India Entry Strategy
India Entry Strategy, With the rollout of the ongoing Union Budget, India has now permitted 100 per cent FDI (foreign direct investment) in single-brand retailing to help fuel the growth opportunities for both foreign retailers as well as the domestic market.
The following options may be considered by a foreign business looking to set up its operations in India:
Wholly-owned subsidiary company
To carry out its activities, an international company may set up a wholly-owned subsidiary in India. Such a company is treated as an Indian resident despite having a foreign shareholding of 100 per cent. A private limited company wants a minimum of two members, and a public limited company requires a minimum of seven members. Such an enterprise must comply with the FDI policy provisions.
Joint venture with an Indian partner (equity participation)
Foreign companies can also form strategic alliances to conduct business operations in India with Indian partners. Such an organization must also comply with the FDI Policy provisions.
Limited liability partnership (LLP)
In India, LLP is a new type of business structure. This blends a company’s independent legal status & permanent succession character with a partnership firm’s operational versatility. At least two partners need to form an LLP, and they have limited liability in the business.
|Pre Incorporation||Incorporation||Post Incorporation|
|Drafting of Shareholder Agreement (not mandatory but suggestive)||Drafting Memorandum of Association (MOA) & Article of Association (AOA) – Constitutional Documents||Opening a bank account|
|Regulatory Approval if required (varies with the sector)||Power of Attorney to filling the MOA and AOA||Allotment of shares|
|Obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC)||Certificate of Registration||Income Tax Registration|
|Identification & Reservation of Name||Public Company is required to obtain a Certificate of Commence of business||Import Export Code|
|Sales Tax Registration|
|Central Excise Registration|
Overview of Establishing up a Company in India
Procedure to establish up a company in India Entry Strategy
The most common business form in India is a limited liability company, commonly referred to as a corporation. A company’s shares restrict the liability of the investor to the sum of its investment (including any undisclosed amounts) in the Company’s shares. Nonetheless, the final structure decision is based on commercial and tax considerations.
The scheme and scope of our services for introducing up a company are explained hereafter:
Proposed Name of Company
To hold the available name, the applicant provides:
- Proposed “Main Object” of the Company;
- 1 to 6 proposed names in order of preference;
- Details of a minimum of two Promoters (first subscribers);
- Details of the minimum of two Directors.
Once the name has been accepted, it will be held for 60 days. Upon acceptance of the proposed name, the new Company could be incorporated immediately.
First Director(s) and Subscriber(s)
A minimum of two (2) managers and two (2) subscribers (for a private limited company) and three (3) managers and seven (7) subscribers (for a public limited company) are required for each Company.
Director Identification Number (DIN)
Each of the recommended directors is required to obtain a DIN.
- Proof of identity & proof of residency is required.
- Attestation: All helping documents need to be attested by various institutions and officers
- A prescribed setup duly signed by the applicant is also required.
Digital Signature Certificate (DSC)
The Digital Signature Certificate (DSC) is required to digitally validate the documents that are sent to the Company Registrar (ROC) during the lifetime of the Company, and sometimes even the tax authorities. At least one company director must have a DSC.
Memorandum & Article of Association
The Association Memorandum (MOA) and Association Articles (AOA) are a company’s legal documents.
The MOA contains six crucial requirements about the Company, among other things:
- Name of the Company
- Registered Office
- Liability Condition (Limited or Unlimited Liability of the members of the Company)
- Objects (primary and ancillary objectives of the Company)
- Capital clause (Authorized Capital of the Company)
- Association Clause (The subscribers’ details)
The Association Article (AOA) sets out the Company’s necessary working procedures and regulations, through which it also requires the Company and its members to follow these rules. The members of the Company shall not infringe these Articles. Nor can any AOA provision circumvent the context defined in the Association Memorandum (MOA).
Every organization must have a registered office from the date of incorporation (and subsequently) to which all correspondence and notices would be sent and which must be available and publicly accessible.
The Company’s registered office is within India and a place to send and receive all corporate communications on all days.
All Statutory records are needed to be kept at the registered office of the Company.
Once the legal documents have been accepted by the company registrar and a registration certificate has been issued, a private company may begin business activities. In addition to the said registration certificate, a Public Company is required to obtain a company start-up certificate from the Company Registrar before starting a business.
The smallest paid-up capital for a private limited company (Pvt. Ltd.) is INR 100,000 and for a public company is INR 500,000.
After the Company is organized, there are other compliances which are required to be undertaken, such as:
- Opening a Bank Account
- Maintenance of the rightful books along with the Minutes
- Allotment of shares
- book of the Company’s Meetings
- Register of Members to be maintained
- Support of the financial books of Accounts
- Filing of annual accounts and returns with the Income-tax authorities and with the Registrar of companies.
- Holding the Annual General Meeting (AGM)
Following are the necessary statutory registrations required to be obtained:
- Income Tax Registration
- Import Export Code
- Sales Tax Registration
- Central Excise Registration
- Service Tax Registration
FAQ India Entry Strategy
How do you write the market entry strategy?
Here are six steps you can pursue to build a winning market entry strategy and start exporting into previously unknown territory.
How can I enter the Indian market?
Five tips for a better Indian market entry strategy
1. Find the right partner.
2. Localize your products to join consumer needs and preferences.
3. Remember the high level of price sensitivity.
4. Enter the Indian market for the long-term increase, not to make a quick buck.
5. Prepare to navigate a much various legal and regulatory landscape.
What are the business laws in India?
Passed in 1926, the Trade Unions Act distributes with the registration, liabilities, rights, and responsibilities of trade unions. The Industrial Disputes Act of 1946 regulates trade unions and matters among industrial employers and employees. Business laws in India include customer protection.
How can a foreign company enter India?
A foreign company can set up its activities in India by getting into a joint endeavour with an Indian organization or wholly-owned subsidiary in sectors where 100% foreign direct investment. FDI is not permitted in a specific industry such as real estate, lottery, gambling, atomic energy, etc.
The following strategies are the main entry choices open to you.
· Direct Exporting. Direct exporting is selling directly into the market you have chosen using in the first instance you own resources. …
· Joint Ventures.
· Buying a Company.
· Turnkey Projects.