India emerges out to be one of the most promising economies in recent times in terms of potential return on investment, and with increased ranking of India in “Ease of doing business”, it has attracted many Offshore companies into setting up operational presence in India.
Considering above, it becomes imperative to analyze in Detail all aspects pertaining to setting up of operations in India. We will look into aspects from a macro perspective:
- Foreign Exchange Management Act: It must be understood and analyzed in detail whether the sector and type pf operations intended to be setup are permitted as per FEMA, read with latest updated RBI regulations in this regard.
The dynamically changing economic conditions, both domestically and globally, contributes to the ever-changing laws pertaining to Inbound and Outbound investments.
- Income Tax regulations and Double Tax Avoidance Treaties: What needs to be analysed in detail while investing in India is both – domestic taxation and international law with respect to the same read with treaty agreement between respective nations.
- Legal Entity Form: It becomes a very crucial decision to analyse pros and cons of setting up a Private Company limited by shares, Public company, LLP, partnership firm, Trust or any other form. This decision primarily depends upon future intended operations, and expected scale.
- Specific License: Specific license permits are needed for more than fifty three sectors, based on circumstances and nature of operations. Hence, at times, it becomes important to obtain license and ermits to initiate operations and setting up.
- Legality: It needs to be analysed whether the sector is legal to operate in India.
- Transfer Pricing and other aspects for multiple country operations: This is an important aspect if multiple country operations are carried out or intended to be carried out.
Ease of doing business, combined with long term strategic thinking is critical while deciding to set up an entity in India and initiate operations in India.