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| Establishing a Company in India | |||||||
Establishing a company in India is popular as India has a strategic location between the east and west. Foreign direct investment (FDI) in India is surging. From 2007-2008, FDI amounted to US$32.4 billion, nearly double the 2006 figure of US$17 billion. However, this figure lags far behind FDI into China (US$69.5 billion in 2006) and the US (US$175 billion). That said, in 2006 rating agency Fitch Ratings upgraded India’s sovereign debt ratings to investment grade, and according to UNCTAD's World Investment Report, 2008 India is the second most attractive location for foreign direct investment.. Several important points to consider when establishing a company in India include: | |||||||
| 1. | The regulations for establishing a company in India, each company must:appoint at least two directors. Thereafter, an unlimited number of directors may be appointed. At least two shareholders, be they local, international, corporate or individual must also be appointed.
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| 2. | Investors establishing a company in India
inject a minimum paid up capital of US$2,250 into the corporate bank account before completion of company incorporation; and submit audited financial statements and annual corporate tax return to the Income Tax Department. | ||||||
| 3. | Investors forming a company in India might want to consider Special Economic Zone (SEZ) Enterprise. These are manufacturing clusters encouraged by local Governments across India to provide employment to local citizens. An SEZ Enterprise is an attractive entity for foreign investors because it can i) be 100% foreign owned ii) obtain 100% tax exemption on export income for the first 10 years of manufacturing and iii) because it benefits from a large pool of low cost local labour. | ||||||
| 4. | Growing numbers of international investors are establishing a company in India. In 2006, 732,169 limited liability companies were incorporated in India (712,400 in 2005). The government fee to register a limited liability company is approximately US$100. | ||||||
| 5. | An India Branch Office retains the legal identity of its foreign parent. The India branch adopts the same name as its parent, and is required to file audited financial statements annually with the Indian government. | ||||||
| 6. | The process for incorporating in India
is through the MCA, where companies are registered and administered, corporate compliance and disclosure requirements are monitored, and statutory audits by public accountants are regulated. | ||||||
| 7. | Remember to appoint a local, resident company secretary and registered office. Take note that only individual company secretaries are allowed. | ||||||
| 8. | The process is performed through Ministry of Corporate Affairs. Company law is outlined in the India Companies Act 1956 and company incorporation is controlled by the Registrar of Companies at the Ministry of Corporate Affairs (MCA). | ||||||
| 9. | Foreign companies may wish to invest directly in Indian project. However companies wishing to do so require investment approval from the Foreign Investment Promotion Board (FIPB) of the Ministry of Finance, the shares in an Indian company can be 100% foreign-owned, and requires no approval during incorporation.
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| Contact Us | |||||||
For more information on how establishing a company in India, email email@healyconsultants.com or call us in Singapore at (+65) 6735 0120. | |||||||
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