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India-Vietnam: Increasing Bilateral Trade and Investment Opportunities

The year 2020 celebrates India-Vietnam 42nd bilateral trade anniversary. India Vietnam relations have been steadily growing marked by economic, commercial and strategic engagements over the past four decades. India ranks 7th in the list of top trading partners of Vietnam while Vietnam has emerged as the 18th largest trading partner of India.

The increasing trade and investment ties between the two countries have prompted many Indian companies making investments in Vietnam in various sectors.

By 2020 both countries had aimed for a trade worth USD 15 billion with trade growing considerably from USD 5 billion to USD 13.7 billion between 2016 and 2019. Covid 19 pandemic, however, disrupted global economies and the India Vietnam trade volume shrunk by 9.9 per cent to almost USD 12.3 billion in the last financial year. The steady and rapid growth in trade between the two countries can only be understood by the fact that it was only USD 200 million in the year 2000.

Unprecedented volatility has gripped the global investment and trade environment and forced businesses to diversify supply chains away from China and has made India Vietnam trade routes for international business more significant.

Major areas of focus in India Vietnam trade and investment include energy, food processing, sugar, tea, coffee, mineral exploration, manufacturing, IT, agrochemicals and automotive components.

India is one of the fastest-growing economies in the world today and ranks 5th globally in terms of GDP. The ASEAN-India Free Trade Area ( AIFTA), which Vietnam is also a part of, had come into effect in 2010 as a result of convergence in interests of all parties in enhancing their economic ties across the Asia Pacific. This Free Trade Agreement (FTA) exempts tariffs for more than 80 per cent of goods traded between ASEAN and India.

Vietnam has quickly emerged as a lucrative and highly effective location for the manufacturing industries in electronics and telecom segments who are relocating from China because of higher cost and US-China trade war. The country could successfully revive customer confidence by swift and efficient containment of the pandemic. Vietnam is increasingly recognized as a preferred manufacturing hub for companies to diversify their supply chains.

Vietnam has improved its global ranking in ease of doing business ranking 70 amongst 170 economies and has incentivized its business environment enabling Indian investors to establish their operations in its thriving economy.

India, on the other hand, has world-class expertise in IT services, pharmaceuticals, oil and gas and can greatly benefit Vietnam. There also exists export opportunities for iron and steel, zinc and man-made staple fibres from India to Vietnam.

India also has a large middle class in its 1.3 billion population and offers Vietnam a huge market. India’s customs duty exemption for ASEAN products also makes India an attractive destination for Vietnamese exports. There is a huge prospect in developing services related to wholesale and retail trade, business support, transportation and storage including trade opportunities in cotton and knitted clothing.

Exports from Vietnam to India include mobile phones, machinery, computer technology, electronic components, natural rubber, chemicals and coffee while Vietnamese imports from India essentially consists of meat and fishery products, corn, steel, pharmaceuticals, automobiles, cotton, textile and leather accessories and machinery.

Vietnam is strategically located offering access to other South Asian markets with proximity to manufacturing hubs and has a friendly and conducive investment climate which have helped it gain popularity as preferred manufacturing and sourcing location.

The increasing importance of Vietnam in global manufacturing and supply chain is potentially beneficial to India for its bilateral trade and investment ties with this nation. India’s business conglomerates have already invested close to USD 2 billion in Vietnam with more than 200 investment projects.

Several Indian business entities have already invested and shown interest in establishing operations in Vietnam including Tata, Adani, Mahindra and HCL Technologies to name a few.

Vietnam provides numerous attractive reasons to woo foreign investors such as favourable investment policies, increased access to markets, free trade agreements, political stability, economic growth, low labour cost and young workforce.

Indian Government has long initiated business and trade tie-ups with Vietnam as an impetus to promote textile trade and investment between the two countries and sanctioned USD 300 million Line of Credit to Vietnam in 2014.

Despite disruptions in the global economy, Vietnam remains resilient in its economic growth prospects in coming years and provides investment opportunities to Indian investors in Agriculture, Seafood, Information Technology, Automotive Components, Assembling and manufacturing of Agri Machineries and Infrastructure.

Vietnam has introduced several incentives to attract foreign direct investment to the country including preferential corporate income tax rates, import duty exemptions, exemption of taxes from royalties, reduction in land rental fees, and privileges awarded to build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) projects and projects in Special Economic Zones.

The incentives offered are primarily focused for promoting FDI in high technology sectors,  underprivileged regions, labour-intensive industries, and other priority sectors such as education and health where foreign entities receive red carpet welcome for company formation in Vietnam.

