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Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

Companies investing in infrastructures can benefit from advantages, mainly tax exemptions. Are considered as infrastructures, services of telecommunications, construction and maintenance of highways, construction and management of industrial parks, production and distribution of electricity. Tax exemptions are granted for 5 years; then a 30% deduction for 5 additional years, tax exemptions on dividends, interests and surplus are also granted. Local and foreign companies are urged to establish in the least developed areas by allowing tax advantages (part or total exemptions).
TheIndian Investment Centre (IIC) provides support and assistance to international investors.


Legal forms of companies

Form Number of partners/shareholders Minimum and/or maximum capital Liability Registration fee Release of financial documents
Private Limited Company From 2 to 50 partners maximum. No minimum capital. Liability is limited to the amount contributed. They vary depending on the size and the place of establishment of the company. No
Public Limited Company Minimum 7 shareholders. No minimum capital. Liability is limited to the amount contributed. They vary depending on the size and the place of establishment of the company. Yes

Registration and licensing procedures
Status consist of a Memorandum of association that defines commitments of each partner and Articles of Association that constitute the company policy.
The status of a Public Company must be registered with the Trade Register of the State of establishment, which delivers a Certificate of Incorporation. Finally, as opposed to the Private Company, the Public Company has to obtain a Commencement of business Certificate to start its business.

Foreign exchange control
Currency exchange controls are regulated by the Foreign Exchange regulation Act (FERA) of 1973. The rupee is not freely convertible. Capital and profit transfers are allowed provided that an authorization request is made to the Reserve Bank Of India ( RBI).

Regulations concerning equity investment
A majority holding interest in the capital of a local company is legal, provided that authorization procedures, applicable to the different sectors, are respected.  

Foreign Direct Investment inflows in India

FDI inflows 2003 2004 2005 World rank (*)
FDI inflows (USD million) 4 585 5 474 6 598 119/141
Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.


Last modified in 2006 - ongoing update
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