Things Canadian citizens should know while incorporating business in India

Things Canadian citizens should know while incorporating business in India

Different kind of business structures in India for company incorporation

India is one of the best places in the world for entrepreneurs to incorporate a business having a democratic, geographic, and locational benefit. It consists of a young & strong workforce with huge potential in business that is a major attraction for entrepreneurs of Canada for India entry. Currently, India is one of the largest and fastest-growing economies in the world with increased GDP at an average of 8.5 per cent in the last five years. The government of India has made an intensive approach to ease the regulations for citizens of Canada to incorporate a business in India.

Different kinds of business structures in India

Foreign investment could be done by the citizen of Canada in the following business structure-

  1.  Limited Company- It is the most preferred form of business for citizens of Canada and foreign nationals to incorporate manufacturing units, export/import businesses and consulting businesses in India. As per law, foreign nationals could become full-time directors or managers in the company.
  2.  Limited Liability Partnership (LLP) – Limited Liability Partnership means a partnership in which some or all partners are liable for limited shares. It means that each partner enjoys the benefits of limited liability to the partners at low compliance costsUnder Limited Liability Partnership, prior approval from the government and different bodies is essential to set up the same by foreign nationals. 
  3. Sole Proprietorship: Citizens of Canada or foreign citizens planning to set up independent consulting or trading in the form of a shop can start a proprietorship enterprise, provided they get prior consent from the Reserve Bank of India and the Foreign Investment Promotion Board. The essential provision under sole proprietorship is that the amount invested in a proprietary business cannot be repatriated outside India.
  4.  Liaison Office / Representative Office: A Liaison Office could be incorporated with the approval of the government of India. The role of the Liaison Office is restricted to the collection of information, promotion of exports/imports and help in technical/financial collaborations.
  5. Project Office: Foreign companies planning to start specific projects in India can set up temporary project offices in India for carrying out business activities specific to that project. The Government of India has now permitted foreign entities to incorporate project offices subject to specified occurrences.
  6. Branch Office: Foreign companies engaged in manufacturing and trading activities overseas can set up Branch Offices in India. Branch Offices incorporated with the approval of RBI may remit outside India profit of the branch.

Step by step method to start a business in India

  • The shareholders and directors of the proposed new business need to get Permanent Identification Numbers (PAN) from the Income Tax Department.
  • The directors of the corporation need to apply for the Director Identification Number (DIN).
  • Attain a Digital Signature Certificate (DSC) from a government-certified agency. 
  • Submit six names for the corporation in order of preference to the local Registrar of Companies. 
  • Forms could be downloaded from the Ministry of Corporate Affairs website and further on the approval from the Registrar of Companies investors will set up the company.

ASC is a consulting firm assisting foreign investors for India Entry. For incorporating a business in India, advisory over feasibility study, business model, market study, regulatory approvals, and recommendations could be provided by the consultant. An experienced consultancy will guide investors on selecting the right business structure will be beneficial for an organization in the long run and one can set up the company as per their company structure.      


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