Start a company in India

Okay, me and my friend is having an argument. Is it possible for a foreigner to start a company in India?

I want to start an e-commerce store in India, import things from China/ Thailand or from India if I can find what I want, and sell it in India, online. Is it possible for me to start this kind of business?

I know that there has to be a minimum 1 lakh rupiees investment into the company, and there is a lot of paperwork and stuff, but can I start the company alone? Do I need an indian partner? Can he invest 1000 rupees and be the owner of 1% of my company?

Is it possible for a foreigner to start any business in India these days?

Yes. There are many sectors where 100% FDI is allowed. You are a tad confused. You are into importing actual tactile/molecular "things". Your ecommerce site could be anywhere - or to use the latest wuselword "cloud" so before you go into the business, write a business plan and float it with some folks who have a clue.

Enigmatic smile. (http://www.flickr.com/photos/nrg-photos/6530349855/)

Im actually not that confused, I have it all figured out. I was just vague in the text, I didnt want to say exactly what I wanted to start.

So, I am going to start a webstore in India, where you can buy clothes. The clothes I will mainly import from China/Thailand and some from India as well. Later on, I will open up a store, where the clothes will be sold as well. So one onlinestore, and one real store.

Can I own this company 100% or do I need an indian partner? I know that previously foreigners could only start IT or tourist business without an indian partner, is it still like that? If I do need an indian partner, how much does he need to invest in my company and how much does he needs to own?

Then you probably know that you need to contact a Chartered Accountant who is familiar with Companies Act.

I am sure since you have figured it all out, you must have gone through the RBI FAQs - right ?

Where you fall in the 100% vs 75% vs bupkiss will depend on how GOI interprets your application and how your CA incorporates you. As per the recent decision on letting foreign entities to open shop, there is the vague directive of states deciding who and how to allow.

Okay, please forgive my english, it is not my first language. When I wrote "I have it all figured out" I meant my business plan, what I wanna do. If I meant everything as in "I know everything about starting up a businesss" I wouldnt be asking questions here.

I know that an accountant or a lawyer needs to get all my documents ready for me.

The main question for me is if I can start a retail business in India or not? And do if I do need an indian partner for that? And if I do need an indian partner, how much does he need to invest/own of the company? How much can I own of the company?

Of course you can, it is for your lawyer and CA and you to develop a business plan and a strategy to define what you are - An Import Business ? Garments business ? A web portal ? or a Brick-n-Mortar cheap outlet ? What is the CAPEX you are going to invest in YR1, YR2, ... ?

All of the above will determine how much you can own/invest. If your CAPEX is less than a rediwala outside Sarojini Nagar Market selling cheap chinese silk sarees and Thai bettyboop T-Shirt, It is unlikely, you will be allowed much wiggle room.

This after all is a travel site - you want answers without giving specifics - There are some smart gals and guys here who know ins and outs of Indian business environment, but they ain't dishing out anything for free, as this kind of advice is their rozi-roti. Try KPMG, E&Y or CapGemini - They ain't cheap but they'll walk you through to the ribbon cutting; or politely tell you to rework your business plan.



Take a look at documents put out by Competition Commission of India, Reserve Bank of India, and here

Last time I looked, retail is one of the sectors where FDI is not allowed, unless it is a one-brand thing. But there has been talk about changing the rules to allow FDI in all types of retail.

That has changed now.

Having an online store in India but the company office in your country would not be a problem.

I own a limited company with a British citizen as my fellow Director. My business is IT based so its not exactly retail, but I doubt the laws would be very different with regards to foreigner ownership. From what my accountant clearly informed, it was impossible for a foreigner to start a business in India on his/her own. (apparently need at least 2 Indian partners)

Perhaps the rule has changed (I will ask my accountant on Monday) but please be aware that doing business in India is nothing short of a nightmare with the kickbacks and the red tape involved. (does not mean its not profitable... just means that you need to be on your toes and be involved all the way... so perhaps more stress than is usual)

Needless to say, if it turns out that you DO need an Indian partner, then you HAVE to make sure it is someone you can COMPLETELY trust.

One other point - in India, some places are easier than others to conduct business in so do your research well.

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