Start business in india
Posted: Mar 06, 2017
Ever since India embarked on the path of capitalism - opening its door to global trade, staring business in India has only become easier. From the abolition of license raj to the concept of single window clearance, India has seen it all. There was a time when getting a phone connection took one year in waiting, and only a recommendation from a Member of Parliament could speed up the process. However, things have changed dramatically!
There are many options for starting a business in India. One can incorporate a private limited company, form a partnership firm, a limited liability Partnership firm (LLP) or simply start out as a sole proprietor. Foreign investors also have the option to set up a branch office, liaison office or project office in India, besides a wholly owned subsidiary or joint venture company. While a branch or liaison office is established to undertake general business activities, a project office is started to undertake a specific project in India, like construction of roads or building a bridge. The same is closed after completion of project.
While the above are a few available options to start a business in India, one would have to adhere to relevant legislations as applicable.
- Companies Act, 2013: the Indian Companies Act, 2013 is the master legislation that governs an incorporated entity. Whether you’re Indian citizen, wanting to incorporate in India or a foreign national, looking to enter India, you will be governed by the said legislation, if you start a business as an incorporated company.
- Indian Partnership Act: the Indian Partnership Act governs partnership firms in India. The said legislation, inter alia, outlines the rights, liabilities and duties of partners, both among each other and towards third parties.
- Foreign Exchange Management Act and relevant Reserve Bank of India regulations: the Reserve Bank of India (RBI), from time to time, notifies regulations regarding doing business in India. Such regulations include flow of money to and from India, banking regulations and rules regarding setting up liaison, branch or project office.
- Limited Liability Partnership Act: the LLP Act governs regulations with respect to formation of limited liability partnership firms. A limited liability partnership firm is similar to a partnership firm except that the liability of partners is limited to their contribution in the firm. The said regulation applies uniformly to Indian citizens, a well as foreign nationals, wanting to set up such an entity in India.
- Income Tax Act: while the Income Tax Act is the master legislation as far as taxation of entities is concerned, there are a number of other indirect tax related legislations that need to be complied with, before starting a business in India.
- The India Contract Act: the said legislation governs the manner in which execution and enforcement of contracts shall happen.
Besides the above, there are regulations with respect to employees and workmen, foreign direct investment (FDI), Securities and Exchange Board of India (SEBI) regulations for listed companies, food and drug rules for companies in pharmaceutical and food manufacturing business.
As a precaution, whether you are an Indian entrepreneur wanting to start business in India or a foreign national wanting to enter India, it’s advisable that you consult an attorney before starting out.
Charles Silver is a writer and working in this field from the last seven years. He writes for a wide variety of websites