1.0 FACT SHEET
2.0 INDIAN ECONOMY
3.0 BUSINESS STRUCTURES
4.0 CORPORATE COMPLIANCE REQUIREMENTS
5.0 ACCOUNTING, AUDITING PRACTICES, AND FINANCIAL REPORTING
6.0 TAXATION STRUCTURE
7.0 FOREIGN DIRECT INVESTMENT
8.0 INDUSTRIAL LICENSING AND CLEARANCES
9.0 INTELLECTUAL PROPERTY RIGHTS (IPRs)
10.0 EMPLOYMENT REGULATION AND LABOUR LAWS
11.0 FINANCIAL MARKETS AND SERVICES
12.0 REAL ESTATE
13.0 GUIDE TO VISA REGIME IN INDIA
Country Name: Republic of India
Capital City: New Delhi
Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal, between Burma and Pakistan
Time Zone: GMT +5.5
GDP – Purchasing Power Parity: $8.727 trillion (2016 estimate)
GDP – Per capita (PPP): $6,664 (2016 estimate)
GDP – Real growth rate: 7.5% (F.Y. 2015-2016 estimate)
Inflation Rate (consumer prices): 5.41% (2015 estimate)
Exports: $238418.11 million (April 2015 – February 2016)
Exports – Commodities: petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel
Imports: $351806.61 million (April 2015 – February 2016)
Imports – Commodities: crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals
Labour force: 496.9 million (2012 estimate)
Labour force – by Occupation (2012 estimate):
Population: 2nd most populated country of the world – More than 1.27 billion (2015 estimates)
Government Type: Federal Parliamentary Republic
Administrative Divisions: 29 States and 7 Union Territories
Fiscal Year: 1 April – 31 March
Legal System: Common law system based on the English model; separate personal law codes apply to Muslims, Christians, Hindus and followers of other religions.
Executive: The Chief of State is the President who is elected by an electoral college consisting of elected members of both houses of Parliament and the legislatures of the states. The head of Government is the Prime Minister who is chosen by parliamentary members of the majority party following legislative elections. The Union Council of Ministers is appointed by the president on the recommendation of the prime minister.
Legislature: Bicameral Parliament consisting of the Council of States (known as Rajya Sabha) and the People’s Assembly (known as Lok Sabha)
Judiciary: The Indian Judiciary follows a rigid hierarchy with the Supereme Court of India at the top followed by High Courts of respective states with district judges sitting in District Courts and Magistrates of Second Class and Civil Judge (Junior Division) at the bottom.
Major Languages: The Official language of India is Hindi, spoken by some 35% of the population as a first language. Since 1965 English has been recognized as an associated language and is the preferred language for conducting business. In addition, there are 22 main and regional languages recognized for adoption as official state languages.
Currency: Indian Rupee (INR)
Internet Country code: .in
India’s economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and have worked towards accelerating the country's growth. As per the Economic Survey 2012-2013, in 2011-12 and 2012-13, the growth rate slowed to 6.2% and 5% respectively. Nevertheless, despite this slowdown during 2014-15, India's GDP growth recovered marginally to 7.3% from 6.9% in the previous fiscal. India's GDP growth during January–March period of 2015 was at 7.5% compared to China's 7%, making it the fastest growing economy.In the last decade, growth has increasingly come from the services sector, whose contribution to overall growth of the economy has been 65%, while that of the industry and agriculture sectors has been 27% and 8% respectively.
The Indian market provides lucrative and diverse opportunities for business and offers a liberal economic environment for the same. India’s requirements for equipments and services for major sectors such as energy, environmental, healthcare, high-tech, infrastructure, transportation, and defense will exceed tens of billions of dollars as the Indian economy further globalizes and expands. With expected continuance of the government’s liberal policies, India has potential for a sustained high growth for the next couple of years.
There are various forms of business structures existing in India viz. Sole proprietorship, Partnership Firm, Limited Liability Partnership, Cooperative Society, Private Limited Company, Public Limited Company etc. On the basis of nature of business, the companies can be further categorized as Non Profit Organizations, Foreign Companies, Government Companies, Non-banking finance companies, Nidhi Companies etc.
Different legislations govern different forms of business organisation however the main legislation governing the most widely used ‘company’ form of business structures in India is the Companies Act, 1956. But the Act is replaced by the Companies Act 2013, which was passed by the The Lok Sabha on 18th December, 2012 and by the Rajya Sabha on 8th August 2013. It received Presidential assent on 29th August 2013 and has been notified in the Official Gazette on 30th August, 2013.
