India is one of the world’s fastest-growing economies, with enormous human potential and a market of over 1.2 billion people. Opportunities in India with chartered accountant firms have drawn a substantial amount of Foreign Direct Investment into the nation, and the amount of FDI inflow continues to rise each year as more and more foreign companies establish operations in India. This page explains to international businesses how to establish a company in India.
Entry Strategy for Foreign Businesses in India
Registration of a company and establishment of a branch/liaison office are the two primary entrance strategies for international enterprises in India.
Foreign direct investment of up to 100 per cent in a private limited or public limited firm falls under the automatic method, for which no authorization from the Central Government is necessary. Therefore, establishing a private limited company as a wholly-owned subsidiary of a foreign firm or joint venture is the cheapest, simplest, and quickest entrance method for foreign firms and persons entering India.
Branch Office, Liaison Office, and Project Office registration need RBI and government permission. Therefore, the cost and time involved with registering a foreign business’s branch, liaison, or project office are more than those connected with incorporating a limited liability company. In addition, foreign nationals are not permitted to establish a branch office, liaison office, or project office. Therefore, this option is confined to foreign enterprises as an India entrance strategy.
Prerequisites for Establishing a Business in India
A minimum of two directors out of which one should be a Indian Resident and an Indian address are required to establish a business in India. According to best ca firms in Pune, a private limited company in India must have a minimum of two directors and two shareholders.
The ideal legal entity structure for international corporations is to form a company with three Directors, including two foreign nationals from the parent company and one Indian native. Since there are no minimum shareholding limitations with the Indian Director, foreign nationals or corporations may control 100% of the Indian Company’s shares.
A physical location in India must function as the company’s registered office. The location of the firm’s registered office address will also define the legal jurisdiction applicable to the company. Most international corporations establish their registered offices in India’s main metropolitan areas, such as Delhi, Mumbai, Bangalore, Hyderabad, and Chennai.
Documents Required for Indian Company Registration
Foreign nationals serving as Directors of the Firm must present a copy of their passport and address proof to register the company. A Notary must notarize the copy of the original papers in the Director’s home country or the Indian Embassy in the Director’s country.
If a corporation becomes a shareholder in an Indian business, the Board Resolution of the foreign firm allowing investment in the Indian company is also necessary. Attach the Board Resolution with the notification copy to the foreign entity’s certificate of incorporation.
During the incorporation procedure, the presence of any foreign Directors in India is not required. Therefore, foreigners may create and maintain a company in India without visiting.
Cost of Company Registration in India
Costs associated with establishing a company in India are pretty low. Registering a corporation in India might take a few weeks, making it an easy area to develop a business.
After the business is registered in India, the Indian Director may assist in opening a bank account for the firm in India. After opening the bank account, the Company must file FDI reports with the Reserve Bank of India. In India, reporting FDI inflows into a firm is straightforward and may be completed quickly by a legal or accounting specialist. Completing the FDI reporting will guarantee that the firm complies with all requirements in India and is operationally ready.