India ranks quite high on the ladder when it comes to economic growth and human resource. Besides that, a considerably large youth population along with prominent industrial structures help create a favourable environment to bring foreign capital. Thus, the opportunities for foreigners to set up business in India increased. Here, we’ll discuss the possible options for foreigners setting up business in India. Read on.
Entry Strategy To Start Business In India
There are mainly two effective strategies by any foreigner can start their business in India.
- Incorporating A Private Limited Company
It is one of the easiest, fastest, and most effective ways to start a business in India for any foreign individuals and companies. Under the direct route, any foreigner can invest up to 100% in any private or public company in India. Most importantly, the individual doesn’t need to take any permission from the central government. Therefore, incorporation of a private company as a joint company or a wholly-owned subsidiary of a foreign company is the most-popular entry strategy for foreign companies and individuals to start their business in India.
- Registration Of A Branch Office, Project Office, Or Liaison Office
Registration of a branch office, project office, or liaison office requires approval from RBI or the government. However, in case you don’t know, the cost of registering a branch office, liaison office, or project office is comparatively higher than an incorporation of a private or public company. But the main problem is that only foreign companies are allowed to register a project office, liaison office, and branch office. Hence, with this strategy, foreign individuals cannot enter India and start their businesses.
Requirement Criteria To Establish A Foreign Company In India
To start an ecommerce business formation in India, a company need to have a permanent address and two individuals. In addition, a private limited company should have a minimum of two shareholders and a minimum of two directors. Moreover, the incorporation of any company in India has various rules, like the director of the company should be an Indian Citizen and Indian resident.
Remember, any individual who has stayed in India for 186 days or more is considered an Indian citizen. The most popular legal entity structure of all incorporated private companies in India is to develop a business with three directors. Here, two individuals will of foreign nationals and another individual will be an Indian Citizen.
Document Required To Register A Company
For company registration, all foreign individuals who are the directors of a particular company need to submit a copy of their passport and other address proofs like a bank statement, driver’s license, etc. Remember, all the copies of the original documents should be notarized by the home country or by the Indian Embassy in the country of the foreign director.
There are mainly two possible options for a foreigner to set up their business in India. But since the second one is only applicable to foreign companies, incorporation of a private company is the best option. However, if you want to learn more about NRI taxation rules, make sure to read this blog.