Doing Business in India
Business Approvals and Compliances
For companies to start a new business in India are required to apply for a name, LLP name search facility (of existing companies/ LLPs) is available on the MCA portal. The system will provide the list of similar/closely resembling names of existing companies/ LLPs based on the search criteria filled up. For registration of the name, RUN – LLP to be filed.
The applicant must file e form RUN with the Central Registration Center (CRC), India for approval of name.
The name reserved for the company shall be available for adoption of the name for a period of 20 days. In the case of laps of the said period, fresh approval needs to be taken from RUN or RUN – LLP is to be taken. For LLP name is reserved for 3 months. In case of change of name of the company, the reserved name is available for 60 days.
Issue of Certificate of Incorporation by CRC – Once all the Forms are duly approved by CRC, the digitally signed “Certificate of Incorporation” is issued.
In Case of LLP, LLP agreement is required to be signed and submitted to ROC within 30 days of incorporation of LLP.
Once the Incorporation Certificate is received, LLP can start its operations.
A company having share capital is required to file a declaration of receipt of subscription amount and verification of registered office within 180 days of incorporation and prior to commencement of business.
DSC can be obtained by approaching Certifying Authorities (CAs) with original supporting documents and self-attested copies
A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.
Filing of electronic Memorandum of Association (eMoA- INC 33) & Articles of Association (eAoA- INC 34)
Payment of stamp duty/ filing fees.
In case of foreign subscribers, physical MOA and AOA are to be filled in.
The applicant has to submit the application in the prescribed Form & Self Evaluation-cum-Verification Report along with prescribed documents and original test report(s) taxes) for considering grant of the license under Product Certification Scheme of BIS.
List of products that mandatory require BIS license are listed in Annexure I.
DIN is a unique identification number issued by the Ministry of Corporate Affairs (MCA) as a part of the business registration process, for a designated partner of an existing LLP or a person intending to become a director of a company.
DIN can be obtained by filing application Form DIR-3 online.
All designated partners of the proposed LLP shall obtain “Designated Partner Identification Number (DPIN) / Director Identification Number (DIN)” through FiLLiP & proposed company through SPICe (if DIN is not available)
Note – Application for DIN (for a person proposed to be appointed as a Director of an existing company or LLP) to be filed in Form DIR-3. Change in particulars to be intimated in Form DIR-6 within 30 days.
PAN number shall be allotted based on the information filled in Form SPICe at the time of incorporation of a company.
Quality Marking certificate is provided by Quality Marking Centre of the State Government.
TAN number shall be allotted based on the information filled in Form SPICe at the time of incorporation of a company.
After payment of all fees & stamp duties, CRC scrutinizes all forms and may suggest changes in forms and/or attachments.
Apply for state government incentives/ customized package scheme for Mega projects as per state policies (Optional)
All industrial undertakings exempt from the requirements of industrial licensing, including existing units undertaking substantial expansion, are required to file information in the prescribed form for Industrial Entrepreneurs Memorandum (IEM), i.e. “Form IEM”, with the Secretariat of Industrial Assistance (SIA), Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, and obtain an acknowledgement. No further approval is required.
Optional for all Micro and small enterprises; Service sector medium enterprises; mandatory for manufacturing sector medium enterprises.
Rule
MSME Registration is an optional registration under the MSMED Act that provides Micro, Small and Medium sized enterprises with a host of benefits and access to subsidies and schemes.
MSME criteria
Industries are categorized into manufacturing & service enterprises:
Guidelines:
MSME can be registered by filling Udyog Aadhaar Memorandum. It is a 12 digit Aadhaar number allotted to MSME by DIC
The Udyog Aadhaar Registration can be done online by individuals themselves in case they have an Aadhaar number. However, in all exceptional cases, including those of not having Aadhaar number, can still file Udyog Aadhaar Memorandum, in offline mode(i.e. on paper form), with the General Manager (GM) of the concerned District Industries Centre (DIC).
