India company formation is an ideal way for international entrepreneurs to conduct business in one of the world's most rapidly growing economies in recent years. The following will help you determine whether registering a company in India is the optimum corporate structure to fulfill your international business objectives.
India company formation allows entrepreneurs to be legitimately tax-exempt for the first five years of operation of their company, and 50% tax-exempt for the next five years if the company is set up in one of India's Special Economic Zones.
India is a popular business outsourcing location due to the wide availability of low cost, English-speaking labour. 100% foreign ownership is permitted when completing company formation in India.
India company incorporation is challenging due to complex bureaucracy and regulations. According to the World Bank's Doing Business 2012 Survey, India ranks poorly at 132th for its ease in which to do business in. The survey measures factors including business start up procedures, time, cost and minimum capital required to start a business. In addition, India is negatively ranked as the world's 94th least corrupt country in the 2012 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.
A minimum paid up capital of INR100,000 (US$1,860) is required for India company formation. In the event that the company uses words such as India or Hindustan in its name, then the minimum paid up capital requirement will be INR 500,000 (US$9,300).
To complete company registration in India there must be a minimum of two shareholders and two directors. The directors and shareholders need not be resident in India. Corporate directors are not permitted and a public register is available, giving details of shareholders and directors.
Domestic corporations are subject to tax at a basic rate of 30% and a 2.5% surcharge. Foreign corporations have a basic tax rate of 40% and a 2% surcharge. In addition, an education cess at the rate of 3% on the tax payable is also charged. Corporates are subject to wealth tax at the rate of 1%, if their net wealth value exceeds INR 3 mn (US$55,860).
After completing India business registration, it is necessary to prepare and submit annual audited financial statements and file tax returns with the Indian government and tax authorities.
Indian companies are subject to foreign exchange controls. According to the Heritage Foundation's 2013 Index of Economic Freedom, India is ranked very poorly for having the world's 119th-freest economy, and scores at 55.2% in terms of investment freedom and capital flows. The survey is a measure of freedom enjoyed inb business, trade, monetary, financial, investment and labour markets.
To receive the best internet banking and customer service, Healy Consultants recommends using the services of international banks HSBC, Standard Chartered and Citibank for most corporate bank account solutions. Local banks can be used where appropriate for the India company.
Healy Consultants Compliance Team can open an international corporate bank account within 3-4 weeks of India company registration, and there is no need for the Client to travel to India to complete the process. Following bank account approval, the preferred bank will directly and independently email our Clients the corporate bank account number.
India-based banks will provide finance to locally-registered companies provided the following conditions are met i) good Business-plan ii) availability of security iii) experience of business owners iii) last 3 years audited financial statements iv) realistic feasibility study v) project strength and weaknesses analysis (SWOT).
To support their new business in India, Healy Consultants assists clients with trade finance tasks including i) bank guarantees ii) letters of credit iii) finance against trust receipt iv) document against payment and against acceptance.
Securing corporate finance in the form of a loan, overdraft or simply preferential credit terms are other corporate banking related aspects of doing business in India.
India banks provide the full range of corporate bank account facilities including multiple currencies, internet banking, telephone banking, checking accounts, savings accounts, debit and credit cards, fixed term deposits and wealth management services.
Government agencies play an important role in doing business in India, like all countries. All businesses deal with government agencies on a regular basis, and foreigners setting up a business in India should exercise restraint and be patient as much as possible as authorities will always have the final say in any matter.
As not all local India companies are well-versed with international trade, we encourage our Clients to consistently use and sign contracts of service with suppliers and counterparties.
Your joint venture partner or India shareholder must not merely be a nominee for the sake of meeting the rules of foreign company incorporation. You should choose a partner that actually brings a lot to the table, including knowledge which would help your company succeed in India.
When you're starting a new business it’s important to find out which of India's registrations and licenses apply to your Firm. This can be complex area, as different branches of the government will handle registration and licensing for various aspects of your business.
Healy Consultants offers a range of startup services to support company incorporation in India including obtaining corporate finance, accounting and taxation planning.
Most clients require an Indian virtual office for invoicing purposes, and Healy Consultants offers a range of tailored packages.
Entrepreneurs completing business registration in India can benefit from the Intellectual Property (IP) laws in India. Healy Consultants will assist our Clients with trademark and patent registration. Registering your brand, trademark and designs is particularly important in India. Note that brands and trademarks can only be registered in the name of Indian residents or Indian registered companies (see above).
Healy Consultants offers a comprehensive range of research services to support clients starting a business in India. These include: i) industrial or business analysis ii) economic and political overview iii) competitor analysis iv) customer analysis v) regulation analysis vi) market entry strategies vii) business partner matching.
Grants and other funding programs are available from the Indian government. There are grants and incentives available across a variety of industry categories, including developing your business, innovation and exporting. Healy Consultants assists our Clients locate the grants and assistance programs to help them take advantage of the business opportunities in India.