The provisions of The Companies Act, 2013 are enforced in phases. While 98 sections are enforced by notification issued on September 12, 2013 and the remaining sections are implemented vide notification released on March 26, 2014.The Companies Act 2013 is applicable from financial year 2014 – 2015.
Various other new forms of Business structures and in some cases revamped business structures will come into force in India via the Companies Act 2013 viz One Person Company (section 2(62) of the Act), Small Company ((section 2(85)), Companies with charitable objects etc. (section 8), Dormant Company (section 455), Companies incorporated outside India (Chapter XXII), Government Companies (Chapter XXIII), Nidhi Companies (Chapter XXVI).
The choice of form of business will depend on the activity for which the business is being set up and various other ancillary factors. The features and formation procedures of the important forms of business organization for setting up business in India are as follows:
A sole proprietorship is a single person operation form of business organisation. There is no difference between the owner and the company. It is the easiest to set up and the liability of the owner is unlimited. The profits are entirely the sole proprietors’ however, since his liability is unlimited, his personal assets can be realised to make good the losses of the business. The greatest advantage of such an organization is that it requires minimum legal documentation. There is no separate law on sole proprietorships and it functions as per the normal law of contracts and business.
Partnership form of business formation is governed by the Partnership Act, 1932. Two or more persons can start a partnership and the maximum number of permissible partners in a firm is hundred. Prior approval from the Reserve Bank of India (RBI) is required if foreign nationals want to become partners in an Indian partnership.
There is no stipulation as to the minimum capital to be subscribed for a partnership. A Partnership deed in writing clearly specifying the name of the partnership firm, the names of the partners, the capital to be contributed by each partner, the profit or loss sharing ratio between partners, the business of the partnership, the duties, rights, powers and obligations of each partner and other relevant details needs to be executed. Registration of partnership deeds is not compulsory however registration ensures certain legal rights to the firm and its partners. The liability of partners in Indian partnerships is joint and several for the debts of the partnership firm.
Limited Liability Partnership
The Limited Liability Partnership (LLP), a comparatively new form of business organization in India, which came into being by way of Limited Liability Partnership Act, 2008.
An LLP is a form of business organization combines the advantageous features of both company and partnership into a new business model. LLP is viewed as an alternative business vehicle in which the liability of its partners is limited to the extent of their capital contribution or as agreed as per the Limited Liability Partnership Agreement. The primary intention of LLP is that its external structure should mirror that of the limited company but in terms of conduct of internal affairs it would be similar to traditional partnership.
A LLP is a body corporate, with a distinct legal entity separate from that of its partners. It has perpetual succession and a common seal. It is liable to the third parties independent of the other partners. Any change in its partners, will not affect the existence, rights or liabilities of the LLP. LLP can make contracts, hold assets, sue or be sued in its own name and can hold property or become insolvent.
A Minimum of 2 partners are required to form a LLP and no there is no upper limit as to number of partners. Also, a minimum of two individuals are required as Designated Partners in LLP, of whom at least one shall be resident in India. Unlike corporate shareholders, the partners of a LLP have the right to manage the business directly. One partner is not responsible or liable for another partner’s misconduct or negligence. Liability of the partners is limited to their agreed contribution in the LLP or as specified in the LLP Agreement. However, the partner’s liability in case of fraud is unlimited. The mutual rights and duties of the partners of LLP and the mutual rights and duties of LLP and its partners shall be governed by LLP agreement between the partners or between LLP and its partners. In the absence of such agreement relationship of Partners and LLP would be governed as per Schedule 1 of Limited Liability Partnership Act, 2008.
As per the consolidated Foreign Direct Investment (FDI) Policy (Effective from 5th April, 2013) issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, FDI is permitted in LLPs subject to certain conditions.
The most widely used form of business organisation in India is a “company” which is a voluntary association of person formed for the purpose of doing some business. The governing legislation for companies is the Companies Act 2013, under which the companies can be registered with its liability as limited (personal liability of the members being limited to the amount unpaid on their shares) or unlimited (personal liability of members is unlimited by a pre-decided nominated amount) and are incorporated as public or private companies. Company can also be registered as a Guarantee Company. A Company established for a charitable purpose can also be formed under the provisions of section 8 of the Companies Act 2013.
A Private Limited Company means a company which by its articles of association
In such a company the liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. A minimum of two shareholders and two directors are required to form a private limited company. The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees 1,00,000. There is no upper limit on the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.