In the long term, Vietnam can increase its investments in India by taking advantage of the India Government’s policy reform of loosening up of FDI quota for foods and beverages sector and 100 per cent allowance of FDI in the e-commerce, and foods manufacturing space and explore the company registration in India.

The India-ASEAN FTA however may be reviewed and analyzed for trade loss after India announced its decision to opt-out of the Regional Comprehensive Economic Partnership (RCEP).

TDS and Related Information

The introduction of TDS was done to collect tax from the primary income source. Its concept says that the deductor, a person liable to make a payment of a particular nature to some other person, known as a deductee, has to deduct the applicable tax at source and remit this amount in the Central Government’s account.

The credit of the amount so deducted which is calculated based on the TDS certificate or Form 26AS issued by the deductor, shall be provided to the deductee, from whose income, the tax has been deducted at the source.

Tds Interest on Late Payment

There are two kinds of TDS interest provisions when the payment is not made on time:

  1. TDS Interest when the deduction is late:
    The interest rate for the late deduction of TDS is 1% pm. This interest rate is applicable from the date on which the tax was actually deductible to the deduction date. The default Section for TDS Interest related to late deduction is 201A. The TDS return can be filed only after the interest payment is done.

  2. TDS Interest when the payment is late:
    Section 201(1A) says that the interest payment for late TDS deposit post deduction is at the rate of 1.5% pm. The calculation of such interest is done only on a monthly basis and not on the number of days which is the reason behind considering part of a month as a full month. Such interest amount is calculated to the date on which TDS is due.

There exists a provision for paying the late payment TDS interest before actually paying the TDS return or after its demand has been raised by TRACES. There also exists a provision for adjusting such an interest from the amount pending in any Challan related to TDS under any section. This interest paid on delayed deposits of TDS is not counted as an expenditure under the IT Act of Singapore.

Tds Not Deducted In Case Of Payments Made To Residents

According to the Section 201 of the Finance Act, the payer not deducting the entire or a part of the tax amount on the payment being forwarded to the resident payee is not counted to be an assessee-in-default for that tax which he has not deducted, if the following listed conditions are satisfied:

  • The return is already provided by the resident recipient under section 139.
  • The recipient of the resident has taken into account the above-mentioned income in its return of income.
  • The resident recipient has paid the taxes due on its income that is declared in such return of income.
  • A payee of the resident has furnished a certificate to this effect from an account in Form no. 26A

Penalty Levied For Late Or Short Payment Of Tds:

The penalty can be imposed on the payer to the extent of an amount that was not remitted or deducted. The payer will be punished with meticulous imprisonment for a term not less than 3 months and this can even extend up to 7 years. Also, the payer does not pay the tax amount that is deducted to the account of the Central Government, in addition to a fine in the case. This can be considered under the provisions of Chapter XVII-B of Section 276B.

Late Filing Consequences

From 1st July 2012, any delay in submitting the e-TDS statement will result in a compulsory fee of rupees 200 per day till the return is finally filed. However, in this case, the total fee doesn’t exceed the total TDS amount deducted for the given quarter.

Before the filing of such an e-TDS statement, the payment of the late filing fee needs to be done. If the filing of the e-TDS statement gets delayed for more than one year, or the details such as Challan, PAN, and TDS amount, mentioned in the statement are incorrect, the assessee will have to bear a penalty ranging from rupees 10 thousand to 1 lakh, as per the decision of the Assessing Officer.

Here is the Process of Merging Multiple EPF Account

Today, the working masses often change organizations in the quest for better career opportunities and paycheques. Now, such job switching results in alterations and merger of the old and new provident fund records of the employees. For amendment in such issues, the legislature launched a Universal Account Number (UAN). This is a unique 12-digit account number given to all EPF members. Using this, you can merge all your EPF accounts.

You will have to write to the EPFO for blocking your previous UAN and assure that you transfer the balance amount to your current active UAN. This can be done online through the official portal. The rules say that every member of the Employees’ Provident Fund Organisation (EPFO) must be having only one UAN.

The UAN permits linking all your provident fund accounts in a single one. This eases the tracking of these accounts. There are a few more advantages of UAN like an employee can exchange funds beginning with one PF account then onto the next one very quickly. One can likewise interface with your Aadhar number to UAN that frees you of the signature requirement for withdrawal or transfer of PF money. In case you are having PPF accounts, you will have to combine them into a single one. Members will have access to downloading the passbook from the EPFO portal in PDF format.

