SEMINAR ON“GUIDANCE FOR DOING BUSINESS WITH INDIA”

PRESENTED BY:

Mr. Som MandalManaging Partner, Fox Mandal

FOX MANDALOUR OFFICES

In India:

New Delhi, Noida, Bangalore, Bhubaneswar, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and Pune with associate offices at Cochi, Trivandrum

In Other Countries:

United Kingdom (London), France (Paris), Guinea (Conakry) and Bangladesh (Dhaka)

SETTING UP OF COMPANY IN INDIA

Foreign Company

Operates as a foreign company

Liaison Office (cannot earn

income)Branch office

(can earn profits/revenue

s)Project Office

(can earn profits/revenue

s)

Established as Indian Company

Joint Venture

Wholly Owned Subsidiary

TYPES OF COMPANY

COMPANIES

PRIVATE COMPANIES PUBLIC COMPANIES

REQUIREMENTS OF A PRIVATE COMPANY

PRIVATE COMPANY

SHARE-HOLDERSMinimum: 2

Maximum: 200

MINIMUM PAID-UP CAPITAL:

INR 1 LAKHSDIRECTORS:Minimum: 2

Maximum: 12

REQUIREMENTS OF PUBLIC COMPANY

PUBLIC COMPANY

SHARE-HOLDERSMinimum: 7

Maximum: No LimitMINIMUM PAID-UP :

INR 5 LAKHSDIRECTORSMinimum: 3

Maximum: 12

ADVANTAGES OF JOINT VENTURES

Benefits of Joint Ventures Shorten the Learning Curve

Enhance Company Credibility

Create New Profit Channels

Pooling of resources

Access to new markets

Limited Period

Concentration on core business

STEPS TO ENTER A JOINT VENTURE AGREEMENT

Screening of prospective partners Ascertaining each others’ strengths and weakness and

how the combination can be beneficial for all parties Joint development of a detailed business plan

Undertaking detailed due diligence by each party - checking the credentials of the other party

Entering into detailed Joint Venture Agreement 

WHOLLY OWNED SUBSIDIARY

Wholly owned subsidiary is an incorporated company formed and registered under the Companies Act, 1956 or Companies Act, 2013.

Wholly owned subsidiaries can be formed as either private companies or public companies. Generally wholly owned subsidiaries are preferred to be formed as private companies because certain exemptions are granted to private companies under the Companies Act.

LIAISON OFFICELiaison Office can undertake only liaison activities. It is not allowed to undertake any business activity in India. A body corporate incorporated outside India, desirous of opening a Liaison Office in India is required to obtain permission from the Reserve Bank of India. Set forth below are the specific activities that can be undertaken by a Liaison Office: Representing in India the parent company / group

companies. Promoting export / import from India. Promoting technical/ financial collaborations between

parent/ group companies and companies in India. Acting as a communication channel between the parent

company and Indian companies.

BRANCH OFFICECompanies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank of India. Such Branch Offices are permitted to represent the parent/ group companies and can undertake the following activities in India:

Export/ Import of goods. Rendering professional or consultancy services. Carrying out research work, in areas in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and

parent or overseas group company. Representing the parent company in India and acting as buying / selling agent

in India. Rendering services in information technology and development of software in

India. Rendering technical support to the products sup plied by parent/group

companies. Foreign airline / shipping company.

BRANCH OFFICE Cont… Branch Office should be engaged in the activities in which the

parent company is engaged. The profits earned by the branch office are freely remittable

from India, subject to payment of applicable taxes. Branch Office is not allowed to carry out manufacturing or

processing activities in India, directly or indirectly. Further, it is not permitted to undertake any retail trading activities.

Typical terms of approval for establishing Branch Office Not to expand its activities or undertake any new trading,

commercial or industrial activity other than that is expressly approved by the RBI.

The entire expenses in India will be met either out of the funds received from head office through normal banking channels or through income generated by it in India.

PROJECT OFFICEReserve Bank of India has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and:

The project is funded directly by inward remittance from abroad; or

The project is funded by a bilateral or multilateral International Financing Agency; or

The project has been cleared by an appropriate authority; or A company or entity in India awarding the contract has been

granted Term Loan by a Public Financial Institution or a bank in India for the project.

However, if the above criteria are not met, the foreign entity has to approach the Reserve Bank of India, Central Office, for approval.

SPECIAL ECONOMIC ZONES IN INDIA

A Special Economic Zone (SEZ) is typically a designated territory within the geographical boundary of a country where exports along with certain other economic activities are promoted.

In India, the Special Economic Zones Act has been enacted in 2005. This Act along with the Rules made there under forms the broad legal framework for the establishment, development and management of SEZs in India.

INCENTIVES AND FACILITIES TO UNIT AND DEVELOPERS

The major incentives and facilities available to SEZ developers include:-

Exemption from customs/excise duties for development of SEZs for authorized operations approved by the prescribed authority.

Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under the Income Tax Act.

Exemption from minimum alternate tax under the Income Tax Act. Exemption from dividend distribution tax under the Income Tax Act. Exemption from Central Sales Tax (CST). Exemption from Service Tax under the SEZ Act. 

INCENTIVES AND FACILITIES TO UNIT AND DEVELOPERS

The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

100% Income Tax exemption on export income for SEZ units under the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from minimum alternate tax under the Income Tax Act. External commercial borrowing by SEZ units up to US $ 500

million in a year without any maturity restriction through recognized banking channels.

INCENTIVES AND FACILITIES TO UNIT AND DEVELOPERS Cont…

Exemption from Central Sales Tax. Exemption from Service Tax. Single window clearance for Central and State level

approvals. Exemption from State sales tax and other levies as

extended by the respective State Governments.  

“Arise, awake and stop not till the desired end is

reached.” - Swami Vivekananda

THANK YOU!