Public Limited Company means a company which is not a private limited company. It does not carry the word ‘private’ in its name and also do not have the restrictions as carried out in the private limited companies. Public limited companies are generally large companies with eligibility to raise capital from the public at large . The minimum paid up capital for a public company is Rs. 500,000 and a minimum of seven shareholders and three directors are required to form a public limited company.
One Person Company
India’s revamped legislation ‘The Companies Act 2013’ gave birth to the One Person Company (OPC) - a refurbished form of Sole Proprietorship. One Person Company is a company which can be started with only one person as a member. It is a separate legal entity from its members and gives limited liability protection to its shareholders. OPC may be formed for any lawful purpose with one member and shall have a minimum of 1 director and can have a maximum of 15 directors. However, OPC will be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and will also have to file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year. Every OPC must also nominate a Director in the Memorandum or Articles who will become the owner of the OPC in case the promoter Director is disabled.
Entry Options for Foreign Companies
Indian companies can issue capital against FDI.
FVCIs are allowed to invest in Indian Venture Capital Undertakings (IVCUs)/Venture Capital Funds (VCFs)/other companies, as stated in paragraph 3.1.6 of this Circular. If a domestic VCF is set up as a trust, a person resident outside India (non-resident entity/individual including an NRI) can invest in such domestic VCF subject to approval of the FIPB. However, if a domestic VCF is set-up as an incorporated company under the Companies Act, as applicable, then a person resident outside India (non-resident entity/individual including an NRI) can invest in such domestic VCF under the automatic route of FDI Scheme, subject to the pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms, etc.
FDI in Trusts other than VCF is not permitted.
FDI in LLPs is permitted, subject to the following conditions:
FDI in resident entities other than those mentioned above is not permitted.
Companies incorporated under the Companies Act, 1956 have to file various forms, returns and documents under various sections with the Registrar of Companies (ROC) in an electronic mode within the prescribed time along with the prescribed fees or with payment of additional fees in the event of delayed filing. Physical filing of forms under Companies Act has been discontinued. All filings, since September 30, 2006, are made through e-filing using specially designed e-forms.
Apart from annual compliance requirement, companies are required to perform event-based compliance. Certain events requiring reporting compliance are allotment of shares, transfer of shares, appointment/resignation of directors/Managing Director/ Whole Time Director, change in the statutory auditors, change in registered address etc.
Further, companies have to maintain certain registers like Register of Members, Register of Directors, Register of Contracts, Register of Charges, etc. at the registered office of the company.
Foreign Companies and foreign investors are required to further follow Foreign Exchange Management Act 1999 and Reserve Bank of India (RBI) guidelines and file statements and returns as required.
Different statutes have prescribed various statements to be disclosed periodically by companies. With regard to companies, financial reporting in India covers Balance Sheet, Profit and Loss Account (Income Statement), Statement of Cash Flows, Directors’ Report and Auditor’s Report.
A Company is under legal obligation to keep proper books of accounts and prepare final accounts every year in the prescribed manner. The Company must conform to the legal requirements for preparation of final accounts as laid down in the Companies Act, 2013. The Balance Sheet and Profit and Loss Account of the Company should give a true and fair view of the state of affairs of the company and should be made in the prescribed form as set out in Schedule III to the Companies Act 2013.
Preparation and presentation of financial statements are governed by the Companies Act 2013 and the Accounting Standards laid down by the apex regulator of accounting and auditing practices in India viz. The Institute of Chartered Accountants of India (ICAI). The companies need to disclose the significant accounting policies adopted in the preparation and presentation of its financial statements.
In a move towards convergence with International Financial Reporting Standards (IFRS), the ICAI commenced the process of developing a complete set of Accounting Standards that are ‘converged with’ IFRSs – to be known as Indian Accounting Standards or Ind ASs. The Ministry of Corporate Affairs has notified convergence of 35 Indian Accounting Standards with International Financial Reporting Standards (now called Ind AS) on 25th February 2011.
The Companies Act 2013 has detailed provisions regarding Audit and Auditors. The Act provides compulsory Statutory Audit of Companies, appointment of Auditor and Disqualifications for appointment, Cost Audit, Government Audit, Special Audit etc.
The various types of company audits in India are – Statutory Audit, Internal Audit (in the form of efficiency, proprietary or compliance audit), Branch Audit, Joint Audit, Special Audit and Comptroller an Auditor General (CAG) Audit.
A Company, whether Indian or foreign, is liable to taxes in India if it is resident in India. A corporation is resident if it is incorporated in India or wholly managed and controlled in India. Residents are taxed on all their income whether earned in India or outside India. Foreign income derived by a resident company is subject to corporation tax in the same way as Indian income. A branch of a foreign corporation is taxed as a foreign corporation.