A unit can apply for PRC for any item that does not require industrial license which means items listed in Schedule-III and items not listed in Schedule-I or Schedule-II of the licencing Exemption Notification. Units employing less than 50/100 workers with/without power can apply for registration even for those items included in Schedule-II. Once the unit commences production, it has to apply for permanent registration on the prescribed form.
For starting a manufacturing unit in any state, the first step for the company is to register themselves as MSME or Mega or Large Projects. The criteria to categorize a unit into MSME or Mega Project or Ultra Mega Project is defined the in respective industrial policies of states. This would benefit the units to apply for various incentives available under state government Policies/ Scheme in addition to other specific policies.
Application to State Pollution Control Boards for Collection/ Reception/ Treatment/ Transport/ Storage and Disposal of Hazardous waste.
A completion certification (CC) is a critical and mandatory legal document that a builder should obtain from Application to Town and Country Planning , or Local municipality , development authority or agricultural department or other local bodies such as Nagar Nigam or Gram Panchayat as applicable) with plan, scrutiny fees and land allotment copy.
After the completion of a project, the local authority inspects and evaluates the premise against the approved building plan and awards the completion certificate, if all the rules are satisfied.
The application for registration is to be filed with the Superintendent of Central Excise having jurisdiction over the premises in respect whereof the registration is to be obtained.
Note – Applicability of Excise is for liquor and petroleum based units.
Consent to operate is obtained from Pollution control board of the respective states. It is required in both pre-commissioning stage. It is subject to renewal from time to time.
Special Valuation Branch (“SVB”) is a branch of the Custom House that specializes in investigating the transactions involving relationship between the supplier and the importer. The detailed working and functions of the branch can be accessed at link.
Employees’ State Insurance Corporation (ESIC) provides monetary and medical benefits to Employees in case of sickness, maternity and employment injury and to make provisions for related matters.
Form 01 should be used by employers to register with ESIC.
The Employees’ Provident Fund Organization (EPFO) provides social security benefits to Employees of establishments on which the Employees’ Provident Fund and Miscellaneous Provisions Act 1952.
Online registration for EPFO can be done through link.
Final Fire approval needs to be taken by local state authority.
Any business whose turnover exceeds the threshold limit of INR 20 lakhs (INR 10 lakhs for North Eastern and hill states) will have to register under GST. Businesses registered under any of the pre-GST laws: VAT, Excise/Service Tax have to register under GST by default.
Any business can get registered under GST by applying via the GST Online Portal or at GST Seva Kendra set up by the Government of India. Fill Form-part A (PAN, Mobile and email id. The portal verifies your detail via OTP. Upload the document as per business type. Fill Form-part B using the received number through OTP. Application reference number shall be received via mobile/ email. The GST officer verifies your application/ document. In case more information/ documents are asked through Form GST-REG-03 details have to be shared through Form GST-REG-04 within 7 working days. GST officer approves application and GSTIN within 7 working days.
Import Export (IE) Code is a registration required for persons importing or exporting goods and services from India. IE Code is issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industries, Government of India. IE Codes when issued can be used by the entity throughout its existence and doesn’t require any renewal or filing.
IE Code application must be made to the Directorate General of Foreign Trade along with the necessary supporting documents.
Application to State Electricity Distribution Company for sanction of power supply for low tension (LT), high tension (HT), or Extra High Tension connection as applicable.
According to section 5 of the Profession Tax Act, every employer (not being an officer of the government is liable to pay tax and shall obtain a certificate of registration from the prescribed authority.
The company is required to apply in Form I to the registering authority.
Registration under Shop & Establishment is provided by state government.
Trademark registration provides legal right of exclusivity for the use of mark to the owner of the mark. Trademark registration involves multiple steps. A step by step guide for registration of trademark is detailed at link.
State Industrial Development Corporations for approval for water connections; to State Industrial Promotion Boards (where applicable) where source of water is river/ canal/ dam; and to Central Ground Water Commission in case of ground water extraction.
Application to respective State DI/ State Industrial Development Corporation (SIDC)/ Infrastructure Corporation/ Small Scale Industrial Development Corporation (SSIDC)
Lift and escalator approval needs to be obtained from local state authority.
