Immigration and Starting Business in India Ravi NATH Partner RNClegal/ Rajinder Narain & Co. t: t: f: f: c: e: October 6, 2015 Vienna, IBA Annual Conference 1

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Foreign nationals and industry – Welcome  Economic Liberalisation – Began in 1991  Rapid growth – GDP From ‘Hindu Rate of Growth’ 9.8% (2007) 7.3% (2014) Expected to grow fastest in the world – faster than China.  Growth in SEZs, EEZs, MNCs. New Government since May,  A substantial presence of foreign nationals in India, principally in major cities.  UN Department of Economic and Social Affairs – 2013 estimates that 533,835 (0.4% of India’s population) is of international migrants. 3

First Steps  Importance of right first steps – advisors.  Foreign nationals – valid international travel document: national passport with an Indian visa.  Categories of Indian Visas. 4

Visas  Business  Conference  Diplomatic  Employment  Emergency  Journalist  Medical  Missionaries  Project  Student  Tourist  Transit 5

Tourist Visa  For recreational purposes, sight-seeing, casual visits, but NOT for business or commercial activity  Passport should have at least six months validity from the date of arrival in India.  e-Tourist Visa available for certain countries. “Casual business visit” permitted under e-Tourist visas. Validity: 30 days. 6

Business Visa For:  Establishment of industrial or business venture or to explore such options;  Purchase/ Sale of industrial/commercial products or consumer durables;  Attend meetings, such as board meetings, technical meetings;  Pre-sale/ Post-sale meetings or for monitoring an ongoing project.  Also available to Foreign nationals who are partners/ directors of Indian enterprises 7

Business Visa  Duration:Up to 5 years [ U.S.A – 10 years] [China – 6 months]  Maximum period of stay:6 months (in certain cases)  Registration at FRRO within 14 days(if stay exceeds 180 days).  Applicant should produce proof of ‘assured financial standing’ and expertise in field of intended business.  Documentation pertaining to proposed business activity in India is required – e.g. registration of company in India. 8

Family  Business visa holder’s family is given ‘X’ visas which are co- terminus with the principal visa holder.  A family member(s) can be given student/ research visas, if so eligible.  Family members staying in India for more than 180 days, on a single visit, should get themselves registered with FRRO well before the expiry of 180 days. 9

Foreign Direct Investment  Government of India policy on Foreign Direct Investment (FDI) – ‘Consolidated FDI Policy’ dated May 12, 2015 ( Amendments during the year are released as Press notes. New consolidated policy announced every year.  Overseas investments in shares or debentures of Indian companies, under the Automatic Route or the Government Approval Route, depending on the sector.  Sectoral caps.  Prohibited sectors – Lottery, Gambling, Chit Funds, Nidhi company, trading in Transferable Development Rights, Real Estate Business, Tobacco industry, Atomic Energy, Railway operations (other than permitted activities). 10

Corporate Structures  Before incorporating a company in India, a foreign entity may wish to establish a less permanent corporate structure, such as:  Liaison Offices (LO);  Branch Offices (BO);  Project Office (PO)  Minimum criteria :  Profit making track record;  Minimum net worth – BO >= US$ 100,000 – LO >= US$ 50,000 11

Liaison office  Also known as Representative Office – can act only as a channel of communication between Head Office abroad and parties in India – Duration – 3 years (extendable).  Permitted activities: i. Representing the parent company / group companies; ii. Promoting export / import; iii. Promoting technical/financial collaborations between parent/group companies and companies in India; iv. Acting as a communication channel between the parent company and Indian companies.  Cannot carry on business activity. Must be a cost centre, not a profit centre. 12

Branch office  Companies engaged in manufacturing or trading activities are allowed to set up BO with specific approval of the Reserve Bank of India (RBI). The BO should be engaged in the same activity as the parent company.  Permitted activities: i. Export / Import of goods. ii. Professional or consultancy services. iii. Foreign airline / shipping company. iv. Representing the parent company in India and acting as buying / selling agent in India.  Prohibited to undertake retail trading activities of any nature, manufacturing or processing activities.  Profits – Remittable after payment of Indian taxes. 13

Liaison Office, Branch Office  RBI Route — Where principal business of the foreign entity falls under sectors where 100 per cent FDI is permissible under the automatic route.  Government Route — Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. 14

Project Office  RBI allows foreign companies to establish POs, provided they have secured a contract from an Indian company to execute a project in India, and: i. the project is funded directly by inward remittances; or ii. the project is funded by a bilateral or multilateral International Financing Agency; or iii. the project has been cleared by an appropriate authority; or iv. a company or entity in India awarding the contract has been granted a term loan by a Public Financial Institution or a bank in India for the project. 15

Corporate Structures - Companies  Incorporated under the Companies Act,  Types of Companies:  Private company;  Small company;  One Person company;  Public company;  Dormant company.  Foreign nationals may be directors of an Indian company. But, section 149(3) of the Companies Act requires every company to have a Director who has stayed in India at least 182 days in the previous calendar year. 16

Companies  Managing Director / Whole-time Director should be a resident of India. (S.196, Companies Act)  Directors need to be registered with the Registrar of Companies and are allotted Director Identification Numbers. 17

Labour Laws  Workers/ workmen – Welfare legislation.  The Employees’ State Insurance Act, 1948 – 10 or more employees – Applies to employees earning under INR 15,000 (approx. US$ 235) per month.  The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 – 20 or more employees.  Payment of Gratuity Act, 1972 – 10 or more employees.  Shops and Establishment Act – Varies from state to state.  Factories Act – Applies if a ‘factory’ is established. 18

Labour Laws  Indian companies can employ foreign nationals who require ‘Employment Visas’ Conditions:  Duration:Usually one year, or for term of contract. (Extendable; Foreign technician – five years; IT Professionals – three years).  Applicant should be highly skilled and qualified. Employment visas not granted for routine/ clerical jobs.  Salary should be more than US$ 25,000 per year. 19

Taxation 20 Union Income Tax Customs Tax Service Tax Central Sales Tax Central Excise Wealth Tax State Value Added Tax Entry Tax Stamp Duty Local Octroi Property Tax

IPR Regime  India is TRIPS compliant.  Statutes:  Trademarks Act,1999  Indian Copyrights Act, 1957  Patents Act,1970 (amended in 2005)  Design Act, 2000  The Geographical Indications of Goods (Registration & Protection) Act, 1999  The IPR framework in India is stable and well established - over 75% of patent filings in India are made by foreign entities.  Simplified procedure for filing, E-filing facilities introduced. Enforcement needs to be strengthened. 21

22 Thank you.