COUNTRY OVERVIEW

Classical Indian culture was formed under a series of civilizations in the last three thousand years BC; the Gupta dynasty in the 4th to 6th centuries AD saw a flowering of Indian science, art, and culture. The invasion of Muslim armies caused great destruction, though things settled down into the Delhi Sultanate in the 10th and 11th centuries; later the Moghul dynasty ruled India from 1500 to the late 18th century.

European powers began to infiltrate India from the 17th century onwards, initially engaging in trade. The British East India Company ran what amounted to its own government in India during the 18th century and the first part of the 19th century. By degrees Britain became the dominant power in India, and by the middle of the 19th century India was counted as a part of the British Empire.

An overwhelmingly non-violent independence movement led by Mahatma Gandhi and Nehru came into fruition in 1947. Two states were created: secular, Hindu-majority India and (initially) secular Muslim-dominated Pakistan. Somewhat unwisely, the latter country separated by more than 1,000 miles of unfriendly Indian territory.

Tensions rose both between India and between West and East Pakistan. In 1971, aggrieved by the continued dominance from Islamabad, East Pakistan declared its independence. This resulted in a bloody war (decided when India sided with East Pakistan) and the creation of Bangladesh. Tensions remain high between India and Pakistan, especially in Kashmir. Both countries have nuclear weapons.

The climate of India varies from tropical in the south to temperate in the hillier north. India has rich agricultural resources, and its mineral reserves include coal, iron ore, manganese, mica, bauxite, rare earth metals, titanium ore, chromite, natural gas, diamonds, petroleum and limestone.

The population is more than 1.3 billion, second only to China, and is growing at 1.34% per year. The two largest cities are Delhi, which contains the capital New Delhi, with 19 million inhabitants, and Mumbai (Bombay), the commercial centre and chief port, with 20 million.

There are 22 official languages in India, testifying to its fragmented past; Hindi and its allied dialects are used by 44% of the population. For political, economic and commercial communication, English is very widely used. Literacy is only 61%, largely due to the exclusion of women from formal education in many regions.

India is a federal republic divided into 28 states and seven union territories. There is a bicameral parliament. The president and vice-president are elected by the members of the legislature; but real power resides with the prime minister, who is elected by the members of the largest political party. Currently the prime minister is Narendra Modi of the nationalist BJP; he has been in power since 2014.

The legal system is based on English common law and precedents play a large part in the judicial process, as they do in other common law countries. There is a Supreme Court; justices are appointed by the president and remain in office until they reach the age of 65.

India’s economy was held back for a long time by protectionist, autarkic tendencies verging on cronyism. Liberalization began in the 1990s and large parts of the economy can now be described as open. Although agriculture is still the dominant sector, incentive policies have underpinned the growth of IT and other technology-based industries. Outsourcing has been a major growth sector.

GDP growth has averaged 7% for the last ten years, and the economy bounced back strongly from the financial crisis to clock up 10% growth in 2010. The deficit remains on the high side 2012, though inflation, which was a recent problem, has settled down; it was at 3.3% in November 2018. With low GDP per capita PPP of only USD6,427 (December 2017) there is ample scope for further rapid growth.

The currency is the Indian rupee. Currently (March 2013), 1 Indian rupee = 0.0139 US dollars (72 rupees to the dollar).

  • Country: India
  • Region: Asia
  • Currency: Indian Rupee (INR) (R)
  • Languages: Hindi, English
  • Time Zone: UTC +5:30
  • Phone Code: +91
  • Communications: Very Good
  • Capital primary business districts: New Delhi, Mumbai
  • Good Relationships: China, France, Germany, Philippines, Singapore, Sri Lanka, Thailand, United Kingdom, United States, Vietnam
  • Bad Relationships: Burma, Egypt, Iran, Korea (Democratic People’s Republic of), Libya, Somalia, Sudan, Syria

