setting up a food business/ franchise in india

megamighty

Hi all I'm new to this forum so treat me lightly I have just worked out how to start a new thread..

I have this idea of setting up a food franchise in India it would be a new business taylored to india.
The company would of course employ indians other than myself and my partner who would be only be paid dividends from the companies profits.
I assume the easiest way to do it would be on a business visa and by setting up an Indian company... though not an expert..

Does anyone know if the setup of food business in India is encouraged?
Best company structure?
The company may also look to export it's product to other countries from India
And may need to import some product in
Does anyone know about the special export processing zones and how they work?
Would appreciate any advice
THANKS

megamighty

If the franchise being food outlets have a cafe/ restaurant aspect is it easy to get a license to sell alchohol (not in the states where it is prohibited of course)??

Would it be easier to set up one shop in my home country and then set up a branch in india to franchise from??

complicated I know

PeakXV

Well - if the business is taylor made for the India market - it might be hard to initiate & expand it elsewhere. With the exception of setting up a test franchise in the Indian-towns in Australia.

What kind of due diligence on the Indian market have you done for this business as of yet to know that it is something that is trendy & competive enough to be worth the effort? If you haven't all ready, it might be worth a reconaissance visit to gather data on possible competitors, locations, real estate, licenses, importing, time-frames, hiring, firing, legal & other detailed finances. It seems to me there was an Australian fellow (IM'er) who set up a bar in Delhi a few years back ..... can't remember the specific details though.

That's all I know - Best of luck in your venture!

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We shall not cease from exploration and at the end of all our exploring will be to arrive where we started ...and know the place for the first time.
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Don't go to India ~ Pre-trip Warnings & Misconceptions?

Nick-H

There's a thread about setting up businesses in India fairly recently it's -->here. You need to see if Foreign Direct Investment is permitted in the area that you are interested in, and if so, how much. It is controled, I know, in retail, I suspect that anything to do with food in India is tied up.

Just my suspicion.

Go check out the thread mentioned above, and join in that conversation, or come back here with any specifics, maybe.

Mod note: I deleted the posts in another thread where you asked the same thing. You've certainly got the hang of starting a thread now! Might as well stick to this one.

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crvlvr

Does anyone know if the setup of food business in India is encouraged? What do you mean by "food business" Restaurant" Processed food? Agrivultural Prodcuts?

Best company structure? Get an Indian partner who has experience in the line of trade

The company may also look to export it's product to other countries from India. And may need to import some product in
Does anyone know about the special export processing zones and how they work? The benefit of being located in a SEZ is that you do not have to pay import duty on any of the products of equipment that you import. Also, there is no income tax. However, 100% of your sales MUST be exported.

If the franchise being food outlets have a cafe/ restaurant aspect is it easy to get a license to sell alchohol (not in the states where it is prohibited of course)?? Typically very difficult to obtain liquor license in India without political pull and baksheesh

Would it be easier to set up one shop in my home country and then set up a branch in india to franchise from?? - Yes. But, only from a visa perspective. However, now the parent company will become legally repsonible for the activities in India. ie. lawsuits, if any..

Nick-H

Nice one, crvlvr

KABAARY

Or on inputs used in manufacture etc....also, exemption from excise excise duty on purchase of locally manufactured goods and service tax with respect to staxable services locally procured blah blah blah. Refer to the SEZ Act, 2005 & SEZ Rules, 2006 for more details. Note that goods manufactured in an SEZ unit can be sold/cleared into the Domestic Tariff Area only upon payment of customs duty as applicable on like goods imported into India - positive Net foreign exchange earnings requirement as specified in SEZ Rule 53 has to be taken care of.

100% of the sales need not be exported. You can do domestic sales also but the income tax exemption (Section 10AA) will be restricted by virtue of a formula whereby only the following will be eligible for income tax deduction :

Profits of SEZ Unit x (Export turnover of SEZ Unit/Total turnover of the company)

edwardseco

Hey, I have a copyright on typos here.

.

OP, minor quibble if you mean the United States of America as opposed to Mexico and that it is simply not true. I do know one interesting soul who is a partner in an Indian restaurant. I'll try to pick his brains..

dzibead

Nick, you mean, "Nice one, crvlvr."

dzibead

Doesn't the OP mean not in the Indian states where alcohol is prohibited?

capt_mahajan

-crossposted-

No wonder I couldn't find it.

And I was listening to Vulture Culture too

Nick-H

Oh, Egg on Face!!!!

Could have sworn it was Peak's post, even had his avatar in my mind.

Sorry, crvlvr... rushing to edit now.

greenasgrass

Being a lawyer I am probably biased about these things, but if someone was asking the questions you have asked about setting up in business in the UK on an internet forum, my response would be the same - you need a lawyer. The best person to answer all of your questions (and particularly the ones about the best business model, export/import licences and how you would go about setting up in business with a partner) would be a lawyer qualified to advise business clients. I'm sure that all of the people on IndiaMike are well informed, but just as IMers advise people with Visa queries always to double check with the relevant Embassy/immigration authorities, you would be best off getting your information "from the horse's mouth" as we say in England.

Lecture over

Nick-H

Yes, that is very true.

Unfortunately, it is not so easy to tell how much your chosen lawyer does actually know about what they are doing until they are well into doing it --- regardless of what they claimed, with full confidence, and lots of smiles, when they started.

Thus it is quite conceivable that someone might get through a lawyer or two, or three, without being ever properly aware of, for instance, the Reserve Bank of India's recent circular summing up Foreign Investment in India.

It's tough!

megamighty

It seems there are many law firms offering advice and that often they are based in the US or UK. (and will quote $1500US just to give you a plan of action.. with no action) I believe It is always better to approach a situation with enough information from people on the ground such as you guys on India Mike so to know whether they are really are as informed as they state and also to hear of first hand experiences. Please let me know of any friends who have set up bars/ restaurants/ food chains and what the sitch is? negative and positive. It is obviously a big commitment to enter into (having run a restaurant in Australia and an organic food shop/ takeaway food store) I know the commitment involved and I really appreciate your feedback. THANKS