Steps describing the process of merging two EPF accounts
  • The KYC process requiring PAN, Voter ID, Bank Account, etc verification must be complete.
  • The person must be having a UAN, and it must be linked to the existing EPF account.
  • After activating UAN, waiting for three days is mandatory before starting the process of merging EPF accounts.
Online Process of consolidating two EPF Accounts into one using UAN:
  1. Visit the official website of EPFO.
  2. Click on services.
  3. Then select one Employee and one EPF Account link.
  4. After this selection, you will see a window where the employees of the organization will have to fill in the necessary details like the UAN, phone number, etc.
  5. After filling in all the details click on the Generate OTP tab and verify the OTP that you receive on your registered mobile number.

The above procedure is easy to complete and, therefore, can be done by the individual itself. An alternative way of doing this is to submit the claim either through the present employer or through the person having the quit from.

Consolidating two EPF accounts is simple and the combined account so formed makes life easier. You get a single amount when you require pulling back your employee’s provident fund. EPFO is presently planning to make Aadhar, the essential address proof after the Aadhar Act of 2016 was passed. Individuals having Aadhar seeded UAN can avoid the hassle of verification of claim forms by the company.

Is the process of linking the UAN and Adhaar beneficial?

You must have figured out the importance of consolidating two EPF accounts into a single one. In the same way, it is extremely essential to comprehend that you should link your UAN with your Aadhar Card. The benefits are many like settlement of payments turns out to be easy, the process gets more precise and much more. So, if you haven’t presented your Aadhar card for the purpose so far, you ought to do it at the earliest.

Offline Process of transferring EPF account

You can apply for the offline transfer through Form 13. The standard procedure of doing the same starts with filling Form-13 after downloading it from the EPFO official website. You can even get this from your new organization HR. Now, in the form, you have to enter the details of your current PF account and submit it to your new organization HR. The Provident fund balance from the previous organization will accordingly begin accounting in the new PF sum. Whether you work in a private organization or a government firm the procedure is the same for all. Each time you switch your job it is simply the new organization detail and the related record that needs to be refreshed.

Frequently Asked Questions.

How can I get a UAN for myself?

Your employers will provide you with the required UAN. It will also be mentioned on the salary slip you receive.

What is the result of having 2 UANs in the same period?

Having two UANs in the same period is completely illegal. You should be having only one UAN, and all your operating EPF accounts must be linked to the same.

What is the portal or official URL or website to log in to the UAN?

You can enter this URL, www.epfindia.gov.in on any search engine like Google and type your username and password to check-in for the necessary UAN details.

Is it mandatory to link EPFO with Aadhaar?

Yes, the EPFO has made it mandatory to link your Aadhaar with your Employee Provident Fund Account to access the portal online. There are other benefits as well as doing the same.

How many days will it take to merge two PF accounts together?

Generally, the time taken is about 20 days for completing the process from the date of submission. However, it might take less time when you operate online.

India Oman to Expedite Amendments on Double Taxation Treaties And Boost Bilateral Trades And Investments

In a bid to boost bilateral trade and investment, India and Oman during the ninth session of India -Oman joint commission meeting (JCM) reviewed the recent developments in businesses and trades and reaffirmed their commitment to expand bilateral trades and encourage businesses to invest in each other’s country to realize untapped potentials in commercial and economic relationships.

The ninth India-Oman CM was held in October 2020 through a virtual platform and was co-chaired by Hardeep Singh Puri, Minister of State for Commerce and Industry and H.E. Mr.Quis bin Mohammed Al Yousef, Minister of Commerce, Industry and Investment Promotion of the Sultanate of Oman.

Bilateral trade between the two countries has increased to USD 5.93 billion in 2019-20 registering a growth of 8.5%. India -Oman agreed to cooperate in the areas of Agriculture and Food Security, Standards and Metrology, Tourism, Information Technology, Health and Pharmaceuticals, MSMEs, Space and Civil Aviation, Renewable Energy, Mining, Culture and Higher Education.

Indian companies are already invested in Oman and in Steel, Cement, Fertilizers, Textile, Cables, Chemicals and Automotive Sectors. There are already more than 4000 Indian business establishments in Oman with an estimated investment of 7.5 billion USD.

Company formation in Oman has been encouraged by the Oman Ministry of Commerce, Industry and Investment promotion and assured liberal benefits for Indian companies.

As per a press release, “Both sides also agreed to expedite their internal procedures for signing ratification of the protocol amending India-Oman Double Taxation Agreement and conclusion of the India-Oman Bilateral Investment Treaty.”

India and Oman reviewed and assessed the progress of the proposed MOUs in different sectors and mutually agreed to conclude them promptly. Indian representatives appreciated Oman for signing the International Solar Alliance Framework Agreement.

