Success tips when doing business in India in 2022
When doing business in India, there are several points about settling and conducting a business in India that our client should be aware of:
- India is one of the most diverse countries in the world. It is pointless to have generalizations while doing business since everyone comes from a different culture and background;
- Meetings can get informal at times. Also, punctuality is an issue with many Indians. Do not expect everything to start right on time;
- The educated class in India speak English well and Indians are usually good communicators.
- There are a lot of public holidays in India. Before travelling to India for business, it is important to check the calendar.
- India is a socialist country with a bureaucratic government. Consequently, you should expect business processes to take longer than usual;
- Although Mumbai is India’s financial capital, Delhi is the place where major business transactions happen. Also, Delhi is a better planned city with a good infrastructure unlike other Indian cities.
Interesting facts about India
- India has the world’s sixth largest economy of over US$2.45 by nominal GDP.
- India’s major import partner is China while its major export partner is the USA. Some of the main imports are crude oil, gold and precious stones while its main exports include software, petrochemicals and agricultural products;
- India is home to over 15,000+ multi-millionaires yet a vast number of the population live under the poverty line;
- India is the world’s largest democracy, with 1.2 billion people;
- The population of India is the second largest in the world, currently at 1.21 billion making it about one sixth of the world’s population;
- Based on 2017 Global Services Location Index, India is the best country for outsourcing activities. Half of the world’s outsourced IT services are provided by India.
Frequently asked questions
How many directors are required for forming a business in India?Only 2 directors are required when registering a company in India.
Is it mandatory to have a resident director or shareholder for Company Registration in India?Yes. Under the India Companies Act, every business must have at least 1 resident director. As India company registration agents, Healy Consultants will provide our Clients with this nominee resident director service for US$4,600.
How many shareholders are required for registering a company in India?A minimum of 2 shareholders will be required for business registration in India.
How to register a business in India?For business registration, our Client will be required to i) reserve the company name ii) supply the India office lease agreement iii) sign the company setup forms iv) register for tax and social security and v) obtain a business license.Healy Consultants’ experts are India company registration specialists and will assist our Clients at every step.
Why must a company be registered in India?
What documents are required for company formation in India?The following is the company formation checklist for India:
- Notarized passport copies and proof of address for all directors and shareholders;
- Passport pictures of all directors and shareholders;
- Forms DIN-3 and DIR-4 for DIN application;
- Forms INC-29, INC-1 and MOA & AOA for name reservation and company incorporation;
- Form 49A for PAN;
- Form 49-B for TAN;
- Forms VAT-1 for VAT registration;
- All forms are available for download at the Ministry of Corporate Affairs website.
The above is a preliminary list of documents. Depending on the nature of business, it might vary.
Can foreigners be the director of an Indian company?
How to form a group of companies in India?The most popular form of business entity among foreign investors in India is the Private Limited Company (PLC), to form a subsidiary, a joint venture or a 100% owned company. Visit our Incorporation Steps page to know the procedure for registering a company in India.
How to register private finance company in India?A private finance company in India can be registered as a Non-Banking Financial Company (NBFCs)-Micro Finance Institutions (MFIs). The following steps are to be followed to register the same.
- The MFI can be registered either as a private limited company or a public limited company;
- Initially a company could be registered with US$1388 capital;
- Raise the authorised and paid-up capital to US$292,670;
- A Certificate of Registration must be obtained from the Reserve Bank of India (RBI). The list of documents to seek the certificate has been outlined in the RBI website.
Is GST registration mandatory for new businesses?Yes, GST registration is mandatory for all new businesses in India. However, there are several cases in which businesses get exemptions from GST registrations, such as below:
- For e-commerce service providers whose annual turnovers are less than US$27,611;
- For inter-state service providers whose annual turnovers are less than US$27,611;
- For inter-state supply services provided by job workers whose annual turnovers are less than US$27,611.
Do I need to have an office space to incorporate a company in India?No, according to Companies Act1956/2013, every company looking for registration in India needs to have registered office to which all official correspondences can be sent by the government departments. There is no need for an actual physical office space. A residential address can also be rented and used as a registered office.
