Business Visa

travelingdoc

I am a Canadian (non-Indian heritage) who would like to start a small business in Bangalore that would be self run by myself and my (also Canadian) partner. We might have one or two Indian employees. So - has anyone tried a similar venture applying for a business visa? What kind of documentation would be required of me?

Priyamav

For an Indian Business visa you would need sponsorship from an India-based company. And you would need papers from a company-back-home. A business visa is actually primarily meant for people from a company in a non-indian country who want to do business with a company in India...or a company in a non-indian country who want to set up a subsidiary in India.

The process is actually quite complicated. And I know, because I have looked into quite a few details of setting up a 100% foreign owned company in India.
Although they are trying to encourage FDI in India, the paperwork that is involved in setting up a 100% foreign owned company quite complex.

First of all, what is the nature of your business? If it is on the list of FDI which is not allowed by the Reserve Bank of India, you will not be able to set up a company.

Second: I assume you will be setting up a private limited co. and not a sole proprietorship.

A third issue is: to make the process easier you will actually need an Indian partner, who will 'formerly' setup the company, into which you and your friend will be able to buy 99% of the shares. I have talked to law agency in Delhi who deals with this kind of 'incorporation'. The lawyer sets up the formal company in the form of a shell (buys 1% of the shares), and then allows you and your friend, as investors so-to-speak, to buy the other 99% of the shares. After a certain period you can even retain the 1%. The advantage of this scheme is that your company will be registered as an Indian company, which means you will pay domestic corporate taxes, etc.

The other way of doing it is by asking permission from the RBI. You will need a lawyer for this too. It will take a long time.

In any case: having an Indian partner (one you can trust) will really be a plus. Not just business-wise, but also because it will be easier to set up and run the business. Another issue: if your company would ever need to file for bankruptcy, it is a legal process that can take years. Having an Indian partner will make that easier.

Visa-wise, the story is not that complicated. Under the scheme described above you will become both 'owner' and 'director' so to speak. As a director one could get an employment visa and pay income taxes on that, etc.

There are also quite some issues involved with taxes, repatriation of funds, banking, etc.

So in conclusion: it can be done, but it's not as straightforward as setting up a company in Canada. Also very important: find a lawyer you can trust. And go through every possible detail with that person.

I was told that once it is formerly setup visa-issues are not that a problem. And to actually set up the company: visa-issues are not a major factor either. To set up a company you are in fact a foreign investor buying stock of a company, whether you are physically in India on a certain visa or in a foreign country, that doesn't matter.

This is what I figured out last year october. The situation could have changed over a year. Perhaps it is more straightforward now.

In any case good luck. What type of company is it? I am moving back to Bangalore in January.

cfhi

And i tot my problems about getting an employment visa and FRRO registration is big enough problems, damn am i lucky i nam working for a company here rather then setting up a company here~~

johng

I have an Indian Pvt Ltd company that was set up in Goa about 18 months ago. The partners are myself and my wife, there is no need for an Indian partner and the process was easy and quick, about three weeks and cost about 300 Euros. I used a lawer who dealt with everything.
There seems to be no problems and we have just filed our tax and company returns so presumably are fully legal.

John

Priyamav

That's very interesting John! What type of business is it? (tourist?) Are your also director or just owner? What type of visa do you have?

johng

I am both owner and co-director.
Not tourist, more export/import, though at the moment not doing either, I am more interested in building my house!
I have a 12 month tourist visa at the moment, seemed easier to get than a business one, as i am not planning on living in Goa until next year.
I believe the regulation regarding having an Indian partner changed early in 2004.

John

travelingdoc

Thank you Priyamav for your very comprehensive response! To answer your question I am a chiropractor (a back doctor for those of you with limited exposure to chiropractic in your country). Chiropractic is just beginning in India. There is one full time doctor practicing in Bangalore and one part time clinic operating in Delhi. The day to day operations of my business would be very straight forward, mostly cash based, renting a space so very minimal overhead, and the only employee may be a translator or a front desk person. I would also need the ability to refer patients for further medical imaging or lab tests if necessary, but overall a very straightforward operation.
Johng - thank you! I have also read on another thread that the laws have changed and foreigners no longer need an Indian partner. Did you use a lawyer in Spain or Goa?

Priyamav

A doctor's practice should not be hard to set up.

When looking for details of incorporation I spoke with two different law firms:
- one in Mumbai suggested the elaborate way described above, but said it was quicker and easier than the direct RBI approval way
- another in Bangalore suggested the RBI approval way was not hard at all, as long as the nature of the business was on the list of approved business domains.

First one suggested the fees and incorporation costs would end up around
$2,000. The second one suggested the fees and incorporation costs would end up around $1,000.

If I can find the contact details of the one in Bangalore, I will post them here.

GoanCanuck

It all depends on the nature of your line of work. Certain sectors of the economy like Tourism are allowed to receive 100% Foreign Direct Investment. Other sectors like agriculture are restricted. Since you are a chiropractor you will have to get a licence to practice from the Medical council.

travelingdoc

I'm not certain that I would have to obtain a liscence from the medical council, since Chiropratic is not currently regulated in India and there are no laws governing it's practice. But of course I will look in to this!

GoanCanuck - where can I access information on what sectors are permitted to have 100% FDI and which are not? Thanks in advance.

GoanCanuck

Here you go http://moia.gov.in/shared/linkimages/33.htm

GoanCanuck

Travelingdoc, my advice would be to start somthing small which is tourism related but which requires minimal investment. Use this shell company to carry out your chiropractic practice! This would be the easiest route for you and one which is already being used by many thousands of Europeans.

mira4bai4

This is all good news as previously it looked a daunting project.

Does anyone have an updated link to a page that clarifies the regulations, I lost much of my links and data in an upgrade ~ such is life.

Priyamav

The problem I had when searching for information on this topic is that this specific version of FDI was not documented anywhere. A lot of sites on FDI discussed partnerships, or subsidiaries of foreign companies, etc. None actually dealt with the specifics of setting up a 100% foreign-owned company in India, by foreigners, who want to also live in India. There is no specific visa that would cover this situation: a business visa is actually specifically meant for people that work for a company in a non-indian country and seek to do business with a company in India. You therefore *officially* need papers from two companies.
An employee-visa is for people who are hired by a company in India (and that company *officially* needs to prove that the job in question cannot be done by an Indian). So *officially* there is no visa that covers being owner of a company and also living in India. *Officially* you are not allowed to make money on a tourist visa... (ok ok I am stopping with the *officialy*s now)

Take Thailand for instance: they have detailed websites that describe how a foreigner can set up his own company in Thailand and live and work there.

But anyways, you can get away with a lot of things in this sphere. Business visas are not that hard to obtain. You can set up your company in India and get some friend's company in your country to set up papers that are aimed at doing business between the 2 companies. Et voila: a 5 year business visa.

johng

I agree with you that there is an air of absurdity about the requirements for a business visa, as the owner of an Indian company it appears that I have to write a letter to myself from the Indian company and reply in a similar manner from a Spanish one. Whether it is possible to skip this procedure by approaching the Embassy direct I don´t know, the Madrid embassy is uncontactable other than by being in Madrid.
Luckily I get 12 months tourist visas from Madrid so for the moment there is no problem.

John