India has long been associated in business and trade with Oman and  has enjoyed a friendly diplomatic relationship. Increasing bilateral trade and investment between the two countries and a strategic partnership reinforced a need to review and expedite the double taxation treaty and procedural amendments as appropriate.

The India Oman business ties have been robust and expanding for quite some time now and India is Oman’s one of the top trading partners. For Oman, India has been its third-largest source of imports and also the third-largest export market for its non-oil products.

Mr. Hardeep Singh Puri highlighted recent initiatives undertaken by the Indian Government for enhancing the ease of doing business in India and promoting business through Product Linked Incentive (PLI) schemes in various sectors. He also invited Oman business enterprises and Omani Sovereign Wealth Funds to invest in India.

Company formation in India has now become much simpler, transparent and less bureaucratic. IMC, a professionally managed and well-experienced business service consultancy group can help Oman business enterprises to set up companies in India and provide all necessary support from the start to end. IMC is based in one of the Indian metropolitan cities and also has well established operational setups in Dubai and Singapore.

Shops and Eligibility Act in India – Everything you need to know

The Shops and Establishment Act is authorized in every state in India and it controls most business entities in the nation. Some of the primary goals of this Act include controlling payment relating to wages, occasions, terms of employment, leaves, work conditions, over time work, maternity leave and advantages, the depiction of work, rules for work of youngsters among many other things for individuals involved in shops and other business establishments. The Shop and Establishment Act is enforced nationwide. All commercial establishments in India such as hotels, eateries, theatres, amusement parks, theatres and other entertainment houses all come under the purview of this Act.

In the act, a “commercial establishment” is defined as:

  • Any business organization in the commercial sector like banking, insurance or trading establishments
  • Establishments where citizens are employed or engaged to complete office work or provide professional services
  • Hotels, eateries, restaurants, boarding houses, small café or refreshment houses
  • Entertainment and amusement places like theatres, cinema halls or amusement parks

All the above mentioned enterprises fall under the Act and are thereby, expected to adhere to the rules, regulations and norms that are set by the Act for better treatment of their employees. The exceptions to the Shops and Establishment Act varies from state to state in India. Each state in the country submits a list of all shops and establishments that come into the Act and outlines who are the ones required to complete registrations under the Act in order to run their company in the state.

When do I need to register my business under the Shops and Establishment Act?

You must apply for registration under the Shops and Establishment law within 30 days of establishing your business, a store of any of the establishments mentioned above. This registration is important and necessary for multiple reasons, such as opening a new current account in a bank. This registration works as a basic license and a proof of your enterprise while applying for other registrations that are required to run and manage a business in India. Incorporation and online shopping forms are available for you access on the government website.

The application process for the registration

Each and every state in India has established different regulations and rules for registration under the Shops and Establishment law. However, the basic procedure is still the same. As per the law, every business has to obtain approval from the Ministry of Labour. You can obtain the registration certificate from the Chief of the Shops and Law inspector of the facility or from any other inspector who is authorized to the region in which the facility is run.

An application, in the specified form, must be submitted to the relevant inspector along with the following documentation:

  • Name of the business in question
  • The name and details of the owner as well as employees (during the time of business formation)
  • The address of the business facility and a copy of the bill of sale. Alternatively, the lease contract for the shop is also accepted
  • The business owner’s PAN card number

All the above listed details and documentation should be submitted in the form along with the relevant fees set for the inspector in charge.

After the application is received, the allotted inspector will review the details and visit your business facility. If necessary, the inspector will provide a certificate of registration under the law. The registration certificate obtained should be displayed in a visible, significant place inside the store and should also be renewed in case any of the details provided (like the number of employees, etc.) should be changed. The certification should also be renewed upon expiration. Registering a business the Shop and Establishment Law is one of the many mandatory requirements for all businesses operating from a store or a facility. In cases of facility changes or closures, all the relevant details should be presented to the inspector within fifteen days of the planned change or closure.

Businesses that run out of stores or facilities need this licensing or registration to prove its authenticity while planning to increase investment through bank loans or from investment capital. The above described registration process can be fully completed and the formal, printed version of the license will be issued within 10 business days in most of the cities and may take a little longer elsewhere.

India offering numerous post-Covid business opportunities for British Companies

Indian Foreign Secretary, Harsh Vardhan Pingla claimed that India is offering numerous business opportunities for British Companies in the post Covid period.

Indian Foreign Secretary, in his inaugural address at Confederation of Indian Industry’s 125th Annual Conference in the UK, ” A New India-UK Economic Partnership in a New World: Lives, Livelihood, and Growth” affirmed over a virtual platform on 15th of September,  2020.

