

  • STAGE 2 Registration of the branch/liaison office with the Registrar of Companies, New Delhi.

From Individuals for Company and LLP

For Company and LLP registration, the following documents are required from proposed Shareholders / Partners and Directors / Designated Partners

  • Copy of valid Passport

  • Copy of Identity / Address Proof such as Telephone Bill / Mobile Bill/Electricity Bill / Bank Account Statement must be in the name of applicant and should not be older than 2 months.

  • Consent to Act as Director / Designated Partner

  • Declaration on Permanent Account Number (PAN)

  • Memorandum of Association – MOA to be signed by the subscriber and a witness with details. (For Company)

  • Articles of Association – AOA MOA to be signed by the subscriber and a witness with details. (For Company)

  • Subscription Documents –to be signed by the Partners of LLP and a witness with details. (For LLP)

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FAQ

Frequently Asked Questions on Start Business in India

Can Foreign National / Non-Resident Individual can Start a business India?

Yes. Foreign National / Non-Resident Individual can Start a business India as an incorporated entity subject to compliance of provisions of Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) Regulations.

Whether the Foreign National / Business require an Indian Partner to Start a Business?

No. It is not mandatory to have ownership partner in India to start a Business. The business can be 100% owned by the foreign shareholders subject to Foreign Direct Investment (FDI) regulations. In case of in case of business where F

What is Foreign Direct Investment (FDI)?

Foreign Direct Investment (FDI) refers to the Investment made by a Foreign National or a Business incorporated outside in a Business entity registered in India.

Can a Foreign National or a Business Registered outside India start a 100% owned business in India?

FDI of up to 100% in is freely permitted under the automatic route, subject to sectoral caps as stipulated in the Consolidated FDI Policy of India.

Does FDI requires any prior permission from any authority?

FDI in sectors/activities to the extent permitted under the automatic route does not require any prior approval of either the Government or the RBI. FDI in activities not covered under the automatic route or beyond the sectoral cap as stipulated under the FDI Policy requires prior approval of the FIPB.

What is Automatic Route Investment?

Under the automatic route, 100% Foreign Direct Investment (FDI)is permitted subject to sector-specific caps as stipulated by the FDI policy. FDI to the permitted extent under the automatic route in specific sectors/activities does not require any prior approval from the Reserve Bank of India (RBI) or Government of India (GOI).

What is Government Route Investment?

Foreign Direct Investment (FDI) in activities not covered under the automatic route requires prior approval of the Foreign Investment Promotion Board (FIPB). Any Indian company with FIPB approval for FDI does not require additional clearances from the RBI to receive inward remittances and issue shares to non-resident investors.

What are the business entity options available in India?

The following are the options available to start a business India by a non-resident Indians and businesses incorporated outside India:

1. Limited Company

2. Limited Liability Partnership (LLP)

3. Branch Office & Liaison Office or Project Office

Can two Foreign Nationals / Companies can a start a Partnership India?

No. Foreign Foreign Nationals / Companies can not start a Partnership India

How many shareholders are required to register a Company?

To register a private limited company the following are the basic requirements:

1. There should be 2 promoters/shareholders. The promoters can either be corporates or individuals.

2. There should be 2 individuals with Director Identification Number (DIN) to be appointed as directors.

If the proposed company is a 100% subsidiary of a foreign entity, the second promoter can be a nominee promoter holding a nominal stake for the purpose of complying with the requirement of two promoters.

How many Directors are required to register a Company?

There should be 2 individuals with Director Identification Number (DIN) to be appointed as directors and at least one of the directors must be a Resident in India who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year. The Directors need not be shareholder and vice versa.

Can I register a One Person Company (OPC) for Foreign Investment?

No. Non-Resident Indians and Foreign nationals are not permitted to register a One Person Company (OPC). Also, Business entities are also not permitted to register an OPC.

What is LLP?

A Limited Liability Partnership (LLP) is a form of business that offers the combined features of 'partnership' and 'company' business structures. This business form was introduced in India in April 2009 with the enactment of the Limited Liability Partnership Act, 2008.

How many Partners are required to register a LLP?

For registering an LLP, a minimum of 2 partners are required. Partners could be individuals, companies or LLPs, but only individuals can become designated partners of an LLP. A partner need not be a designated partner of an LLP.

How many Designated partners are required to register a LLP?

An LLP should have a minimum of two designated partners who are individuals and at least one of them should be resident in India.

What is the time duration required for registering a new Business in India?

Time duration required for registration is also depends on the chosen Business option. In case of Limited Companies and Limited Liability partnerships, the process may take 10-15 days from the date when all required documents are made available in India after required notarisation and attestation. However, in case of Branch Office and Liaison Office, longer time will be required as the Reserve bank of India requires the Background check of Applicant Foreign Company before approval.

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