Company registration in India by NRIs and Foreign Nationals
As an NRI living abroad, starting a business in your home country, India, can be a challenging task. Amidst the complexities of logistics, legalities, and cultural differences, company registration in India can be a daunting process. However, thanks to the Indian government’s initiatives in recent years, registering a company in India has become more straightforward and accessible for NRIs. In this blog post, we will discuss the registration process, eligibility criteria, and benefits of registering a company in India for NRIs. Keep reading to explore the exciting opportunities that await you!
1. Introduction to NRI and Foreign National Investment in India
If you’re an NRI or a foreign national looking to invest in India, you’ve come to the right place. India is a top choice for investment due to its flourishing economy and abundant resources. As one of the fastest-growing economies in the world, India presents abundant business opportunities for NRIs and foreign nationals. However, not all business entities in India allow foreign investment, so it’s important to choose the right one. Private Limited Companies and Limited Companies enable Foreign Direct Investment (FDI) into India under the automatic route, making them the ideal choice for NRIs and foreign nationals looking to invest or start a business in India. Before becoming a director of an Indian company, you must obtain a Director Identification Number (DIN) and a Digital Signature Certificate. A private limited company must have a minimum of two directors, and at least one director should be an Indian Citizen and resident. The shareholding of an Indian Company can be held by a foreign national or foreign entity, subject to the FDI norms in India. Incorporation of a company with NRIs or foreign entities requires notarization of their identity and address proofs, but the process has become easier and quicker in recent times. With India on the rise and making it easier for foreign investors, there’s no better time to invest in India and reap the returns.
2. Type of Companies NRIs and Foreign Nationals can Register in India
If are an NRI or foreign national looking to invest in India, you have several options when it comes to incorporating a company. Private limited companies, public limited companies, and Limited Liability Partnerships (LLPs) are the types of companies that NRIs and foreign nationals can register in India. Private and public limited companies allow FDI into India under the automatic route in most sectors, while LLPs allow FDI under the automatic route only in those sectors or activities that allow 100% FDI through the automatic route.
As per FEMA guidelines, FDI is not allowed for any other types of business like a proprietorship firm, partnership firm, or one-person company. Therefore, the ideal type of business entity that NRIs and foreign nationals can establish in India would be a private limited or public limited company as FDI is allowed under the automatic route for most sectors.
The foreign promoter can establish a public limited company if the number of investors in the venture is at least seven as it requires a minimum of seven members. The foreign promoter can establish a private limited company with just two members. A private limited company can have up to 200 shareholders while a public limited company can have unlimited shareholders. Overall, the process for registering a company in India is fairly straightforward and offers immense potential for growth and development.
3. Investment Policy for NRIs and Foreign Nationals in India
Investing in India is a great opportunity for NRIs and foreign nationals. The Indian Government has made it easy for them to invest in the country under the Foreign Exchange Management Act 1999 (FEMA) Regulations. They can register a Private Limited Company, Public Limited Company, or Limited Liability Partnership (LLP) in India. The ideal type of business to establish in India is a Private Limited or Public Limited Company as FDI is allowed under the automatic route for most sectors. They can even invest in an Indian company by purchasing shares, investing in the capital of an existing company, or registering a new business in India.
Before starting a company in India, they must ensure compliance with the Companies Act 2013. They must obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC) to become a director of an Indian company. A Private Limited Company must have a minimum of two directors and a Public Limited Company must have a minimum of three directors. They should also have at least one Indian citizen director residing in India in the company established by NRIs or foreign nationals. Moreover, the proposed company must have an office address in India before going for incorporation.
India is a great destination for starting a new business. With a market of over 1.2 billion people and a roaring economy, India presents numerous business opportunities for persons and businesses of all sizes and visions. India is also progressing quickly to make the process for incorporation of a company easy and quick. Therefore, there is no better time to invest in India and reap the returns.
4. Compliance Requirements for Company Registration in India
If you’re an NRI looking to register a company in India, it’s important to be aware of the compliance requirements. The Ministry of Commerce and Industry has taken steps to make the process of starting a business in India easier for NRIs, but there are still certain regulations that need to be followed. Private Limited Company registration is the ideal structure for NRIs due to the legal and capital requirements. To register a Private Limited Company, you must have an office address in India and at least one Indian resident director. You must also obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC). All forms filed with the Registrar of Companies must be signed with the DSC. Additionally, certain documents, such as identity proof and address proof, as well as those related to Indian origin, need to be attested by an Indian embassy or notary public. Compliance for a private limited company is simpler than that for a public limited company, and there is no requirement for prior approval from the Government or Reserve Bank of India to direct foreign investments into a private limited company. With this knowledge, you can register your company in India with ease and start your business journey in India.
If you, as an NRI or foreign national, want to invest or start a business in India, you need to know the criteria for directors and shareholders of an Indian company. According to the Companies Act 2013, NRIs, PIOs, foreign nationals, and foreign residents can act as directors of an Indian company. However, they must first obtain a Director Identification Number (DIN) and a Digital Signature Certificate, which requires submitting a self-attested and notarized copy of their passport and an address proof. A private limited company must have at least two directors, and it is recommended that at least one director be an Indian citizen and Indian resident. The shareholding of the Indian company can be held by a foreign national or foreign entity, subject to the FDI norms in India. A private limited company must have a minimum of two shareholders and a maximum of 200 shareholders, while a limited company can have unlimited shareholders but must comply with more stringent statutory filing requirements. Therefore, the ideal entity for NRIs and foreign nationals to invest or start a business in India would be a private limited company. With the right knowledge of criteria for directors and shareholders, you can successfully invest and start a business in India and reap the rewards of its booming economy.
