Introduction

India has emerged as an investment hotspot with a robust economy and potential business opportunities. Organisations all over the world are enamoured by its promising industries, well-trained workforce, and strategic business initiatives by its government. A structured business approach is important especially for an indefinite investor in India for starting a foreign operation. The following guide developed by the Starters’ CFO describes procedures that every intending foreign company must follow to gain approval to operate legally in India.

Step 1: Analyse the factors within the Indian Business environment

Knowledge about the Indian business environment is the initial key to the creation of a foreign company. India has a clear legal structure for FDI boosted by the Companies Act 2013 and FEMA. They need to gain awareness about significant trends related to the business, economic policies and cultural factors for the entry strategy to succeed.

Key Considerations:

·       India allows FDI up to 100% in several sectors In India 100% FDI is allowed in several sectors.

·       It is well facilitated under Make in India and Startup India and enjoys tax benefits and incentives.

·       Regional economic conditions vary between states, requiring the development of specific business models.

Step 2: Selecting the Ideal Business Structure

The business structures have to be chosen carefully to fit Indian regulations and the goals of your company. Foreign companies can operate through various structures such as:

Wholly Owned Subsidiary: Perfect fit for when you want to have your business fully under your management.

Joint Venture: A partnership approach to harnessing local talent in the sources of information.

Branch Office: Helps to run business activities under certain conditions.

Liaison Office: Serves as an important link between the parent company and all stakeholders who operate from the Indian context.

Key Factors to Evaluate:

·       Business ‘purpose and need for products and services that engage’.

·       Looking at the long-term strategic goals.

·       About compliance and taxation of each structure.

Step 3: Applying for Digital Signatures and Director Identification Numbers (DINs)

It is noteworthy that Digital Signatures (DSCs) and DINs are necessary to begin a business’s incorporation. To obtain these credentials, the proposed company’s directors must apply through the Ministry of Corporate Affairs (MCA).

Steps to Follow:

1. Get DSCs from a registered authority.

2. Obtain DINs electronically applicable by filing Form DIR-3 on the SPICe+ portal.

3. All directors should submit the identity and address proof.

Step 4: Reserving the Company Name

A company name provides a basis for any enterprise, because a firm name can be said to be its calling card. Make sure that the chosen name is not prohibited by the Companies Act, 2013 and should be related to business operations.

Steps for Name Reservation:

1.     Use the “RUN” feature on the online MCA portal to register a distinctive name.

2. Submit two name suggestions and check the availability of each option.

3. Do not use trademarks and follow the rules of naming.

Step 5: Terms of reference for preparation of memorandum and articles of association

The MOA and AOA are some of the legal documents that set down the concept of your business as well as the rules and regulations to be followed in handling it.

Key Inclusions:

·       Corporate governance policies together with rights pertaining to shareholders.

·       For both of these latter strategies it is crucial to adhere to Indian legal standards.

·       Such documents should be notarised or apostilled in the parent country before they get to be submitted.

Step 6: Subscribe to the Incorporation Application

The MCA has introduced the SPICe+ form on its portal which consolidates different services to make the incorporation easier.

Required Documents:

1. MOA and AOA.

2. A copy of the registration of an office address in India is required.

3. Identification of directors and shareholders, their identification proofs and photographs.

4. After submission, the document is scrutinised by the Registrar of Companies (ROC) and a Certificate of Incorporation is granted on approval.

Step 7: Opening of a Corporate Bank Account

A corporate bank account is useful in making transactions and sources of funds in a company. Select a bank, which provides services adapted specifically for foreign enterprises.

Steps to Open an Account:

1. The Certificate of Incorporation shall be submitted.

2. The authorized personnel’s KYC documents must be submitted.

3. Follow the FEMA regulations in its foreign currency transactions.

Step 8: Registration of Tax Payers

Tax registration is a legal requirement to carry out business in India. Depending on your business activities, the following registrations may apply:

·       Goods and Services Tax (GST): Applicable where turnovers are more than INR 20 lakh (INR 10 lakh for special class of states).

·       Permanent Account Number (PAN): A vital prospect for tax payment and transactions.

·       Tax Deduction and Collection Account Number (TAN): S4643 is necessary when claiming with-held taxes on labour.

Proper registration minimises barriers to operations in business activities.

Step 9: Failure to meet post-incorporation compliance

The post incorporation compliance is as crucial for the firm’s sustainability. These include:

·       Adhering to financial records without compromise, for example avoiding forgery of any kind.

·       To file annual returns and accompanying financial statements.

·       Holding business Annual General Meetings (AGMs).

Step 10: Obtaining the Industry Specific Licenses and Permits

Some of these trades need extra licenses or approval before the trade is conducted. For instance:

·       Environmental Clearances: For example, necessary for building construction or manufacturing industries.

·       Sector-Specific Licenses: Applicable for such business areas as food processing or production of pharmaceuticals.

That is why, engage the local authorities that may or may not be approving compliance to this notion.

Step 11: Leveraging Government Schemes

India has employment benefit policies in its sleeves like Make in India, and Digital India, which give numerous kinds of incentives to entice Foreign Investors. The following are the initiatives that need to be fully exploited to get the most out of it;

Incentives Include:

Concessions of tax privileges aimed at preferred sectors.

The grants of the technology adoption and innovation.

Flexibility of compliance for new generation business.

Step 12: Building a Skilled Local Team

Competent local talent must be hired for the purpose of understanding the dynamics of the market and the strategies to be employed. Also, extending relations with local suppliers and partners enhances operations productivity.

Step 13: Marketing Your Business in India

Marketing objectives guarantee that your business is visible in the market despite the stiff market competition. Make use of online media and conduct fairs and exhibitions as well as reach out to various stakeholders in the community for increased awareness. Extend quality and innovation to become reputable and widely accepted by customers.

Conclusion

Getting a new company in India gives of a chance to grow. Thus, it becomes achievable for businesses to flow through the legal requirements easily, and establish the foundation to triumph. Down at Starters’ CFO, we assist our clients, from the registration of their company to compliance services and business growth advice. Why not join us to turn your business idea into reality in the increasing Indian economy?