There are various direct and indirect taxes and duties applicable to a company which will vary from situation to situation, like – Income Tax, Minimum Alternate Tax, Dividend Distribution tax, Securities Transaction Tax, Wealth Tax, Customs duty, Central Excise, Service Tax, Value Added Tax (VAT) etc. These taxes and duties chargeable to Indian Companies are governed by various legislations like - Income-tax Act 1961, Annual Finance Acts; Finance Act, 1994; Customs Act 1962; Central Excise Act 1944; State VAT and Central Sales Tax laws etc.
Corporate Taxation is governed by the Income Tax Act 1961. The Income Tax rate is 30% for domestic companies and 40% for foreign companies and branches of foreign companies, however, It is proposed to reduce the rate of corporate tax for domestic companies from 30% to 29% in respect of companies having Turnover/ Gross Receipts upto INR 5 crores from assessment year 2017-2018.
More than 1 crore but less than 10 crore
More than 10 crore
Surcharge at 12% (increased from 10% to 12% in Budget 2016-2017) is payable on additional taxes levied on distribution of profits by domestic companies / mutual funds / securitization trusts and on buybacks.
All the above mentioned Increased surcharges will be in force for only one year.
In India, the tax year is the fiscal year i.e from 1st April to 31st March and Companies are required to submit a final return of tax by 30 September of the assessment year, stating income, expenses, taxes paid and taxes due for the preceding tax year. Other than that, Advance Tax has to be paid by the companies during the year on 15 June (15% of total tax payable), 15 September (45% of total tax payable), 15 December (75% of total tax payable) and 15 March (100% of total tax payable).
Minimum Alternate Tax (MAT)
A MAT is levied @ 18.5% on the adjusted book profit on those companies whose income tax payable on the taxable income computed according to the normal provisions of the Income tax Act 1961, is less than 18.5% of the book profits.
The MAT credit may be carried forward for offset against income tax payable in the following 10 years.
In case of MAT also, Surcharge as applicable as per the status of the company whether Domestic or Foreign as the case may be and Education cess (2%) and Secondary and Higher Education cess (1%) will be applicable.
Securities Transaction Tax (STT)
STT will be levied on the value of taxable securities transactions as under:
Purchase/Sale of equity shares (delivery based)
Purchase of units of equity-oriented mutual fund (delivery based)
Sale of units of equity-oriented mutual fund (delivery based)
Sale of equity shares, units of equity-oriented mutual fund (non-delivery based)
Sale of an option in securities
Sale of an option in securities, where option is exercised
Sale of a futures in securities
Sale of unit of equity oriented fund to the Mutual Fund
The Customs Act, of 1962 is the basic Statute, which empowers the Government to lay down duties to be levied on goods imported into or exported from India. The categories of items and the rates of duties that are to be levied have been incorporated in two schedules to the Customs Tariff Act, 1975.
The first Schedule to the said Act specifies the various categories of import items, in accordance with the ‘Harmonized System of Nomenclature’ - an international scheme of classification of internationally traded goods. Different rates of duties are prescribed by the legislature on different commodities/group of commodities mentioned in the first Schedule. The duties are levied both on specific and ad-valorem basis, while there are few cases where at times specific-cum-ad valorem duties are also collected on imported items.
Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, narcotic substances and certain hazardous substances is collected by the State Government and is called "State Excise" duty. The Excise duty on rest of goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944. Excise duty is a duty levied on excisable goods manufactured in India at the rates prescribed in the Central Excise Tariff Act 1985 which is aligned with the Harmonised System of Nomenclature.
Sales Tax is different from Excise Duty as it is a tax on the act of sale while Excise Duty is a tax on the act of manufacture or production of goods.
There has been no change in the general Excise Duty rate, which is at present 12%. Changes have been made in the effective rates of Central Excise and the Central Excise Act 1944.
Service Tax is the tax payable on services provided. Although it is a tax which is payable by the provider of service, however, it can be collected from the recipient of service. The Central Board of Excise & Customs (CBEC), Department of Revenue, Ministry of Finance, deals with the task of formulation of policy concerning levy and collection of Service Tax. The basic rate of Service Tax is at present 14.5% (including swach bharat cess of 0.5%). The Budget 2016 has introduced a new cess which would be levied @ 0.5% on the value of all taxable services which will be implemented from 1st June 2016.
Service Tax came into effect in 1994 through the Finance Act 1994, and was payable on a specified list of services. However, from 2012, Budget 2012 (which received assent of President on 28.05.2012) has made service tax applicable on all services except those in the Negative List, thus introducing the ‘New Service Tax Regime based on Negative List’. Vide Notification No. 19/2012-ST dated 05.06.2012, the Central Government has announced 01.07.2012 as the date of Introduction of the new regime.