If you are an NRI or foreign national looking to invest in India, it is important to understand the FDI guidelines for shareholding in an Indian company. According to the FEMA regulations, NRIs and foreign nationals are allowed to invest in Indian companies under the automatic route in most sectors. This makes it easy for foreign investors to obtain ownership of shares in an Indian company. The ideal type of entity for foreign investors to establish in India is a private limited or public limited company, as FDI is allowed under the automatic route for most sectors. However, it is important to note that FDI is not allowed for any other types of businesses such as a proprietorship firm, partnership firm or one-person company. Before registering a private or public limited company, foreign investors must ensure compliance with pre-requisites such as obtaining a Director Identification Number (DIN) and Digital Signature Certificate (DSC) to become a director of an Indian company. A private limited company must have a minimum of two directors, and a public limited company must have a minimum of three directors, with at least one Indian citizen director residing in India in the company established by NRIs or foreign nationals. The NRIs and foreign nationals can have the shareholding in an Indian company subject to the FDI guidelines in India, as the RBI allows 100% FDI in various sectors under the automatic route in India. By following these guidelines and requirements, NRIs and foreign nationals can successfully invest and establish a business in India.
7. Procedure for Incorporating a Company with NRIs and Foreign Entities
If you are an NRI or a foreign national looking to invest in India, one of the most ideal business entities for you would be a Private Limited Company. Before starting a private limited company, you must ensure compliance with certain pre-requisites. For instance, you must have a minimum of two directors as per the Companies Act 2013, obtain a Director Identification Number, and a Digital Signature Certificate to become a director of an Indian company. Additionally, if you’re establishing a public limited company, it requires a minimum of seven members. The proposed company must have an office address in India before incorporation, for which office address proof such as a rental agreement or sale deed must be submitted. Notarization of foreign identity proof, address proof, and other documents of foreign origin is also mandatory for incorporating a company with NRIs or foreign entities in India. Finally, you can hold shareholding in an Indian company subject to FDI guidelines in India. Since RBI allows 100% FDI in several sectors under the automatic route in India, obtaining ownership of shares in an Indian company by an NRI and foreign national is simple. Invest in India now and reap the returns of its booming economy.
8. Benefits of Investing in India for NRIs and Foreign Nationals
As an NRI or foreign national, investing in India could provide several benefits. India has one of the fastest-growing economies in the world, with a government that encourages foreign investment. India’s young population and increasing urbanization make it an attractive market for investment. India’s policies have also improved, ranking at 63rd in the World Bank’s Ease of Doing Business Ranking. The Indian government’s recent economic package of $270 billion under the Atmanirbhar Bharat Abhiyan is also attractive for investors. Additionally, NRIs and foreign nationals have special provisions in India’s income tax laws that offer significant benefits. Non-residents are liable to pay tax only on their Indian-sourced income, and they have the option of choosing between the tax slab or a flat 20% rate without exemptions. There are also no wealth taxes in India, and NRIs and foreign nationals can transfer funds freely out of the country. India also has a vast market scope for businesses, and there are relatively low labor costs. Overall, investing in India provides an excellent opportunity for NRIs and foreign nationals to diversify their portfolio and obtain a higher rate of return.
9. Potential Business Opportunities in India
India is a land of opportunities, and as an NRI, you have a unique chance to capitalize on this. The Indian economy is growing at a rapid pace, which has made it a haven for investors. A wide range of sectors like financial services, auto, engineering, healthcare, pharmaceuticals, and IT have attracted both foreign and Indian investors. India’s vast and affordable skilled labor force makes it a conducive environment to establish a business, and the government is making efforts to simplify the process for NRIs. Private limited companies are seen as particularly ideal for non-Resident Indians due to the nature of its legal and capital requirements. They can be started with as few as two shareholders, and compliance is much simpler compared to that of a public limited company. The Foreign Investment Promotion Board (FIPB), which functions under the Ministry of Commerce and Industry, ensures smooth sailing for foreign investors and simplifies the process of setting up a company in India. The government has also eased investment regulations under the Foreign Exchange Management Act (FEMA) and plans to attract foreign direct investment (FDI) to propel India’s economic growth. With a little planning and the right approach, you can potentially tap into these opportunities and success in India.
10. Conclusion and Future Outlook for Investment in India
As an NRI looking to invest in India, it is important to know the challenges you may face. The government is making efforts to ease the process of doing business in India for NRIs, but some challenges still exist. The incorporation process can be tedious, with regulatory requirements, physical office presence, and the need for a local address for a registered office being major roadblocks. However, with the introduction of the SPICe form, it has become easier for NRIs to start a business in India. The RBI has also allowed 100% FDI through automatic routes in many sectors. Private limited companies prove to be a popular mode of investment for NRIs, as compliance provisions and incorporation procedures are simpler. As an NRI looking to invest in a private limited company, it is crucial to follow the RBI guidelines for purchasing and transfer of shares. Overall, it can be concluded that the future outlook for investment in India is positive. With a diverse population and huge market, India presents many investment opportunities. Efforts by the government to ease the process of doing business in India for NRIs, coupled with RBI policies, make investing in India an attractive prospect. So, keep your eyes open for opportunities and make the most of them!