Mr. Harsh Vardhan highlighted that many reforms have been initiated in India during the post Covid period and in the areas of Infrastructure, Taxation, Aadhar, Mobile connectivity,  Agriculture, and JAM Trinity. The policy and structural reforms so undertaken have made India one of the most preferred foreign investment destinations attracting new companies to India.

As per the Indian Foreign Secretary,  even during the Covid pandemic, India has received $20 billion foreign direct investment amidst the slowing global economy. He invited UK business houses to take advantage of the recent reforms and set up businesses in India. With reforms in place, India company formation has become an incredibly fast and easy process.

In the inaugural session, the foreign secretary described the Covid outbreak as a distinct opportunity to transform India into a manufacturing base from a passive market in the past. As per him, there are opportunities in pharmaceuticals, vaccines,   services, and manufacturing where India and the UK can work together. He highlighted India and the UK’s economic synergy and claimed that products designed in the UK can be profitably manufactured in India.

Indian high commissioner to the UK, Gaitri Issar Kumar, stressed that India and UK have a long and proven trade and investment eco- system, and sought UK India partnership when global supply and value chains are in total disarray. She addressed the participants saying the UK has always been a ready partner of India and mutually cooperated in many areas, especially in generic pharma, API and medical instruments manufacturing, and building health infrastructures. She also emphasized that India and the UK can work together in other areas, including financial technology, renewable energy, defense, and electronics manufacturing, and information technology.

President of Confederation of Indian Industry (CII), Uday Kotak, discussed India’s foreign direct investment and said India is the second-largest FDI contributor to the UK. He also informed that the UK is the 6th largest FDI contributor for India. Mr. Kotak also reiterated the need for the hour through a focus on managing growth, lives, and livelihoods while considering the challenges associated with life after a pandemic.

Chandrajit Banerjee, Director General of CII, highlighted that Brexit is around the corner, and there is an immediate need to discuss the business partnership between India and the UK. He emphasized on free trade and comprehensive economic agreements. The Director-General also mentioned a trade war and growing tensions between America and China, and its deadly impact on global supply chain necessitates strong business ties with the UK for mutual growth and economic recovery and development.

Five post covid mega opportunities that can Engineer and Spearhead India’s economic growth by generating $300 billion in the next five years

Ever since the 1918 Spanish Flu pandemic, the human race has experienced such a profound public health crisis in the recent past due to coronavirus.

Every challenge throws an equal opportunity, and India is no exception. Great opportunities are rising in India’s economic horizon and mainly because of technological and geopolitical changes, new laws, and changing climates.

In addition to direct contributions, these five mega opportunities will also help expand additional manufacturing ecosystems through expansion and new company formation in India relating engineering service providers and ancillaries.

Data Center Business:

As Post covid social distancing measures keeping us indoors, the demand for web-enabled services has risen dramatically.

The emergence of 5G technology, likely to be launched by the end of 2021, will further increase IoT (Internet of Things) enabled products in the Indian market. The ever increasing demand for more data center capacity is all set to continue the exponential growth curve.

The digital transformation programs were undertaken in India across all businesses for staying viable and competitive, and individual domestic users staying more and more online will also propel the demand for more data centers.

The present data center market in India is pegged around $2 billion, and the projected growth rate is approximately 25% taking the figure to $5 billion by the year 2024.

The 8 major cities in India have around 7.5 million square feet of space, accommodating various data centers. As per industry estimates, some 10 million square feet additional space is likely to be added over the next three years. The adoption of IaaS (Infrastructure as a Service), SaaS (Software as a Service), and PaaS (Platform as a Service) will receive further impetus once 5G is rolled out and will invariably increase the physical presence of cloud service providers requiring more space and increasing data centers revenue.

The data localization proposition by the government mandating personal data storage within the country will further increase the demand for more data centers in India. Reserve Bank of India (RBI, the regulatory body of the Indian Banking System) has already made local data storage compulsory for all financial institutions.

Big business houses and technology firms, e.g., Microsoft, Reliance,  Oracle, Hiranandani, and Adani have already committed more than $ 15 billion investment over the next 5 years to set up new data parks across the country well as expanding the existing ones. CtrlS, Nxtgen  NTT, the other players in this market are equally optimistic. Hiranandani group has set up Asia’s largest data center in Navi Mumbai with 0.82 million square feet of space.

The Indian government has already launched a Big Data management policy through CAG. Though in the nascent stage, Big Data can be the strongest driver of data center investment in the Indian market offering New business opportunities in India.

