FDI/Business Set-up Services

BUSINESS SETTING-UP SERVICES:

To Setting-up a business in India certain and approvals, permissions and registrations are mandatory from FIPB/RBI and from other regulators, Departments and Authorities. We will assist you to getting approval from FIPB, RBI, for your foreign direct investment (FDI), to obtain PAN, TAN, open a Bank Account, Importer Exporter Code (IEC) from the Director General of Foreign Trade Value Added Tax (VAT) & Central Sales Tax (CST) Registration, Mumbai. Profession Tax Registration etc. so as you can operate the business at the earliest.

FOREIGN DIRECT INVESTMENT (FDI)

The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily adaptable. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/ Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The regulatory framework, over a period of time, thus, consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc.

ENTITIES INTO WHICH FDI CAN BE MADE

 Foreign Direct Investments is permitted in following types of entities in India

 FDI in an Indian Company:

Indian companies can issue capital against FDI.

FDI in Partnership Firm / Proprietary Concern:

 (i)        A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non-repatriation basis provided;

(a) Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers / Authorized banks.

(b) The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.

(c) Amount invested shall not be eligible for repatriation outside India.

(ii)       Investments with repatriation option: NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India.

(iii)      Investment by non-residents other than NRIs/PIO: A person resident outside India other than NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment in the capital of a firm or a proprietorship concern or any association of persons in India. The application will be decided in consultation with the Government of India.

 (iv)      Restrictions: An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or print media.

FDI in Venture Capital Fund (VCF):

FVCIs are allowed to invest in Indian Venture Capital Undertakings (IVCUs) /Venture Capital Funds (VCFs) /other companies. If a domestic VCF is set up as a trust, a person resident outside India (non-resident entity/individual including an NRI) can invest in such domestic VCF subject to approval of the FIPB. However, if a domestic VCF is set-up as an incorporated company under the Companies Act, 1956, then a person resident outside India (non-resident entity/individual including an NRI) can invest in such domestic VCF under the automatic route of FDI Scheme, subject to the pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms, etc

 FDI in Trusts: FDI in Trusts other than VCF is not permitted.

 FDI in Limited Liability Partnerships (LLPs):

 FDI in LLPs is permitted, subject to the following conditions:

 (a)       FDI will be allowed, through the Government approval route, only in LLPs operating in sectors/activities where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions (such as ‘Non Banking Finance Companies’ or ‘Development of Townships, Housing, Built-up infrastructure and Construction-development projects’ etc.).

(b) LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.

(c) An Indian company, having FDI, will be permitted to make downstream investment in an LLP only if both-the company, as well as the LLP- are operating in sectors where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions.

 (d) LLPs with FDI will not be eligible to make any downstream investments.

(e) Foreign Capital participation in LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels or by debit to NRE/FCNR account of the person concerned, maintained with an authorized dealer/authorized bank.

(f) Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs).

(g) In case the LLP with FDI has a body corporate that is a designated partner or nominates an individual to act as a designated partner in accordance with the provisions of Section 7 of the LLP Act, 2008, such a body corporate should only be a company registered in India under the Companies Act, 1956 and not any other body, such as an LLP or a trust.

(h) For such LLPs, the designated partner “resident in India”, as defined under the ‘Explanation’ to Section 7(1) of the LLP Act, 2008, would also have to satisfy the definition of “person resident in India”, as prescribed under Section 2(v)(i) of the Foreign Exchange Management Act, 1999.

(i) The designated partners will be responsible for compliance with all the above conditions and also liable for all penalties imposed on the LLP for their contravention, if any.

(j) Conversion of a company with FDI, into an LLP, will be allowed only if the above stipulations are met and with the prior approval of FIPB/Government.

 FDI in other Entities:

FDI in resident entities other than those mentioned above is not permitted.

 Entry routes for investments in India:

Under the Foreign Direct Investments (FDI) Scheme, investments can be made in shares, mandatory and fully convertible debentures and mandatory and fully convertible preference shares1 of an Indian company by non-residents through two routes:

  1. Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment.
  2. Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India (Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of Industrial Policy & Promotion, as the case may be) for the investment.

 Setting up a Business with Foreign Direct Investment (FDI)

The foreign investor first need to assess the their entry route to India, subject to their area of operation and Sectoral caps. Automatic route is now available for almost all sectors except very few. Under the automatic route, the Investors are permitted to do the investment first and comply the reporting and other required compliance within the time frame.

If the foreign investors intents to operate on the sectors which are not classified under automatic route, or which are not falling within the sectoral caps, the Foreign investors need to seek FIPB approval and or approval from other authorities.

As a business setting-up intermediary service provider, Hushai Consultants LLP will help you to obtain the necessary permissions/approvals from (Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of Industrial Policy & Promotion, as the case may be) for the investment.

Hushai Consultants LLP will provide and arrange to complete all the formalities in respect of filing of necessary information and returns with RBI under automatic route such as filing of Form FC-GPR and FC-TRS etc.

 To start up your operations in India we will assist you:

  • Permanent Account Number
  • We will assist you to open a Bank Account
  • TAX Account Number
  • Importer Exporter Code (IEC) from the Director General of Foreign Trade.
  • Service Tax Registration
  • Value Added Tax (VAT) & Central Sales Tax (CST) Registration, Mumbai.
  • Profession Tax Registration.In case of opening Bank Accounts involving foreign signatories/directors, documents are required to be certified by and attested by the Concerned authorities in the foreign country, etc as per the banks requirement.
  • Our Services in respect to the above includes liasoning with the client, filing application with the concerned government authorities, Laise with the department, follow-up and obtain the licenses and approvals as required.