Approval is given for installation and operation is accorded separately.
An approval from development authority/ local nodal authority for sanction of building plans/ building permit under the provisions of Building Byelaws, Master plan and Local Body Acts. The Building approval comprises of the building plan and the layout approval for the construction of the building. The applicant has to get approval of layout plan from concerned authorities before starting construction of. Intimation of Disapproval or IOD basically states conditions that needs to be complied with during different phases of Under Construction Project. Post this the applicant received commence certificate to commence construction.
Consent to establish is required from Environment and pollution control board for starting the building construction activity of the unit. An application is to be made to concerned bodies at the state pollution board and central level for environment clearance.
Application for environment clearance (EC) needs to be made at the online platform by MoEF.
Proposals requiring EC clearance under EIA notification 2006. Proposals requiring only CRZ Clearance under CRZ Notification 2014. Proposals requiring both clearances i.e. EC clearance (Category A and Category B both) under EIA notification 2006 and CRZ Clearance under CRZ notification 2011
Environment Clearance is a two-stage process. Stage 1 – Grant of ToR (If, after accepting category A or category B proposals, Ministry/ SEIAA do not take any decision within one month, then, Standard TOR is accorded automatically to the proposal. Stage 2- Grant EC – TOR accorded proposals, Proposals without TOR
Under the Factory Act, 1948 approval for Factory Layout Plan is required. It is usually granted by the Labour’s Department of each state however the competent authority may vary from state to state.
The approval is granted within 60 days for chemical factory and 45 days for other factories subject to the specific criteria met by the competent authority of the state
The layout plan approved is non – transferrable.
Licensing is done under Industries (Development & Regulation) Act 1951. only five industries are under compulsory licensing:
- Electronic aerospace and defence equipment
- Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes
- Specified hazardous chemicals i.e. (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii) Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocyanates)
- Distillation and brewing of alcoholic drinks
Industrial undertakings through online application Form IL. Else IEM has to be availed The step by step guide for availing IEM illustrated at the link
Industrial licenses are regulated by the IDRA, 1951 Act, and are approved by the Secretarial of Industrial Assistance (SIA) on the recommendation of the licensing committee.
Businesses planning to establish industries to produce any of the following items in India must obtain a compulsory license:
Distillation and brewing of alcoholic drinks;
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes;
- Electronics and aerospace and defence equipment;
- Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches; and
- Hazardous chemicals including items hazardous to human safety and health and thus fall for mandatory licensing.
Applicable in case industry located outside an industrial area
Concerned departments:
- State Directorate of Industries (DI)
- Department of Town and Country Planning
- Local authority/ District Collector
Application to State Pollution Boards before commencement of construction activities and production activities under Water Act and Air Act for Consent to Establish and CTO respectively is to be made
There are 4 categories of industries–
- Red – Industries having pollution index score of 60 and above
- Orange- Industries having pollution index score of 41 to 59
- Green – Industries having pollution index score of 21 to 40
- White- Industries having pollution index score up to 20
Note- The approval is granted by state and compliance procedure may vary from state to state
Application to State Electricity Distribution Company for sanction of power supply for low tension (LT), high tension (HT), or Extra High Tension connection as applicable during the construction phase.
Provisional Fire Safety Approval from State Fire and Safety department.
As per the Boiler Act 1923, registration of Boiler is mandatory compliance. Permission for registration is granted post successful inspection.
Provisional registration is granted by the competent authority for the period of 6 months, within which the final inspection (upon request) is undertaken.
For further details and form link to be referred.
Under the Building and other Construction Workers Act, 1996 approval required during pre and post commissioning stage. It is usually granted by the Labour’s Department of each state however the competent authority may vary from state to state .
The approval is granted within 30 days subject to the specific criteria met by the competent authority of the state.
Under the Contract Labour (Regulation and Abolition) Act, 1970 approval required. It is usually granted by the Labour’s Department of each state however the competent authority may vary from state to state.
The approval is granted within 30 days subject to the specific criteria met by the competent authority of the state.