The India Companies Act 1956 out lines Business law and incorporation. These both are controlled by the Registrar of Businesses at the Ministry of Corporate Affairs (MCA).

When starting a business in India, one might consider applying for an SEZ Enterprise. It 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.

Starting a business in India typically evolves with i) Company name check at the MCA office in the state where the company will maintain its registered office and ii) Filing the Memorandum of Association and Articles of Association with the MCA, along with a) declaration of compliance, duly stamped b) notice of the situation of the registered office of the company c) particulars of the Directors, Manager and Company Secretary and d) the MCA’s company name approval. Approximately three weeks later, the Registrar of Companies at the MCA issues a Certificate of Incorporation.

To receive a manufacturing license, a SEZ enterprise is required to i) lease land on which to build a manufacturing facility ii) export at least 50% of its output to international countries (the remainder can be supplied to the Indian domestic market) and iii) submit annual performance reports to the SEZ authorities. Applications to set up an SEZ Enterprise are lodged through the Ministry of Commerce and Industry.

Of the many legal entities permissible in India, the majority of entrepreneurs do so through an LLC.

The government fee to register an LLC is US$100. After starting a business in India, with the exception of an SEZ company, most Indian businesses do not require a business license. Sectors closed to foreign investment include the retail trading, atomic energy and gambling industries.

When starting a business in India, the said business must inject a minimum paid up capital of US$2,250 into the corporate bank account before completion of company incorporation.

It is important to be aware of the accounting and tax procedures. India is a high tax jurisdiction with complex tax laws.  As a result, it is normal for a business to frequently engage the professional services of accountants and tax advisors.