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How Can I Start a Business in India, If I am in Canada

How Can I Start a Business in India, If I am in Canada?

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Three decades have passed since India opened its market for foreign investors and allowed Foreign Direct Investment (FDI) and foreigners can now invest in the majority of Indian business sectors and the country provides a range of incentives encourage company formation in India.

Key Considerations

When a Candian citizen wants to start a business in India, the following considerations are to be kept in mind

  1. Understanding the Indian market regarding the Indian Economic environment, Canada India trade and investment and resources for Canadian investors.
  2. Opportunities for Canadian investors in various sectors including automotive, telecommunication, oil and gas, transportation, medical devices and healthcare, environmental technologies, food processing etc.
  3. Preliminary assessment of readiness through research and identification of target markets, business plan preparation and market entry and, export strategy
  4. Understanding import regulations and licensing
  5. Investment analysis about investment procedures, types of company formation, taxation, labour force and exchange control
  6. Finances and financing including India’s financial systems, import and export financing, types and sources of financial assistance
  7. Legal aspects encompassing such as labour laws, intellectual property protection, litigation and arbitration, standards and conformity, performance guarantees and contractual obligations
  8. Risk management analysis including political risks, foreign exchange risks, customer risks, corruption etc.

Key Company Types

Three types of company formation are possible in India

  1. Public Company needing 7 or more persons
  2. Private Company needing 2 or more persons
  3. One Person Company, basically a private company owned by a single person

The foreign investments in India are governed by the rules and policies of FDI, FEMA, RBI and Companies Act 2013. To establish its business any foreign entity has the following options:

  • Joint Venture with an Indian Company
  • Liaison Office
  • Limited Liability Partnerships (LLPs)
  • Wholly owned subsidiary company
  • Branch Office
Indian Companies act 2013 details how to register private limited company in India, the most popular form of a company allowing 100 per cent FDI through automatic route in the recent reforms and made things easier for Canadian citizens to develop their business in India.

Key Documentation Requirements

Following documents are required for setting up a private limited company in India

  • Photographs of shareholders and Directors
  • Pan card
  • Rent agreement
  • List of Directors and shareholders
  • Authorized representative
  • NOC from the owner of registered office space
  • Address proof
  • Business address proof
  • Constitutional documents; AoA, MoA
  • Identity Proof; Passport, Driving license
  • Prior registrations, if any

Key Process Steps

The company registration is done in 5 easy steps and can be done without being physically present in India
  • Application for Digital Signature Certificate usually takes a day
  • Application for a company name; availability and reservation, generally takes 3 days
  • Drafting of AoA, MoA and preparation of documents, stamp duty payment and documents notarization, takes 2 days normally
  • Application for company registration, application for DIN allotment, PAN and TAN, takes 2 days
  • Application processing by Authority, issuance of the certificate of incorporation, also takes 2 days
Key Online Resources

Following are some resources that can provide additional insights to Canadian citizens for a good start of their Indian businesses

Bottom line

Canada and India share the similar legal heritage of English common law, and in some respects, the two legal systems are almost identical. This facilitates acclimatization of a Canadian citizen with Indian corporate laws and in turn the business environment.

International trade being inherently more complex than domestic trade, retaining a legal, experienced and qualified professional services company who is familiar with the laws and procedures and possess expert knowledge of the target market, is extremely important for company setup in India.

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