What do these abbreviations stand for – ROC, PAN, TAN, TDS, DSC, DIN, MOA, AOA?The following are the full-forms of the abbreviations:
- ROC: Registrar of Companies are those companies that are responsible for registering companies and LLPs and making sure that they follow the statutory requirements under the Company Act;
- PAN: Permanent Account Number is a ten-digit alphanumeric number, allotted by the Income Tax Department to the person applying for it;
- TAN: Tax deduction and collection Account Number must be collected by all those individuals who are responsible for deducting tax at source or who must accumulate tax at source;
- TDS: Tax Deducted at Source is based on the idea that a person (deductor) who is liable to make a payment to any other person (deductee) shall remove tax at the source and transfer the same into the account of the Central Government;
- DSC: Digital Signature Certificate are merely physical or paper certificates in electronic format;
- DIN: Director Identification Number must be obtained by all the directors of existing and intending companies in India;
- MOA: Memorandum of Association is basically the charter of the company that is prepared during the process of founding and registering an LLC;
- AOA: Articles of Association is a legal document defining the responsibilities of the directors, the nature of business to be carried out, and the means through which shareholders could exert control on the board of directors.
What is the difference between OPC LLC and a normal LLC?Although there are no major differences between an OPC LLC and a normal LLC. An OPC LLC is essentially a sole proprietorship which offers limited liability to its sole shareholder. Below is a small table of comparison. You can contact us for a complete description of the same.
FEATURES OPC LLC NORMAL LLC Cost to register Lower Higher NRIs or Foreign Nationals Cannot participate Can participate Board of Directors Does not exist Minimum of 2 required Shareholders 100% of shares can only be held by one person Minimum of 2 required; Maximum of 200
Is it possible to register a company in one city and later change to another location?The Registrar of Companies (ROCs) under the Ministry of Corporate Affairs (MCA) are responsible for registering all companies and LLPs in all the states and union territories of India.
It is possible to register a company in one city and later change to another location. The following scenarios might arise and the necessary procedures to be taken have been outlined below:
- Change of Registered Office with a different ROC but in the same State
- Apply for the approval from Regional Director in accordance to the outlines of Form INC-23;
- Once the RD confirms the change, the company must file the same confirmation with the ROC in less than 60 days;
- Within 30 days of receiving the change, the ROC would send its confirmation.
- Change of Registered Office to another State
- A special resolution must be passed by the company to amend the MOA;
- This resolution must be filed in form INC-23 to seek the approval of the Central Government;
- The Central Government would verify that the change is being consented by the creditors, debenture holders, etc. of the company;
- Within 60 days of the application, the Central Government shall pass its judgement;
- The approval given by the centre would be filed by the ROCs of both the states;
- The ROC of the state in which the office has been relocated shall register the company and issue a new certificate of incorporation.
- Change of Registered Office with a different ROC but in the same State
Is there any procedure to follow when choosing a company name?According to the Ministry of Corporate Affairs (MCA) guidelines, the Client is required to provide 6 different company name options to ensure approval of their private limited company in India. Following is the procedure to follow whilst choosing a company name:
- As per the provisions of the Companies Rules 2011, no company should be registered with an undesirable name. A company name shall be undesirable if it is identical or resembles the name of i) an existing company or ii) a registered trademark or a potential trademark application for registration;
- The name should be original, simple, and preferably not have any form of intended puns;
- The client should check on the search facilities provided on the portal of the Ministry of Corporate Affairs (MCA) that their proposed company name does not resemble with the existing names approved by the MCA;
- After the name search checks, the Client should apply for the company name by filling the e-form 1A using a Digital Signature Certificate;
- Thereafter, if the name of the given company is approved then it would be made available to our Client and would be reserved for sixty days from the date of approval. The reservation period can be further extended to thirty more days with a revalidation application and fees;
- Our Client should incorporate the proposed company within the reservation period. Otherwise, the proposed company name shall be lapsed.
You can read the MCA’s Company Rules, 2011 page for a detailed insight regarding the entire procedure.
If the owner of the company would want to also trademark the name, the following steps should be followed:
- A trademark search should be carried out to check whether the Business name or logo is currently being used by an existing company;
- Draft a trademark registration application given that the business name/logo has been found out as unique in the previous step;
- Register the trademark by paying the registration fees.