Foreigner wants to open a proprietorship in India

Can a Limited Liabilty Company (single man) be opened by Foreign national in India?

Originally posted by : Ashis Mahapatra
	Originally posted by :Narayan S Bhat " This is relevant to FEMA Act 2000- Business Establishment in India   For doing business in India a Non-resident (foreigner) can enter by forming a--   -Wholly owened Subsidiary (A Company registered under Indian Companies Act 1956) -Joint venture with Indian /Resident (A Company registered under Indian Companies Act 1956) -Branch ( by due approval of RBI) -Project Office (by due approval of RBI ) -Liasion Office (by due approval of RBI valid up to 3 yr further extended for 3 yr by application)   First two forms (WOS/JV) approval of FIPB/SIA /CCEA is required ONLY IF the activities fall under approval route as per FDI guidelines or it exceeds the sectorial cap. Hence  proprietorship business is NOT allowed   Rgrds "

Is there any particular notification by RBI regarding this matter..or for that matter any circular regarding the same, also could u please confirm the section under the fema act or any rules made thereunder specify the same.

which explicitly bar foreign nationals (not PIOs/NRIs) to start up a proprietorship in india

Thanks and regards

Hi

Pls read relevent Master circular"Foreign Investments in India" in Notification at www.rbi.org.in 

Here we are discussing on FDI as asked by Mr Narayanan.

FDI/FIPB tells about  investments in Business established or proposed to Establish in India.It does not includes investment in Portfolio window or Venture capital fund or other way of investments in India (NRIs or PIOs)

Notification No FEMA 20/2000-RB dated May 3,2000.(A part of relevant circular pasted here.)

"2. Entry routes for investments in India

(i) Foreign Direct Investment is freely permitted in almost all sectors. Under the Foreign

Direct Investments (FDI) Scheme, investments can be made by non-residents in the shares /

convertible debentures / preference shares 1 of an Indian company, through two routes; the

Automatic Route and the Government Route"    

As per my knowledge ; It explicittly not bar  investment forms other than company.Rather it expressly prescribe to invest in share of an Indian company only.And a company also include a banking company,insurance company & any other  corporation formed under any statutory Act.

No specific Notification has issued for investment in LLP,Partnership,Proprietorship.Hence the scope of investment is limited to company only. 

Investment comes to india in 5 forms

1.FDI     2.FPI   3.FVCI    4.Other investment   5.Investment in Non repatriation basis

Pls through that circular.Its quite informative.

Rgrds

Lately its allowed under 'approval' route

1--  A person resident outside India other than NRIs / PIO may make an application and seek prior approval of Reserve Bank for making investment by way of contribution to the capital of a firm or a proprietorship concern or any association of persons in India. The application will be decided in consultation with the Government of India.

2 -- A Non-Resident India¹⁷(NRI) or a Person of Indian Origin¹⁸ (PIO) resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided;

i. Amount is invested by inward remittance or out of NRE / FCNR(B) / NRO account maintained with Authorised Dealers / Authorised banks.

ii. The firm or proprietary concern is not engaged in any agricultural / plantation or real estate business (i.e. dealing in land and immovable property with a view to earning profit or earning income there from) or print media sector.

iii. Amount invested shall not be eligible for repatriation outside India

Hello Ashis ji

May you mention the tax applicability on investment made in india by NRI/POI.............

Thanks

The NRI/PIO shall be taxable irrespective of his status in india i.e. Non resident.

Hi Ashis.

I am holding student Visa up to 2013.

I want to open a proprietorship in few months to come. Is it possible to open while holding a student VISA? If yes,how do I go about?  Where do I start? Please help me.

Thank you.

Hello Ashish,

i. Amount is invested by inward remittance or out of NRE / FCNR(B) / NRO account maintained with Authorised Dealers / Authorised banks
 

we are trying to form an IT Pvt. Ltd. and one of the share holder and director is from UK. The share holder from UK got a NRO account in india.

What could be the most appropriate time to do the transfer for the share holding amount and how to do the transaction ? Can we do it after incorporation of company and to the company account from the NRO account ?

Please share your views about the above mentioned query ?

Thanks.