Under the new section 66B of the Finance Act 1994, service tax at the applicable rate (currently it is 14%) shall be levied on all services provided or agreed to be provided in a taxable territory, other than services specified in the negative list.
Thus, as regards chargeability to service tax, the following three parameters are important for a service to be taxable as a service:
Service tax does not have to be paid by the service provider for all taxable services provided in the taxable territory. Service tax on taxable services will not have to be paid in the following cases:
VAT is a multi-point destination based system of taxation, on the final consumption of goods or services, with tax being levied on value addition at each stage of transaction in the production/ distribution chain. The term 'value addition' implies the increase in value of goods and services at each stage of production or transfer of goods and services. Currently, all the states in India have replaced their erstwhile sales tax regime with VAT.
VAT is applicable on intra-state sales. Interstate sales continue to be liable to Central Sales Tax (CST), which is imposed by the Central Government and administered by state governments.
The standard VAT rate is 12.5%, with reduced rates of 5% and 1% in most states. Registration is compulsory for businesses exceeding a certain annual turnover (INR 10,00,000 in most states), although certain state VAT laws also specify monetary limits of sales and/or purchases.
Stamp duty is a form of tax that is levied on documents. It is levied on instruments recording certain transactions, at rates depending on the nature of instrument and whether the instrument is to be stamped under the Indian Stamp Act, 1899 or under a State stamp law. Stamp duty rates for an instrument vary from state to state.
India is expected to implement a goods and services tax and a bill to amend the India’s constitution to facilitate introduction of the same is pending before the Parliament. The Goods and Services Tax Bill or GST Bill, officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India from June 2016. As India is a federal republic GST would be implemented concurrently by the central government and by state governments. Though no bold steps have been taken towards the introduction of GST in Union Budget 2016, a closer look at Budget proposal reveals that a multitude of small steps have been taken towards aligning the current tax regime to the GST tax regime. Now, the current budget seeks to impose Krishi Kalyan Cess @0.5%, thereby further enhancing the effective service tax rate to 15%, which is inching closer to the estimated GST rate.
Another step towards GST has been widening the service tax base by way of pruning service tax exemptions. Service tax exemptions afforded earlier in respect of services provided by senior advocates to advocates or partnership firms of advocates and by a person represented on an an arbitral tribunal to an arbitral tribunal have now been withdrawn.
Foreign Direct Investment (FDI) is permitted in India in certain specific sectors. The details of the entry route applicable and the maximum permissible foreign investment /sectoral cap in an Indian Company are determined by the sector in which it is operating.
Foreign Investment in India can broadly be divided into the following:
As per the Consolidated FDI Policy (effective from April 5th, 2013), “FDI” is defined to mean “investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000”.
FDI can be made into the following entities subject to specified conditions:
FDI in resident entities other than those mentioned above is not permitted.
The regulatory framework governing Foreign Direct Investment (FDI) in India, consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc.
The policy with respect to Foreign Direct Investment (FDI) in India is regulated by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, in the Government of India. The Circular on Consolidated FDI Policy, issued by DIPP, which is updated every year, makes provisions in respect of FDI, foreign technical collaborations, royalty payments, joint ventures abroad etc.
The DIPP makes policy pronouncements on FDI through Press Notes/ Press Releases.
These press notes/press releases are notified by the Reserve Bank of India (RBI) as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. Also the RBI issues a Master circular every year in July on “Foreign Investments in India” compiling the regulatory framework and instructions issued by the Reserve Bank on the subject which automatically stands withdrawn and replaced by a new master circular in the next year.
The procedural instructions regarding FDI are issued by the RBI vide A.P. Dir. (series) Circulars. [RBI authorizes ‘Authorised Persons’ to deal with matters related to foreign exchange, FDI etc as per directions issued by RBI in this regard. These directions are issued through these A.P (Dir) circulars where A.P stands for ‘Authorised Person’ and DIR stands for ‘Directions’.]
An Indian company may receive FDI under the two routes as given under:
The Indian company having received FDI either under the Automatic route or the Government route is required to comply with provisions of the FDI policy including reporting the FDI to the Reserve Bank.
Prohibited Sectors of FDI
FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors:
It is clarified that partnership firms /proprietorship concerns having investments as per Foreign Exchange Management Act 1999 (FEMA) regulations are not allowed to engage in print media sector.
