Regulatory provisions for doing business in India
Once it is determined that Foreign Direct Investment is permitted for the industry in which investment is proposed and investment would be as per Industrial Policy, some other approvals/clearances/registrations are required to actually start operations.
Approvals/clearances/registrations required from different authorities, depending upon nature of activities to be carried out. Some/all of following registrations / approval may be required:
For trading activity: Registration with Ministry of Corporate Affairs (for foreign companies and foreign Limited Liability Partnerships - LLPs), Income Tax, Shop and Establishment, Import-Export Code, Service Tax, Value Added Tax and Central Sales Tax, Profession Tax, Weights and Measures department for packaged commodities etc.
For manufacturing activity: Registration with Ministry of Corporate Affairs (for foreign companies and foreign Limited Liability Partnerships - LLPs), Income Tax, Shop and Establishment, Pollution Control Board, Chief Inspector of Factories, Electricity Board, Chief Controller of Explosives, Municipal Corporations - for factory building plans, Central Excise, Weights and Measures department for packaged commodities, Service Tax, Value Added Tax and Central Sales Tax, Profession Tax, for quality certification Regional Office of the Bureau of Indian Standards (BIS) etc.
Foreign companies and foreign nationals (whether resident in India or not) need permission of Reserve Bank for acquiring the whole or any part of any undertaking in India, of any person or company carrying on any trade, commerce or industry.
Foreign companies and foreign nationals (whether resident in India or not) are required to obtain permission of Reserve Bank for acting or accepting appointment as agent in India of any person or company in the trading or commercial transactions of such person or company.
The association of a foreign company or a foreign national as a partner in an existing partnership firm in India is deemed to be an acquisition of the undertaking in India by the foreign company/foreign national requiring approval of Reserve Bank.
Understanding legal compliance requirements which must be met once entry is effected, viz. corporate laws, labor laws, direct and indirect tax issues, etc.
Some of the labour laws, though all of these may/may not be applicable, are Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, Employees’ State Insurance Act, 1948, Workmen’s Compensation Act, 1923, Maternity Benefit Act, 1961, Payment of Gratuity Act, 1972, Factories Act, 1948, Dock Workers (Safety, Health & Welfare) Act, 1986, Mines Act, 1972, Minimum Wages Act, Payment of Bonus Act 1965, Contract Labour [Regulation & Abolition] Act 1970, Payment of Wages Act, 1936.
The government has softened its stand on the need for each investment to create jobs directly. Many companies — foreign and domestic — are bypassing the tough regulations by either subcontracting labor or through early retirement schemes.
Click here to know obligations of foreign companies under the Indian Companies Act.
Link to tax system in India.
To know the foreign exchange regulations in India for transactions in immovable property, click here.
Visit to India: Nothing like personally visiting India to get the taste and feel of it.
Foreign nationals (except citizens of Nepal and Bhutan) entering into India are required to carry a valid passport/travel documents and a valid visa. Visas for the purpose of tourism, entry, transit, conferences, business and employment in India re issued to foreign nationals by Indian Embassies and Consulates abroad.
A foreign national, holding a visa (other than a tourist visa) valid for a period exceeding 180 days, is required to be registered with the FRRO within 15 days of arrival in India. Change of purpose or type of visa is a not permitted. Further, visa other than employment, student and entry are normally not considered for extension.
Link to the Foreigners Regional Registration Office (FRRO).
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