Electronics Manufacturing:

Presently, India’s domestic electronics manufacturing market stands at $70 billion, only 3.3% globally, with export of $ 11.28 billion in FY20. Like America, Japan, and South Korea are planning to shift their manufacturing base from China, India could be a major beneficiary with a potential of $180 billion in exports by 2025.

As the digital revolution sweeping across India, with more and more people acquiring new products and technologies powered by IoT, AI, ML, and Big Data, the Indian Electronics manufacturing sector is all set for unprecedented growth. Apart from smartphones, laptops, and other electronic gadgets, there is also increased use of electronic products and components in automotive, lighting, and communications.

An incentive scheme of $ 6.65 billion has been launched this year for five global smartphone manufacturers to boost domestic electronics manufacturing. India also plans for product linked incentives for the top five domestic smartphone companies for producing $ 133 billion smartphones and components by 2025.

Lured by the incentive schemes, some 22 Indian and global firms, including Samsung, Lava, and Dixon, have proposed 11 lakh crore worth of mobile production in the next five years. Bajaj Electronics, BHEL, ITI are also planning for increased investment in this sector. Taiwanese manufacturer for Apple iPhones Foxconn wants to incest $1 billion for expanding the Chennai unit, and Wistron, another Taiwanese firm, plans an additional $ 155 million investment in Bangalore.

Water Management:

India needs a reliable and robust water management system to meet drinking water, agricultural and industrial requirements and needs approximately $ 100 billion investment in the next five years as part of India’s ” Nal Se Jaal” scheme and intelligent and innovative water management tools and applications.

Application of SCADA (Supervisory control and data acquisition) and Smart Water meters are to be used for smart integrated decision-making and automated water management control.

The market size for smart water management will be approximately $ 21 billion by 2024 from $12 billion as of now, and India, with its huge water resource, can be a major beneficiary in this sector.

Thermax, Siemens, GE, Toshiba, Voltas, and L&T are major players in this market, offering smart water management solutions for both the demand and supply side.

Defence Manufacturing:

India happened to be the 2nd largest importer of defence equipment after Saudi Arabia from 2015 to 2019 is all geared up for indigenous defence equipment manufacturing. Under the ” Atmanirbhar Bharat” initiative, India plans to suspend 101 weapons and platforms over the next 7 years, accounting for $ 53.4 billion foreign imports.

With this huge import ban, local high-end technology-driven manufacturing companies e.g. Bharat Forge, L&T  HAL, and BHEL, will be the major beneficiaries.

EV Charging:

The introduction of Electric Vehicles (EV) is a major policy decision of the Indian government. As more and more EVs are introduced in the market, India will be needing around 400 000 EV charging stations by 2025, requiring approximately $ 20 billion investment.

Initially, one EV charging kiosk will be installed at every 69,000 petrol pumps in the country and will be expanded afterward. Charging stations at remote areas will further require complete energy back up meaning more investment requirements. Tesla, ABB, Siemens, Schneider, Bosch, and EESL ( Energy efficiency services limited) will be the major beneficiaries as major players in this segment.

Key Takeaway

India can very well become the global manufacturing hub in the recent future and create huge employment opportunities in the country with the right government initiatives and sustainable business policies in the global market.

Steps for Company Formation in India

A company in India is an artificial person, and its registration is a complex and lengthy process. There are numerous formalities and paperwork that should be complete before you approach the registrar of companies for incorporation. The following are the basic steps that need to be followed for India company incorporation.

Application for name approval.

You need the approval of the registrar for the name you propose for your company. It should not be prohibited by the Emblems and Names Act, 1950, and should not be identical or closely resemble any existing company name.

You need to send three preferences of names to the Registrar of the state where the company will be situated. The Registrar is expected to approve the name in 14 days of application.

Preparation of MoA

MoA is the key document of any company and is known as the constitution of the company. It describes the company’s objects and scopes with the outside world. For a public limited company, MoA should be signed by at least seven persons and in case of a private limited company, it should be signed by at least two people. It should also be properly stamped with the company’s seal.

Preparation of AoA

It is the document which states the rules and regulations for the internal working of the organization. A public limited company need not file an AOA and it can adopt the model clause prescribed in Table A, schedule 1 of the act. However, a private limited company needs to submit the AoA duly signed by the signatories.

Preparation of other documents
  1. Consent of directors, duly signed
  2. Copies of preliminary agreements, MoA, and AoA.
  3. Power of Attorney by the promoter in favor of one director or an advocate to supervise the registration process
  4. Required information about the registered office to the registrar of companies within 30 days of registration or commencement of business, whichever is earlier.
  5. The details of the first directors of the company within 30 days of registration or appointment of such directors.
  6. A statutory declaration stating that all the necessary documents have been compiled with. An advocate of a High Court or a Supreme court or attorney of a high court or a practicing Chartered Accountant must sign the declaration.