An application for a license or permission for the establishment of a new industrial undertaking or any substantial expansion of [or the production or manufacture of any new article in] an industrial undertaking has to be made to the Government.
The Industries (Development and Regulation) Act 1951 is the main legislation which provides the legal framework for industrial development and for establishment of industries in India. Industrial licence is granted by the Secretarial of Industrial Assistance (SIA) in the Department of Industrial Policy and Promotion, on the recommendation of the Licensing Committee. For this purpose, application in the prescribed form, accompanied by the requisite fee needs to be submitted to SIA.
At present Industrial Licensing for manufacturing is required in case of :-
Following industries require compulsory industrial licence under the provisions of I(D&R) Act, 1951.
Industries exempted from the provisions of Industrial Licence are required to file Industrial Entrepreneur’s Memorandum (IEM).
Additionally, an entrepreneur has to obtain several product specific clearances depending upon the nature of his unit and products manufactured. Environment & Pollution Related Clearances will have to be obtained under the environmental laws like The Environment (Protection) Act, 1986, The Biological Diversity Act, 2002, Water (Prevention and Control of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981, Forest Conservation Act 1980 etc. The method of granting consent under water and air pollution to SSI units has been simplified. Except for 17 critically polluting sectors, in all other cases SSI units will merely have to file an application and obtain an acknowledgement which will serve the purpose of consent.
Units undertaking to export their entire production of goods and services (except permissible sales in Domestic Tariff Area), may be set up under the Export Oriented Unit (EOU) scheme, Electronic Hardware Technology Parks (EHTP), Software Technology Parks (STP) or Bio-Technology Parks (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering and rendering of services. Trading units are not covered under these schemes. These units are entitled to certain privileges and exemptions.
Similarly a unit can be set up as Special Economic Zone (SEZ). SEZ is a region that has economic laws that are more liberal than the country’s typical economic laws and where all the units therein have specific privileges. SEZs are specific enclaves and are exempt from most restrictive laws regarding taxes, quotas, FDI-bans, labour laws etc to make them globally competitive. Through setting up a SEZ in any state, the state can earn increased export earnings, benefit from increased employment opportunities etc. To enable this, foreign investors are offered incentives such as tax exemptions, duty free imports, exemptions from import quotas, capital mobility to remit profits, export allowances and subsidised interest rates within the SEZ.
Foreign technology collaboration agreement for acquisition of foreign technology requires approval of Government of India. It normally includes technical know-how, design and training, engineering services and lump sum or royalty payments.
India provides protection to Intellectual Property Rights in accordance with its obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organisation (WTO). India has well-established administrative mechanism for enforcement of Intellectual Property Rights. Cases of infringement of IPRs are tried in the judicial courts. Also, Intellectual Property Appellate Board (IPAB) has been constituted by a Gazette notification of the Central Government in the Ministry of Commerce and Industry on 15th September 2003 to hear appeals against the decisions of the Registrar under the Trade Marks Act, 1999 and the Geographical Indications of Goods (Registration and Protection) Act, 1999. IPAB has its headquarters at Chennai and shall have sittings at Chennai, Mumbai, Delhi, Kolkata and Ahmedabad
The governing legislation depends on the IP which needs to be protected. Intellectual Property Rights (IPRs) includes the following independent IP rights, which can be collectively used for protecting different aspects of an inventive work for protection viz. Patents, Trade Marks, Geographical Indication of Goods, Registered Industrial Designs, Copyrights, Integrated Circuit layout design, Plant Variety and Farmers Rights Protection, Biological Diversity and Trade Secrets/Undisclosed Information.
The Department of Industrial Policy & Promotion is concerned with legislations relating to Patents, Trade Marks, Designs and Geographical Indications. These are administered through the Office of the Controller General of Patents, Designs and Trade Marks (CGPDTM).
The following is the regulatory and administrative framework governing IPRs in India:
In India, labour law also referred to as “Labour and Industrial Law” is a comprehensive field. There is not one but numerous legislations governing different aspects of labour and employment in India.
Labour laws in India are enacted by Central Government and State Government depending on the competency for enactment provided in the Constitution of India and are enforced likewise. Moreover, both Central and State Governments have formulated Rules to facilitate implementation of these laws.
Additionally, there are social security legislations for the workers in the Organized Sector and a large number of welfare funds for certain specified segments of workers etc. Social Security Schemes of Employees’ Provident Fund Organization (EPFO) and Employees’ State Insurance Corporation (ESIC) are also available for the workers.
