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Business Expansion Through Startup India

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Overview

India is a massive country located in the heart of South Asia. With a population of approx 1.350 billion, India is the second-most populous country in the world. When it comes to a geographical area, India rules as the seventh-largest country in the world. Further, India is also known for its world’s second-largest labor force. So, with a labor population of 500 million, India offers a thriving domestic market opportunity.

A Highly skilled workforce and an open regulatory environment make it the best business place. Further, it is also a favorite destination for many global companies who want to expand their business.

Entering into Indian Market

If you do not consider India to expand your business, then you are ignoring one of the most promising markets of the future. Several reputed companies have their indirect presence in India. This means very soon they are going to expand their business in India. However, securing a direct presence in India will help companies to gain better control over the operations. They can enhance their financial and marketing activities.

Companies can secure their presence in India in many ways. It includes possessing a subsidiary, LLP, or opening a branch office/Liaison office/project office and many more.

Ease of doing business in India

Ease of doing business is an index made by the economists of the World Bank group. They usually rank countries as per their average in 10 sub-indices. In such cases, we are excited to announce that India has gained the 79th place from 142 in the ease of doing business. Further, India will move on to the top 50 by the next evaluation, as it has earned a place among the top improvers of the world.

Some major changes that India has undergone in a short duration are:

1) Offering cheaper company registration to all the foreign entities by eliminating the fee for simple registration form.

2) Offers easier insolvency resolution by promoting reorganizations in practice.

3) Providing cheaper warehouse establishments.

4) Streamlining all the process involved in construction permit.

5) Providing easy border trade with the latest reforms.

Supportive government policies

The FDI policy in India has been continuously liberalized to make it more investment-friendly for foreign investors. So, as a result of supportive liberal foreign investment policies, India has been ranked among the top investment destinations by the world.

Further, the industrial policy over the past few years has mostly removed all the limitations on business expansion. On the other hand, India has also allowed access to foreign technology and funding on other.

Some majors taken to liberalize foreign investment include:

1) Introduction of the dual-route for making entry to the Indian market, RBI’s Automatic route, and the route by government’s approval.

2) Auto permission for technology agreements, and removal of limitation of FDI in low technical areas.

3) Approval of permissions to the NRIs and the overseas corporate bodies.

4) Hike in foreign equity participations limits to 51% for the existing entities.

5) Liberalization in the use of the foreign brand name.

Some factors to consider before expanding business in India

If you want to expand your business in India, here are some factors that you should consider:

1) Making an industry-specific market research.

2) Analyzing the regulatory environment in India.

3) Making a market strategy.

4) Choosing an adequate legal structure for the entity

5) Select the right partners, and build contacts

6) Think about long-term growth

7) Understanding the business culture in India

Availability of skilled manpower

India is a country that has the second-largest labor force in the world. So, this makes it clear that India is capable of offering a huge pool of skilled manpower. Further, you can also find professional managers and semi-skilled laborers at a comparatively low price. That means it will save you cost. You can also train them to make them completely skilled in your work.

Another reason to expand your business in India is a large scale population. Large scale population offers you plenty of manpower at any point in time. Further, large scale population also creates a competition among the employees to be the best. So, this offers you a chance to select an abundance of skilled employees.

On the other hand, the hourly rate of developers in the western hemisphere is about $60-$80. But in India, it is as low as $15. Thus, you can easily hire skilled developers with flexible pricing. Even a small business can find a suitable budget top expand in India. So, this is why many big entities have set up their captive units in India.

Both foreign and Indian recruitment agencies exist in the market. And the Indian work culture is completely flexible and different from any other work culture. All the employees and extremely professionals, and the much-needed factor English is used as the official language for communicating.

The Indians have proven themselves among the finest workforces. So, global startups can expect the highest quality of the workforce with the best work ethics. Foreign entities can easily set up their R&D, innovation centers, and technical support. Moreover, manpower in India offers all the required expertise to deliver the highest quality of service. If you sum it up, you can find the lowest rates for skilled employees without compromising the quality of the service.

Selecting the right business set up

Foreign companies can make an entry to the Indian market with the following three options.

Establishment of a Liaison office

A Liaison office of a foreign entity is the only representative office that works as a communicating channel between the head office and third parties in India. Further, a LO can indulge itself in promotional activity. But it has to ensure that it doesn’t make a legal standing of its own. Further, it is restricted from doing any kind of commercial activity in India.

Establishment of branch office

The branch offices of the foreign entities are the extensions of their head office in India. So, they are indulged in all those activities that are carried out in the HO. The BOs can export/import goods or render services. Like the Los, BO also cannot have a legal standing of its own.

Establishment of the wholly-owned subsidiary

There are several private limited companies in India. As per the company Act, 2013, a foreign entity can closely hold share among the parent and group companies. This makes them a distinct legal entity, and they are treated as a domestic company.

Setting up an LO in India

1) If you want to set up a LO in India, you need to apply FNC Annex-1. It is the form required for the establishments of LO.

2) Submit the certificate of registration, MOA, AOA, and latest audited financial report of the parent company.

3) Obtain a PAN card, UIN.

4) Enlist the LO with the ROC within thirty days of establishments. You can make an online entry by filing the form FC-1.

Setting up a BO in India

If you want to set up a BO in India, you must follow the below steps:

File an application in the form FNC Annex-1 for establishing a BO

Submit the following details

Knowing about various Acts in India

Companies Act, 2013- This is an act that governs the functioning, restructuring, management, and dissolution of companies in India.

GST Act- The good and service tax is a trade tax for all the entities indulged in trade. It applies to the sales of goods and services.

Indian Contracts Act- This act governs all the contracts relating to the formations and enforceability.

Competition Act- This Act ensures fair competition in the market.

Foreign exchange management Act- It regulates the inflow and outflow of the foreign exchanges and investments that are made in India or made from India.

Income tax Act- It regulates the tax treatment on business profits, mergers, de-mergers, and capital gains.

SEBI Act- This Act governs the security marker regulation in India. It also offers security to all the listed companies. It includes shares, terms of the mandatory and voluntary tender, and many more.

SCRA- It governs the listing and trading of securities on the stock exchanges in India.

Business support

Some businesses often have to function with a limited amount of resources. So, it is essential to make an optimum decision. For most of the startups, it is not possible to employ expert-level resources, particularly with a limited scale of activities.

So, in such cases, all the businesses can channel themselves towards the core business. It is because it will help them save time, funds, and efforts.

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