India is known for its colossal population and huge pool of tech talent. The almost US$3 trillion economy supports a thriving digital economy and a huge consumer market. Financial technology (fintech), IT services and telecoms are all lucrative opportunities in this vibrant country.
I got my first taste of the opportunities – and occasional challenges! – of doing business in India when I took on my first engagement in the country for a US Client specialising in software development and IT services.
The Client contacted us while he was in the process of setting up a USA C-Corp and told us he wished to set up a similar establishment in India. Initially, he sought our advice on whether he should set up an Indian limited liability company (LLC) or a branch. We recommended the LLC. To establish a branch while the USA C-Corp was still not fully formed is not ideal.
The Client told us he wanted to have three employees working remotely in India. He would find his own office in Bangalore, but he would manage the business from USA.
One legal requirement to incorporate a company in India is to appoint a nominee director. The Client had a candidate in mind, but there were challenges associated with this. Therefore, our team provided a nominee director for the Client.
While the incorporation process in India is straightforward, getting all the Client’s due diligence notarised and apostilled in the USA was a challenge due to the Covid-19 situation. That said, once the documents had been received in India, we quickly submitted the application to the Ministry of Corporate Affairs which typically reverts within a month.
The engagement is ongoing, but so far so good, with few real challenges. The Client contacted us in March 2021, the engagement started in April and, at the time, we advised the Client to expect the entity to be set up by the end of July. I’m delighted to report that we achieved this deliverable well ahead of time, on June 1st.
Once company registration is finalised, the Ministry of Corporate Affairs needs to verify the Client’s identity. A link will be sent out to the Client from an online portal called eMudhra. Once that’s completed, we will apply for the digital signature certificate (DSC).
We are now working on the next steps in this engagement. The first step is to submit the DSC and the documents. Then, we will proceed to apply for the director identification number. We are also helping the Client open a bank account and will reach out to one international and several local banks with this in mind.
I’ve learned a lot from my first Indian engagement to date. The incorporation process is not the minefield I had expected, and I now have good experience of corporate structuring and the requirements and procedures around that. This experience will certainly stand us in good stead with future Indian engagements.
I look forward to completing the remaining engagement deliverables for our Client in a timely manner.
Read more about setting up a business in India here.