India is an emerging market since it is the world’s biggest and fastest growing economies in the world. According to the latest reports, India has an immense potential to become the third largest economy in the world in the coming 30 years. The newly launched policies of the government have stirred a spark of interest among the overseas stakeholders and domestic companies. The foreign company considers India an ideal market and rush to expand their business by Manufacturing plant set up in India or opting for Distribution Partnership in India. Any office of a foreign company opened has to go through the process of Regulatory compliance in India.
How to set up a business in India?
Foreign companies can commence business in India in the following manner-
As an India Company:
- A foreign company can choose the medium of a joint venture in a private limited or a limited public format.
- Foreign companies can make 100 percent Foreign Direct Investments (FDI) in the permissible sectors of Indian markets to opt for wholly owned subsidiary market entry strategy.
As a foreign Company:
- A Liaison Office can be opened in India as a representation of the parent company
- A branch office can be opened to carry out research, consultancy, export, and import of goods and services
- Project office can be opened to carry out business operations on a contractual basis
Foreign companies cannot establish their Manufacturing plant set up in India. Global companies have to shift their manufacturing burden to Indian companies as they are regulated to perform any manufacturing activities on their own.
What is Distribution Partnership in India?
Distribution Partnership in India is the expansion of the global distribution network which further manages and promotes the thriving international growth of the foreign company in India. Global companies can also opt of LLP market entry strategy. Limited Liability Partnership (LLP) is an example of a Distribution Partnership in India. Under LLP, the entire company partner (incoherence to their jurisdiction) has limited liabilities on them. In an LLP form of Distribution Partnership in India, no individual partner is responsible for the misconduct of another partner. LLP exhibits various elements of corporations and partnership. A few features of LLP are:
- In compliance with the provisions of the LLP act of 2008
- The government allows 100 percent FDI in LLPs operating in sectors
- No FDI-linked performance regulations
Regulatory compliance in India:
Global companies have to follow the legislation and rules laid by the government of India to establish an enterprise in India. It is essential to understand the legal, pre-entrance precaution measures, governmental policies, and the Regulatory compliances in India to establish smooth business operations. In India, a new company set up is not under government jurisdiction; the companies need to hire a charted accountant (CA). The role of CA is to manage all the regulatory, compliance and statutory matters. Once the company or LLP is registered, there are few mandates required to be taken care of, such as:
- Direct taxes
- Transfer pricing
- Indirect taxes
- Special Valuation Branch (SVB) liaising and license approval
- Corporate and secretarial functions
- Immigration services and auditing
- Compliance framework and advisory
- Support, manage and process work permits
- Social security program management
- Tax advisory
- Compensation and assignment restructuring
References:
https://www.midcindia.org/steps-to-setup-business-in-india
https://smallb.sidbi.in/%20/policies-regulations/guidelines-procedures-starting-new-business-india
http://www.cci.in/insights/business-guides/regulatory-compliance-in-india
http://business.gov.in/legal_aspects/keyregulation.php
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