View from India: the challenges and opportunities of doing business in Ease India

Ease of Doing Business 2020: Having ascended 17 notches, India ranked 63rd in the global ranking published by The World Bank. The report on Ease of doing Business 2020 compares ‘ Business Regulation in 190 Economies’.

Globally, geopolitical turbulence has affected economies and business sentiments adversely. However, India is in a unique position to turn challenges into opportunities by leveraging the strength of its skilled resources, above-average infrastructure, and huge-market potential to attract international investment. Here is a 101 for investors or businesses looking to enter Indian market:

  1. Starting a Business:
    • 100% foreign equity is allowed in almost all sectors through automatic route (there are defined areas of restriction in sensitive sectors such as telecom, defence, and railway infrastructure, agricultural land etc), with restrictions on countries sharing land borders with India – for which government approval is required
    • Setting up a company in India is simple – mostly an online process but requires vetting of some documents by the Indian consulate in the Investor’s country.
      • This can be done within 3 weeks, subject to the quick availability of required documents. The process involves:
        1. Checking for name availability
        2. Applying for Director Identification Number (DIN)
        3. Obtaining digital signature
        4. Obtaining a company registration certificate
        5. Permanent Account Number (PAN) will be automatically
        6. get generated.
        7. Opening Bank account
        8. A few more statutory compliances
    • 2 categories of companies can be formed, with at least one resident director
      • Private Limited Company – 2 directors and 2 shareholders are required
      • Public limited company – 3 directors and 7 shareholders are required
    • Company related compliances are well defined and can be easily done online
  2. Tax compliances – India has a double taxation treaty with most countries and all tax compliances
  3. Opening of Bank account – an online process (or something)
  4. Supporting infrastructure for businesses: Information technology, Connectivity, Infrastructure, Availability of credit line, Protecting minority interest, Insolvency resolution – are all bonus factors in India.
  5. India is focusing on ESG (Environment, Social & governance) in line with its commitment to the UN Sustainable Goals.
  6. On the accounting side, India has adopted Accounting Standards converged to IFRS and the standard on auditing are broadly in line with the International Standards on Auditing.
  7. Challenges still remain around Contract enforcement, dispute resolution and data privacy and may need the involvement of a reliable professional’s namely chartered accountants and lawyers to handle the intricacies of the local law and compliance.

Contributing Advisors