BUSINESS ADVANTAGES

  • India’s young population base and growing economic power promises to be a magnet for foreign investment for years to come. You can readily find people who speak English, with all business communication in the country happening in English itself.
  • India has a strategic position on the world map, and is supplemented by many ports and harbours. The country is peaceful, and very simple to access.
  • India invites diversity with open arms. India encompasses many religions, skin colours and languages, and one would not feel alienated on entering the country.
  • As an emerging economy, India is progressive and pro-development. It’s ease of doing business rank has improved tremendously recently, thanks to governmental measures to simplify procedures and boost digitization.
  • India has a strategic position in Asia, and is supplemented by many ports and harbours on 3 sides. The country is peaceful, and very simple to access.
  • India’s demographic dividend and growing economic power promises to be a magnet for foreign companies for decades to come. You will readily find people who speak English, with all business communication in the country happening in English itself. You can buy English language books and magazines in all major Indian cities and airports.
  • With a 5,000-year heritage of welcoming foreigners to its shores, India invites diversity with open arms. India encompasses many religions, skin colours and languages, and you would not feel alienated when you enter the country.
  • As an emerging economy, India is progressive and pro-development. It’s ease of doing business rank has been improving drastically of late, thanks to governmental measures to simplify procedures and boost digitization.
  • The technically diverse workforce of India makes it very easy to employ the right talent for your company here.
  • Two Shareholders: India requires corporations to have a minimum of two shareholders.
  • Low Authorized Minimum Capital: Low and affordable authorized capital requirement of INR 100,000, which is about $2,250 USD.
  • Reasonable Corporate Tax Rate: Indian corporations pay a flat tax rate of 25%.
  • Special Zone: Indian corporations located in the Special Economic Zone receive particular tax exemptions. However, U.S. citizens and those residing in countries which tax worldwide income must declare all income to their tax authorities.
  • IT Industry: India offers several tax incentives to corporations in the IT sector.
  • Double Taxation Treaties: India offers its corporations the benefit of many double taxation treaties with other countries to avoid paying taxes twice on the same income.
  • Skilled English Speaking Workforce: India has many skilled English speaking persons in its available workforce.
  • Low Wages: Indian employees extremely affordable to hire.

TAXATION

  • Headline tax rates: CIT 30% (plus surcharge 5% and cess 3%), PIT 10%-30% (educational cess 3% of tax), VAT 12.5% (service tax 12.36%)
  • Treaty Jurisdictions: Armenia, Australia, Austria, Bangladesh, Belarus, Belgium, Botswana, Brazil, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Korea, Republic of, Kuwait, Kyrgyzstan, Libya, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nepal, Netherlands, New Zealand, Norway, Oman, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Taiwan, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Vietnam, Zambia
  • TIEA Jurisdictions: Argentina, Bahamas, Bahrain, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macau, Monaco, San Marino, Sint Maarten

The corporate tax rate is 30%. However, India has a Minimum Alternative Tax Rate from 19% to 20% for foreign owned companies.

LLC’s must file an annual income tax return whether they made a profit or showed a loss.

Withholding tax on payments of dividends along with payment of interest and royalties to non-residents are required.

COMPANY FORMATION

  • Suitable for: Wealth Management, Treasury Management, Banking, Insurance, Fund Management, Shipping, Aviation
  • Company Types: Incorporated companies, limited liability partnerships, general partnerships, sole proprietorships, co-operatives, branches and trusts
  • Formation Cost: 2700 – 3300 USD$
  • Formation Time: 21-35 days
  • Maintenance cost: 1000 – 1800 USD$

INCORPORATION PROCESS

  • Application for Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN): DSC is an online signature used for filing and DPIN refers to Directors PIN number issued by the Ministry of Corporate Affairs (MCA). At the outset, the partners must apply for these.
  • Approval of Company Name: 3 different options for your company name are required to be provided to MCA, of which one would be selected. The names suggested should ideally be unique and suggestive of the company business.
  • Submission of Memorandum of Association (MoA) and Articles of Association (AoA): After the approval of the name, the MoA and AoA need to be filed with the MCA.
  • Obtaining Incorporation Certificate: Incorporation certificate is proof that the company has been created, and includes the Corporate Identity Number (CIN). It may take one 2 to 4 weeks to get the incorporation certificate.
  • Application for Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN) and Bank Account: PAN and TAN have to be applied for, and usually take a week to be received. Subsequently. Post this, one can submit the incorporation certificate, MoA, AoA and PAN with a bank to open a bank account.

DOCUMENTS REQUIRED

The following documents are required of all the directors and shareholders:

  • Identity and address proof
  • Scanned copy of PAN Card or Passport
  • Passport size photograph
  • Specimen signature (blank document with signature) [for directors only]

The following documents are required for the registered office:

  • Scanned copy of the latest bank statement
  • Scanned copy of the telephone, mobile, electricity or gas bill
  • Scanned copy of the notarized rental agreement in English
  • Scanned copy of the No Objection certificate from the property owner
  • Scanned copy of sale deed/property deed in English (in case of owned property)