Your Gurgaon Business
an Office in Gurgaon?
Gurgaon, Haryana, India - Delhi NCR City
Gurgaon Business - Setting up Business in India or Incorporating in India
India Inc. - Steps to setting up your company in India
What you should know if you’re planning to set up a software project or call center in India
Setting up most businesses requires a common set of policies to be understood. Here we describe them step by step. We also explain the specific issues involved in setting up software laws and call centers.
FORMING A COMPANY
1. REGISTER THE COMPANY
Investment in hardware and software
technology parks, EOUs, and EPZs 100% foreign investment is allowed
in electronics and software industries, exclusively for exports. Such
units are bonded factories eligible to import, free of duty, capital
goods, raw materials and components, spares and consumables, office
equipment etc. Deemed export benefits are available to suppliers of
these goods from the DTA (Domestic Tariff Area). A part of the production
from such units can be sold in the DTA, depending upon the level of
value addition achieved.
Once the equity investment is approved,
imports of capital goods, components, and raw materials or the engagement
of foreign technicians for short durations don’t require further
approval. The approval of the Ministry of Home Affairs is not needed
for hiring foreign nationals holding a valid employment visa The approval
for setting up units in EPZs is given by the Board of Approvals in the
Ministry of Commerce. The approval for setting up EOUs outside the Zones
is given by the SIA, Ministry of Industry. The approval for setting
up EHTP and STP units is cleared by IMSC (Inter Ministrial Standing
Committee), set up under the Chairmanship of the Secretary, Department
of Electronics. Proposals involving FDI not covered under the automatic
route are considered by FIPB (Foreign Investment Promotion Board).
The Memorandum sets out the constitution of the company (name of the company, the nature of liability of its members), and includes its objects (the purpose for the formation of the company, the parameters within which it has to carry out its activities). The company cannot do any act that is outside the object of the company even if all the shareholders approve it unanimously. The Articles of Association are the rules and regulations for managing the company’s internal affairs and for achieving its specified objects and purposes.
2. GET THE COMPANY’S NAME APPROVED
3. PAY A REGISTRATION FEE
4. INVITE SUBSCRIPTION TO SHARE CAPITAL
5. SEEK FDI AND FOREIGN TECHNOLOGY COLLABORATION
FDI and foreign technology collaboration are are approved either through the automatic route (no prior government approval is necessary) under powers delegated to the RBI (Reserve Bank of India), or the government (government approval is necessary).
Automatic approval FDI
- Proposals where the foreign collaborator
has a previous venture/tie-up in India
Foreign technology collaboration agreements
Payments are subject to an overall ceiling of 8% of total sales, over a 10-year period from the date of agreement, or a 7-year period, from the date of starting production, whichever is earlier. Investment applications under the automatic process are made to the RBI and approved within three weeks.
However, automatic route for technology collaboration is not available to those who have, or had any previous technology transfer/trade-mark agreement in the same or allied field in India.
The FDI/foreign technology collaboration agreement proposals, which don’t conform to the automatic-approval guidelines, require government approval through the FIPB. The government has set up a special FIPB as a fast track mechanism to invite and facilitate foreign investment in large projects, considered beneficial for India, but are not covered by the automatic-approval process and norms under which SIA (Secretariat for Industrial Assistance) is authorized to grant investment approvals.
Investment proposals outside the purview of the RBI
Other proposals including those in the services sector that don’t conform to the guidelines for automatic approval, or seek higher foreign equity investment are approved by SIA (Industry Ministry).
Employing foreign software professionals
To employ foreign software professionals you must get the approval of FRPO (Foreign Regional Registration Office), Ministry of Home. Since, India does not issue work visas, you’ll have to get short term (tourist/business visas) or long-term visas. So for the foreign professional, consultants or employees, staying beyond 182 days, with an intention of working, or employed, or carrying out business, it becomes a big issue of tax liability. In that case, the global income of the expatriate is open for scrutiny under the Indian tax laws. They would have to obtain tax orders to avoid being doubly taxed under Indian tax laws, and their respective countries. India has a double taxation avoidance agreement with many countries.
Setting up a software technology park
STPI (Software Technology Parks of India) is an autonomous society set up by the government under the Ministry of Information Technology, to promote exports of computer software.
STP (Software Technology Parks) is a 100% export-oriented scheme for the development and export of computer software, using data communication links, or in the form of physical media including the export of professional services. The major attraction of this scheme is the single-point contact service to STP units.
To become a certified member unit under the STP scheme, approval from the competent authority is required.
Requirements for setting up STP
An application in the prescribed format
to register and establish an STP unit must be submitted to the STPI
Setting up a call center in India
For a call center you need effective company representatives and state-of-the-art communications and information technologies. You need adequate telecom facilities, trained consultants, access to a wide database, Internet and other on-line information support infrastructure, to provide information and support to customers round the clock. A call center is sometimes defined as a telephone-based shared-service center, for specific customer-related functions like marketing, selling, information dispensing, advice and technical support.
To set up a call center, you must get an NOC (no-objection certificate) from the Deputy Director General (Customer Relations) at the Department of Communications, New Delhi. The NOC grants special permission to use voice circuits over international gateways to serve overseas customers, with the undertaking that it will not be connected to a PSTN (Public Switched Telephone Network) within India.
The government has set terms/conditions for call-center operators. The new policy initiatives aim to liberalize such operations in India, and are permitted on a non-exclusive basis against requests from IT service providers. The call centers can either be international or domestic.
However, interconnectivity of international
and domestic call centers is not permitted. Though, interconnection
of two domestic call centers of the same company is permissible, subject
to DoT approval
A very important deciding factor for companies looking to set up a call center is the laws and regulations of the country.
Another equally important factor is the telecommunication infrastructure, technology and tariffs. India is perceived as technologically savvy and keen to emerge as a country with sound telecommunication infrastructure. Companies also consider economic incentives, like grants, tax exemptions, repatriation of profits, corporate tax on profits generated by call centers and tax treaties.
Companies prefer countries that have an English-speaking work force (and possibly other languages), which is cost effective with a disciplined work culture. The availability and cost of office space is also important. They look at the feel-good factor—positive, service minded and friendly people.
Disclaimer : The above mentioned doesn't constitute legal advice. To get an update on the latest policies for incorporating your business in India, you should get in touch with legal experts.
Act NOW before your competitor does
Special Advertising Packages available for Real Estate Dealers, Call Centres, BPO & Software Companies