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Blog
How to Setup Business in India
FROM RED TAPE TO RED CARPET: NOW SET YOUR BUSINESS IN INDIA HASSLE-FREE
India is an attractive place to do business. India is considered an ideal location in an emerging market with ample potential to gain value without sacrificing quality, attracting large multinationals from around the world looking for low-cost and viable solutions to start their business in India.
With a GDP growth rate of 9.2% in 2021-22 and a population of more than 140 crores in 2022, India’s economy is one of the fastest growing in the world. According to data, India has now become one of the world’s strongest and most competitive economies. This makes it a popular option for funding.
Everybody wants to sell in India? How to enter in attractive Indian Markets?
- Foreign entities can enter Indian Markets by investing in an Indian Company’s equity which may go up to 100% subject to certain capital restrictions under the Foreign Direct Investment (FDI) Policy.
- Foreign entities can also enter Indian Markets by way of joint venture with an Indian Company like Singapore Airlines made a Joint Venture Indian Company Sons to form Vistara, to penetrate Indian Markets.
- For Foreign Companies who want to test the Indian Market beforehand, India offers some economical and hassle-free options:
- Liaison Office/Representative Office: The Liaison Office acts as a link between the Foreign Entity and the Indian Entity only for representation, facilitation and communication purposes between the two.
- Project Offices: Foreign organizations may establish temporary project/site offices in India to initiate specific initiatives. Such project offices may only carry out activities in relation to the specific project.
- Branch: A foreign company that needs a physical presence to conduct business and wants to conduct all trading activities just like its foreign office in Indian locations too, then the foreign company may resort to opening up branches in India.
You may face the following issues while setting up business in India:
- What Structure of Business or Constitution of Business you should choose?
A group of friends decide to venture into trading of consumer goods. They decide ‘Let’s incorporate a company’ – This may be the Wrong Choice. Read below to understand.
When starting a business, it is very important to decide which business structure is ideal for your business model and industry. Every structure entails certain legal, financial, and operational implications including applicability of taxes, laws and compliances. Every industry has a preferability towards certain structure/constitution of business. For example, professionals prefer to form ‘Partnerships/LLPs’ instead of ;’Companies’ to take advantage of flexibility, quick decision making, and ease of maintenance.
Similarly, every business being set-up in India shall be analysed for the structure/constitution ideal for it, before setting up.
- Do you need Registrations and Licenses?
Every business being set-up in India has to ensure taking mandatory registrations and licenses applicable as per various Indian Laws. These licenses may vary from state to state or industry to industry. For example, a new business may have to register under GST, Shops and Establishment Act or may need to obtain FSSAI license, Import and Export Code, etc.
- What changes are required in Business Model to make it effective in Indian Markets?
A company based in USA wants to expand into Indian Markets by setting up retail stores in every metropolitan and plans to penetrate markets by offering huge discounts in the beginning and then weaning off eventually. However, Indian Markets have a tendency to only respond to new brands till the discounts are in place. Thus, the US company may have to rethink their marketing plans as per Indian Market tendencies.
- Are FDI Restrictions applicable on your business?
The Government of India has implemented a liberal FDI Policy allowing 100% Foreign Direct Investment in most sectors to make India an attractive investment destination. However, the company has to ensure adherence to conditions of the policy and completion of compliances applicable. Thus, every new business by foreign companies or investors have to ensure that their business model or investment strategy is not violating the provisions of the FDI Policy.
- Issues in cross border transactions?
Making a remittance to or from India activates multiple tax laws including Double Taxation Avoidance Agreements (DTAAs) that India has signed with the respective countries. Similarly, signing or contemplating an agreement with an Indian entity also entails applicability of various legal and taxation provisions.
How at Master Brains we can simplify setting-up of business in India for you?
Master Brains is a Delhi-based consulting firm that provides a variety of financial, tax, and legal services. We have empaneled professionals from all over the country. We connect these professionals with businesses according to project specifications. We serve as a one-stop shop for professionals. Our consultants are India’s leading experts who can facilitate you at every step of starting a business in India:
- Our consultants can analyse your draft business model/plan to advice on the taxation provisions and company compliances applicable in the country.
- Our consultants will suggest the best constitution to enter Indian Market as explained above as per the needs of the foreign entity as well as the business model and its future plans.
- Our consultants are experts at analysing cross-border transactions transactions which are to be undertaken for entering into Indian Markets. Our experts will streamline it for you by tax planning measures and suggesting business model modifications keeping in mind Indian Markets.
- Our consultants are also experts in drafting and reviewing the agreements/contract to be entered between the Foreign Entity and Indian Entity for any hidden provisions, tax implications, or legal loopholes.
- Our consultants will of course assist you in setting up your business in India in respect of Incorporation of company, applicability of FDI restrictions, etc. making us a complete solution provider.
- Our consultants practice in taxation of various countries and can provide a complete 360 degree analysis of the taxes and tax rates applicable to your business model in any country and the privileges and benefits available to your business model in that country.
Get in touch with us today at +91-8595867402 and walk the red carpet laid-out by Master Brains and set up your business in India.
Team Master Brains
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