Payment of Fees

The prescribed registration fees and document charges are to be paid to the registrar at the time of registration. The amount of fees varies with the amount of nominal capital, in case of companies with share capital, and according to the number of members in case of companies without share capital.

Certificate of Incorporation

Once all the required documents are submitted with the registrar, he makes scrutiny. If the formalities are found in order, then the registrar will issue the Certificate of incorporation, after entering the name in the Register of Companies. The date mentioned on the certificate is the date of incorporation of the company.

Capital Subscription

Once your company is incorporated, the next step is to raise capital. A private limited company can start doing business just after the issue of the certificate of incorporation, but a public limited company cannot. It requires meeting the minimum subscription of share capital as subscribed by the government.

Steps for raising the funds for the public.

  1. SEBI approval
  2. Filing of Prospectus
  3. Appointment of Brokers, Underwriters, and bankers
  4. Minimum Subscription
  5. Application to Stock Exchange
  6. Allotment of Shares

Commencement of Business

After meeting all the capital requirements, a public company receives a Certificate of Commencement without which it cannot start with the business. The business can, hence, be commenced now and your company can function in the required manner. If you are looking to attract US Companies or any other foreign venture, then that is also possible now.

Filing of additional documents

  1. A prospectus or a statement in lieu of prospectus has been filed with the Registrar of Companies.
  2. A declaration that shares payable in cash equivalent to minimum subscription have been received.
  3. A declaration that directors have taken up their qualification shares and have paid the application and allotment money in the same proportion as others.
  4. A statement that no money is liable to become refundable to the applicants because of failure to apply for or to obtain permission for shares or debentures to be dealt in on any recognized stock exchange.
  5. The statutory of the company or a director files a statutory declaration that the requirements relating to the commencement of business have been duly complied with.
Here is a Detailed Guide to Share Transfer Process in India

The ownership of any Public Limited or private limited company in India is critically defined by the shareholdings of the company. Transfer of shares implies the voluntary handing of rights and duties of a shareholder, who does not wish to continue as a member of the company, to a person who wants to take the position. This transfer of shares, like any other moveable asset of the company, is possible only when there are no expressed restrictions on the transfer in the articles of association, prepared while Indian Company Incorporation.

Who are the involved parties in the transfer?
  • Transferor
  • Transferee
  • Legal representative (in case deceased)
  • Subscribers to the memorandum
  • Company (unlisted/listed)

The Companies Act, 2013 lays the following procedure for the transfer of shares.
  • The transfer deed should be drawn in the prescribed forms, which is Form SH-4, countersigned by the necessary authority.
  • The transfer instrument may not be in the prescribed form only under the following situations.
  • Where a nominee or director is transferring shares on behalf of a different body corporate under section 187 of the Companies Act, 2013.
  • Where a nominee or director is transferring shares on behalf of some corporation controlled or owned by the state of the central government.
  • Shares transferred by way of deposit as a security for repayment of some advance or loan, only when they are made with the following.

                   Any Scheduled Bank

                   State Bank of India

                  State Government

                  Central Government

                  Financial Institution

                  Any Other Banking Companies

                 Corporations held by the state or central government

                 The Trustees those who have already filled the declaration

 In the case of transferring debentures, you can use a standard format as an instrument of transfer

  • Bring the trust deed in case of debentures, the Articles of Association for shares, and the transfer deed that is either registered by the transferee or the transferor or on their behalf in proper accordance with the rules of the Companies Act, 2013.
  • The Indian stamp act and the stamp duty notifications clearly say that the transfer deed should necessarily have stamps. The current Stamp Duty Value for transferring shares is 25 paisa for every 100 rupees of the value of the share or part thereof.
  • Checking the affixed stamp on the transfer deed for its cancellation, before or at the time of signing it.
  • The person who provides his/her initials such as name, signature, and address, as the approver of the transfer must ensure that both the transferee and the transferor should sign the deed in person.
  • The relevant allotment letter or share/debenture certificate must be attached and sent to the company along with the transfer deed.
  • If the application prepared by the transferor is for partly paid shares, then the company will have to notify the amount on debentures/shares to the transferee. A no-objection certificate is also required from the transferee, within two weeks of the notice’s receipt date.
  • If the signed transfer deed is lost then attach the exact value stamp on a written application. In such a case, the board will be registering the transfer on the terms of indemnity whatever it thinks fit.
  • If the shares being transferred are already listed on a recognized stock exchange, then there are no fees for the company to charge for the registration of the transfer of debentures or shares.
Cases where the company cannot register a transfer of partly paid shares
  • When a company has already given a notice to the transferee in Form No. SH.5
  • The date till which the transferee has not issued the no-objection certificate within two weeks of receiving notice from the company.

