Business set up in India – 100% Ownership

India with a booming economy and stable Government offers unended opportunities for entrepreneurs and investors. One of the important aspects that make India a lucrative destination is the allowability to set up a business with 100% ownership irrespective of the fact whether you are an Indian Resident /Citizen or not. This article provides you with an over all the processes, legal requirements, and strategic considerations for setting up a wholly-owned business in India.

1. Regulatory framework

The Foreign Direct Investment (FDI) Policy is governed by the Government of India, Ministry of Commerce & Industry, Department for Promotion of Industry and Internal Trade. It has been regularly liberalized and allowed foreign investors to own 100% of a business. In most sectors, no prior approval is required from any Government. Agency except for very few critical sectors like Defence/Media/Tele Communication. Likewise, there are some sectors that are subject to equity caps.

2. Key Regulatory Bodies – Govt. of India

•   Reserve Bank of India Mumbai & Delhi.
•   Department for Promotion of Industry and Internal Trade (DPIIT)
•   Registrar of Companies (RoC) of the respective state.

3.  Types of Business Entities

• Private Limited Company (PLC)
• Limited Liability Partnership (LLP)
• Liaison Office (LO)
• Branch Office (BO)

Strategic action plan

• To locate and identify a professional firm of Chartered Accountants who can render complete services under one roof for setting up business in India.  
• Select the appropriate business module based on the type of business entity mentioned above.
• Go for setting up a business entity as selected
• To open a bank account.
• Go for obtaining the necessary trade licenses/permits, required for your business/services, if any.
• Remit necessary working capital as may be required for your business/services from your home country.
• Make statutory compliances about the inward remittance of funds to RBI and start your business.

Navigating  Challenges and opportunities

1. Market Research and Feasibility Study

Conduct comprehensive market research to understand the demand and supply and potential competitors of the trade.  A feasibility study report prepared by a competent qualified professional can assist in this regard.

2. Location and Infrastructure

The decision in this regard will depend upon your requirements for business /profession. It should based on factors like availability of skilled,  semi-skilled / raw labour, raw material, and infrastructure facilities including connectivity with the road, railway, airport, seaport/dryport, etc.    

3. Manpower Engagement

India offers a large pool of skilled professionals located across the country.  There are good professional companies that render services for the engagement of manpower according to job-specific requirements. Even the entrepreneur can outsource their routine work on a contract basis to a third company without any legal hassles.

4.  Government initiatives and incentives

The Government of India offers various incentives to attract FDI in various sectors time to time. Such incentives include import at subsidized rates, tax incentives, export benefits, exemption from payment of certain Government levies, etc. 

5. Legal and Financial Advisory

To identify and engage with experienced legal and financial advisors for right and timely compliance of applicable Rules & Regulations.

Conclusion

Establishing a 100% foreign-owned business in India is a strategic move that can yield substantial benefits to foreign business entities by setting up their 100% subsidiary in India or by way of opening of branch office. A professional firm of repute having good standing in the profession of Chartered Accountants can help you understand the regulatory environment, adhere to compliances, and harass local incentives and opportunities. Needless to say, you will thrive in one of the world's fastest-growing economies.