India is one of the most attractive destination among the foreign companies and foreigners because of various factors. First being it’s population, India is the second country in terms of population on earth after China. The second factor being its location and talented citizen which are ready to be hired by these foreign companies.
Now we will tell you about some of the ways so that the company can enter into Indian market without any hazel.
An Overview to types of ways to enter into Indian market
1) Incorporation of private limited company or a limited company
It is easiest way to enter into Indian market without any interruption from the government. A 100% of investment in a enterprise can be made by a foreign company or any foreign citizen if he wishes without any interruption from the government of India. Therefore this method is the easiest method for entry in the Indian market. But their are still some industries where the prior approval of the government is required.
The industries are namely:
1) Company dealing in Defence and strategic industries
2) Company dealing in Print and Broadcasting industries
3) Asset reconstruction companies
4) Company dealing in the establishment and operation of satellite
5) Company dealing in atomic minerals
6) Companies dealing in petroleum sector, (excluding private sector company dealing in oil refining) Natural gas/ LNG pipelines.
7) Companies dealing in postal and courier service.
8) Companies dealing in infrastructure
9) Companies dealing in Tea sector
10) Companies dealing in Development of integrated township
2) Incorporation of limited liability partnership
Limited liability partnership is a new concept in India and this requires prior approval from the government to enter into Indian market. it is hence not recommended as it requires prior approval of the government.
3) Proprietorship Firms or Partnership Firms
This method is the most common used for the small and unorganized players in the market. Investing in this type requires prior RBI approval.
The option in the case of entry of foreign players in Indian market is very much limited as the only feasible option is by investing in an limited company.
Steps for Incorporation of Private Limited Companies for Foreigners.
Framework of the company
A minimum number of members is prescribed for a private limited company as-
Two shareholders and two director.
Whereas the shareholder can be a person or a Corporate entity. But a director needs to be a person. A foreign citizen is also allowed to be a director in the company. But one of the directors in the company must be an Indian citizen and must be residing in India. One person in a company cannot hold all the shares as a minimum of two person are mandatory for a private limited company.
During the process of incorporation a digital signature is required for filling the documents for Incorporation of the directors.
Information required while obtaining the digital signature of the foreign citizen
1) A foreign citizen living in its native country
- Whether the native country is signatory of the Hague Convention
An identity proof along with address proof and a photo on DCS application given to the public notary of a foreign country and to be dealt with the concerned Authority.
- If the country of origin is not a signatory of the Hague Convention
An identity entity along with an address proof and a photo on DCS application given to the public notary of a foreign country and to be dealt with the concerned Authority.
Additional documents required are :
Passport, Application and a photo to be attested.
2) Foreign citizen currently living in India
The following documents are required and certified by Individual’s embassy
- Resident permit certificate
- Application form with attested photo
3) Foreign citizen neither in its native country nor in India
Following documents are required and to be given to the local embassy to the country he belongs
- Application form with attested photo
The director has to apply for the Director Identification number(DIN) and it is mandatory for one to become a director of a company one must have a DIN as stated in section153 of the companies act , 2013. After the DIN number is obtained a name approval for the company can be made before the registrar.
After the name of the company is approved the company has to file for the Incorporation documents with the ministry of Corporate affairs. The said documents will include declaration, affidavit from the director’s, memorandum of association, and article of associationwith subscriber sheets and address proof of the registered office.
Each director shall have an its own affidavit and declaration
The shareholders will show their interest in becoming a shareholder by subscribing to the memorandum of association (MOU) and Articles of association (AOU) .
- If the MOU and AOU Subscriber sheet is signed by foreign nationals in India than
The signature has to be verified by the public notary of the country he is a resident to or by the embassy officers.
A business visa has to be attached
- If the MOU and AOU Subscriber sheet is signed by a foreigner residing outside the territory of India than
The country status will be checked according to the convention
- If the country in which the director resides is from the commonwealth nation than
A signature of the director along with identity and address proof must be submitted to the notary of the commonwealth
- If the country in which the director resides is a signatory of the Hague Apostille Convention than
A signature of the director along with identity and address proof must be submitted to the notary of the country with regard to the provisions of the convention.
- If the country is neither a commonwealth nor a signatory to Hague Apostille Convention than
A signature of the director along with identity and address proof must be submitted to the notary of the country. And the certificate issued by the notary must be checked and authenticated by a Deplomatic or consular officer.
If the Indian company is subscribed by a foreign company than the following documents are required
- The the resolution of the board of the foreign company in favour of such subscription
- Address proof
- Certificate of incorporation of the foreign company
After the submission of above said documents the registrar have to issue the Certificate of incorporation of the private limited company subjected to proper filling of papers
After the incorporation of the company the Directors can apply for the PAN number for the company and then can open a bank account in the company name.