All the transfer of shares procedures must be completely approved by the board of directors or any such committee formed by the directors. If the scrutiny is successful and acceptable, then the transfer will get approval with the right authority.

Share Certificate Delivery

Your transfer will become effective only after the approved registration process of the company. The shares certificate gets delivered within one month from the receipt of the company’s instrument (for which transfer request is made).

The time limits associated with the procedure
  • A company with a share capital

There should be no registration of any transfer of securities of the Company or member’s interest in the Company, other than beneficial owners, without a proper instrument of transfer within 60 days from the date of execution.

  • Application by transferor only

For the company which is private limited in India, the transfer should not be registered until and unless the company has given a notice of the application to the transferor and the transferee gives no-objection certificate within 2 weeks from receipt of the notice.

  • The company should deliver the certificates of all the transmitted/allotted/transferred securities in the below-mentioned cases along with the specific time limits.

Debenture allotment: within 6 months from the date of allotment.

In case of subscribers to memorandum – within 2 months from the date of incorporation

In case of allotment of any of its shares – within 2 months from allotment date.

Company’s receipt of the intimation of transmission or instrument of transfer:  within 1 month from the date of receipt.

Penalties on parties involved in the transfer process

A penalty of a minimum of 25,000 and a maximum of 5,00,000 is imposed on the company for any wrong or delayed practices.

However, an officer in default is penalized with a minimum of 10,000 and a maximum of 1, 00,000.

For the detailed insight into the share transfer process in India, feel free to get in touch.

Indian PM Modi Announces Long-awaited Digital Projects

India celebrated their independence from the British Empire for the 74th time this past August 15th.  It was also the day Prime Minister Modi announced the launching of three Digital India projects that could result in new company formation in India:

  • the National Digital Health Mission
  • a new cyber security policy
  • the promise of optical fiber connectivity to 600,000 villages over the next 1,000 days.

The following is a breakdown of these three monumental projects.

National Digital Health Mission

The beginning of India’s new digital health infrastructure took place in 2017 when the National Health Policy was implemented.  It proposed a National Digital Health Authority and released the blueprint for it two years later (July, 2019).  This past August 7th was the release date of the NHDM’s (National Digital Health Mission’s) which outlined the digital registration of:

  • doctors
  • hospitals
  • digital clinical decision systems
  • digital personal health records
  • pharmacies
  • insurance companies

As a result, patients can now share their information between doctors and hospitals in a digital format by simply creating a Health ID.  Furthermore, they can choose the specific documents they want to share with whom for as long as they want. To get the government benefits, people will need to connect their health IDs with the Aadhaar cards. In early weeks of July, NDHM began consultation and collaborations with insurance companies, large hospitals, laboratories and licensing authorities to ensure smooth functioning when the scheme is implemented. Other key features would include tele-medicine, data analytics tools and online pharmacy.

New Cyber Security Policy

The existing cyber security policy was born when whistleblower Edward Snowden said that India’s domestic issues were being monitored by the US National Security Agency.  The scope and sophistication of cyber attacks and intrusions has increased dramatically over the past decade and are now targeting critical information infrastructure as well as sensitive business and personal data.  Consequently, this poses a serious threat to the national economy and security.  Due to a number of technological developments, there are significant challenges to contend with in the cyber environment such as:

  • access to overseas data
  • cyberspace law enforcement
  • data privacy and protection
  • global cooperation regarding cybercrimes and cyber terrorists
  • misuse of Facebook, Twitter, and other social media platforms

Additionally, this will likely require the revamping and revitalization of existing structures.  This may also have an impact on the passage of data protection legislation by a Joint Select Committee in India’s Parliament when attracting new companies in India.

Optical Fiber Connectivity

The Indian Government is referring to this as the “largest connectivity project in the world today.”  BharatNet (Bharat Broadband Network Limited) which is governed by the Government of India’s Department of Telecommunications, is the country’s telecom infrastructure provider.  Under this project, roughly 800,000 kilometers or nearly 500 miles of OFC or optical fiber cable to cover more than 2,50,000-gram panchayats with an estimated cost of the project to be over $6.2 billion. Although it was unable to meet its original deadline of March 2020, the project is still on track to be completed in the ensuing year. It has encountered multiple snags over the deadline and the most prominent issue that is cropping up is the lack of bidders for maintenance. This is partly due to keeping Chinese vendors out of the tender ambit.

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