The ESIC has taken up new initiatives to improve the quality of service delivery. These include coverage of new geographical areas, implementation of an IT rollout plan and medical education projects. As part of the effort towards the automation of work processes to achieve efficiency and improve service delivery, all offices of EPFO have been computerized, with facility for electronic submission of statutory EPF returns with effect from 2012-13. The members can now get their PF balances, track claims, payment status online as well as receive SMS s on their mobile phones after registering on www.epfindia.gov.in
Some important labour laws and the area they relate to are as follows:
The Reserve Bank of India (RBI), Ministry of Finance, Government of India and Securities and Exchange Board of India (SEBI) are the three major institutions which regulate the various aspects of capital market and money market in India.
The RBI is the governing authority for foreign exchange matters. SEBI, established on April 12, 1992, functions as the nodal agency to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
There are 22 stock exchanges in India and the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the most premier stock exchanges. The BSE is Asia’s first stock exchange and the world’s largest stock exchange in terms of number of listed companies with more than 6000 companies.
Main legislations having a bearing on the Capital market are - The Securities Contracts (Regulation) Act, 1956, The Securities & Exchange Board of India Act, 1992, The Depositories Act, 1996, The Foreign Exchange Management Act, 1999
Recovery of Debts due to Banks and Financial Institutions Act, 1993, Banking Regulation Act 1949 and The Companies Act, 1956.
The introduction of the Takeover Code, Corporate Social Responsibility and Corporate Governance Norms, Sustainability reporting by corporates and the major developments in the capital markets over the last few years has made the markets attractive to foreign institutional investors.
Policy actions initiated by SEBI such as allowing Qualified Foreign Investors (QFIs) to invest in the primary and secondary markets, electronic Initial Public Offers (e-IPOs), mandating companies to attain the minimum public shareholding of 25% by June 2013 and the disinvestment programme by the Government is expected to reinvigorate the Indian primary market activities.
The Banking system in India is well developed and the public sector banks are the back bone of the Indian financial system The Reserve Bank of India is the central bank of the country and is the empowered regulatory and supervisory authority of banks' activities in India and their branches abroad. Additionally there are a number of financial institutions in India which are regulated by RBI and SEBI.
Both the Central Government and State Government are empowered to legislate on matters of real estate for the subjects specified in the Constitution of India. There are a number of legislations both central and at the state level on various aspects of immovable property, transfer and sale of such etc.
Key Central legislations pertaining to real estate and the areas they cover are:
Foreign investment in real estate is regulated by the Department of Industrial Policy and Promotion (“DIPP”), the Reserve Bank of India (“RBI”) and the Foreign Investment Promotion Board (“FIPB”) under the provisions of the Consolidated Foreign Direct Investment Policy, the most recent one being applicable from April 5th, 2013.
As per the consolidated FDI Policy 2013, FDI is allowed under the 100% automatic route in townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) subject to satisfaction of certain conditions for the same.
However a bill is in parliament regarding real estate i.e. Real Estate (Regulation and Development) Bill, 2013.The Bill regulates transactions between buyers and promoters of residential real estate projects. It establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs)
Residential real estate projects, with some exceptions, need to be registered with RERAs. Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs.
On registration, the promoter must upload details of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project.
70% of the amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project. The state government can alter this amount to less than 70%.
The Bill establishes state level tribunals called Real Estate Appellate Tribunals. Decisions of RERAs can be appealed in these tribunals.
Visa is not a matter of right and it is the prerogative of the competent authority whether issue visa to any foreigner. While a large majority of foreigners are covered under general visa rules, however certain specific visa rules and procedures apply to certain categories of nationals. ‘Visa’ is a service and a fee is charged for grant of visa in accordance with the scale laid down by the Government of India. Visa Fees, once charged, are not refundable.
Entry, stay and exit of foreigners into India is governed by the Passport (Entry into India) Act 1920, Passport (Entry into India) Rules, 1950, Foreigners Act 1946 and the Registration of Foreigners Rules, 1992.
In India, the concerned Ministry for these issues is the Ministry of Home Affairs (MHA), Government of India (http://mha.nic.in). Outside India, the visa regime is implemented by Indian missions & posts and in India by Foreigners Regional Registration Offices (FRROs), home departments & district administrators in the states and immigration posts.
All foreigners entering India must have a passport or any other internationally recognized travel document and visa.
Nepalese or Bhutanese nationals entering by land must have some Photo Identity Papers as proof of their nationality. But in case of entry by air directly from Nepal/Bhutan or from a country other than China, they must have a passport. No visa is required. However, they must have visa if they are traveling from China
The visa applicant should ordinarily be within the jurisdiction of the mission/post or else it is necessary to make a reference to the Indian mission/post in the country to which the applicant belongs. Additional fee is chargeable for making reference to the concerned mission/post.
Gratis visa is granted to diplomats and officials , UN officials traveling on duty or those traveling to India on invitation of Government of India as its guest. Those granted scholarship under Cultural Exchange Programmes are also granted gratis visa.
The following types of India visa are issued to foreign nationals in accordance with the purpose of their visit.
Type of visa
A multipurpose life-long visa known as ‘Universal Visa’, may be granted by Indian Missions and Posts abroad or the Ministry of Home Affairs to the Foreigners holding Overseas Citizens of India (OCI) card. The holder of universal visa can study, do business or take up employment in India and is exempt from the requirement of registration with Foreigners Regional Registration Offices (FRRO)/Police authorities for any length of stay in India.
Visa can be extended and issues relating to extension of visa , while in India, is dealt by, FRRO, Ministry of Home Affairs.
In view of the existing bilateral agreements/arrangements, all types of visas are issued gratis to the nationals of Afghanistan, Argentina(Tourist visa only), Bangladesh, Democratic People's Republic of Korea, Jamaica, Maldives, Mauritius, Mongolia, South Africa and Uruguay.
Diplomatic, official/service and ordinary passport holders of certain countries are exempt under bilateral agreements from visa requirement.
Since 2006, a number of Indian Missions/Posts abroad have outsourced visa services. A few of the missions/posts have outsourced passport and consular services also.
Visas issued to foreigners are not valid for certain specified areas. Special permits viz. Restricted or Protected Area Permits are required to visit them. These permits are issued by Indian Missions/Posts abroad and MHA/State Governments in India. All Tibetan settlements are Restricted Areas.
Online Visa Application
All foreign nationals entering India are required to possess a valid international travel document in the form of a national passport with a valid visa obtained from an Indian Mission or Post abroad. The duly signed physical copy of the application form completed in all respect and submitted successfully, is to be submitted at the concerned Indian Visa Application Center or directly to Indian Mission/Post, on the scheduled date of interview along with the requisite supporting documents. The instructions for filling the form and scheduling the appointment can be seen at Instructions for Online Visa Application. Important technical information for filling online Indian visa application can be referred at Technical Instructions.
Registration of Foreigners
All foreigners (including foreigners of Indian origin) visiting India on long term (more than 180 days) Student Visa, Medical Visa, Research Visa and Employment Visa are required to get themselves registered with the Foreigners Regional Registration Officer (FRRO)/ Foreigners Registration Officer (FRO) concerned having jurisdiction over the place where the foreigner intends to stay, within 14 days of arrival.
Pakistan nationals are required to register within 24 hours of their arrival. Pakistan nationals are permitted to enter into and exit from India only through designated check posts.
Only single entry Tourist and Business visas valid up to 3 months are granted to Chinese nationals. The visa may be extended up to 3 months by FRROs/Ministry of Home Affairs. All other types of visas fall in prior clearance category.
All Afghan nationals are required to register with the FRRO/FRO concerned within 14 days of arrival except those Afghan nationals who enter India on a visa valid for 30 days or less provided the Afghan national concerned gives his/her local address in India to the Indian Mission/FRRO/FRO. The Afghan nationals who are issued visas with ‘ Exemption from police reporting’ are exempt from Police reporting as well as Exit permission provided they leave within the Visa validity period.
Foreigners other than those mentioned above will not be required to get themselves registered, even if they have entered India on a long term visa provided their continuous stay in India does not exceed 180 days. If the intention of the foreigner is to stay in India for more than 180 days, he/she should get himself/ herself registered well before the expiry of 180 days from the date of arrival with the FRRO/FRO concerned.
Foreigners (including minors above 16 years of age) have to report in person or through an authorized representative to the appropriate Registration Officer for registration. No registration is required in respect of children below the age of 16 years.
There are two types of work related Visas, namely:-
A Business Visa with multiple entry facility can be granted for a period up to 5 years or for a shorter duration as per the requirement. A stay stipulation of a maximum period of six 6 months will be prescribed for each visit by the concerned Indian Mission keeping in view the nature of the business activity for which such Business Visa is granted.
Indian Missions can grant Business Visa with 10 years validity and multiple entry facility to the nationals of the United States of America. This visa should be issued with the stipulation that the stay in India during each visit shall not exceed six (6) months.
An Employment Visa is granted to foreigners desiring to come to India for the purpose of employment, subject to fulfillment of certain conditions. The validity period of the visa has been specified and is based on the purpose of employment.