What are the challenges for NRIs to do business in India?

Last Updated at: January 21, 2020
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How NRIs can do a business in India

NRIs are the citizens of India, residing temporarily in a foreign country. Owing to the constructive initiative of the Indian Government, the NRIs can do business in India with ease. The NRIs are likely to invest in businesses and plays an important role in several businesses. But it is a rare case, having NRIs as the direct owner of any business in India. This is due to the challenges the NRIs have to face to facilitate business in their names. Some of the challenges are: they are legally blocked during the initiation process due to various reasons and conditions, requirement of an office in the country, issues over handling necessary documents such as DIN, PAN and TAN registration.

NRIs are actually Indian citizens with a temporary residence in a foreign country. The NRIs in India usually tend to invest in businesses and play a vital role in various other businesses but finding NRIs as direct owners of any particular business are such a rare sight.  This is because the challenges NRIs face to facilitate business under their name are plenty.

As always if you’d like to know more about professional help on startups, registrations or
compliance, browse our services and find our how we do it differently from others.

 

 Some of the challenges that NRIs encounter are:

    • The legal deadlock that starts at the process of initiation. Due to varied reason and other available conditions, the NRIs usually have the only option of using Private Limited company registration as all other options tend to be less viable. The general rules are that, even though the NRIs register as a Private Limited Company with a minimum of two shareholders,  one must definitely be a resident of India.
    • The other important problem is the need for an office in the country which can be stated to be of the company which will be an important criterion needed to register the business. The NRIs usually tend to find it difficult to have an office space with the Electricity bill, telephone bill addressed to the owner (i.e. NRI), as these pose geographical challenges.
    • Issues over the necessary documents: To make things worse, there exists another roadblock in which the NRIs have to get a Director Identification Number (DIN) which is necessary for a company to hold. A DIN can be obtained by NRIs only with verification and attestation by the Indian Embassy of the country in which the NRIs are staying.
    • The next obligation is now for the company to have a PAN and TAN registration done. These complexities resist NRIs to withhold the investments they have in India through his/her own business entities.

Start Your Business

Scenario Analysis

The above are the problems that were common in registering a firm. But now let us see the current scenario. And also on how the law has made a way for any NRI to initiate a business in India. Most of the NRIs are aware of the recent changes that have been made in India on the enhancement of minimization in entry barriers. So what were these changes and how has the government given NRIs the liberty of owning a business?  

The flow of funds from foreign investors have increased. This leads to the testimony of the fact that the analysis of more interest to do business lies in the Indian territory.

SPICe to the Rescue:

The major improvement allowing NRIs to initiate business plans in the country is through the SPICe Form which stands for Simplified Proforma for Incorporating Company Electronically. This form withholds all the hardships that a new entrant has to face to apply separately for every new registration. The SPICe form transforms the cumbersome task into an easy one. It stands as an easy option to apply for PAN, TAN, DIN, DSC and complete all the processes.

Virtual Set-Ups:

Setting up office spaces in the country is another roadblock NRIs face. To offer a solution to this problem, the government has introduced the process of having virtual directors and virtual offices. These concepts tend to catch up fast in Indian Business Scenarios. There are various Startups which are ready to share office space for remuneration to keep the office space intact for a certain amount of period.

In spite of these developments, the scenario is looking a lot tougher than what is expected out of a country which is leaping its way forward in the ease of making NRIs do business. However, the solutions offered to these challenges are not mainstream solutions.  For example, the first and foremost issue is the need of an Indian citizen for the post of directors. Indeed, this challenge is being satisfied by the people who are ready to work for a salary as a director. And the office space as mentioned above has been provided by many institutions and incubation centres which tends to be a hosting space for the NRIs.

Conclusion:

Therefore, starting a business has never been easy as it is now. There will always be issues and problems which can be stated to be teething problems. The easy way is to be optimistic and use the initiatives of the ministry of corporate affairs to ease business doings. However, it would be the perfect time to have a new law in place to encourage more business-doers who are NRIs.

The major improvement which allows the NRIs to initiate business is through the SPICe form. SPICe means Simplified Proforma for Incorporating Company Electronically. Moreover, this makes it easier to apply for PAN, TAN and DIN and complete the process. The government has come up with the process to have virtual offices and directors. However, even after these developments, it is not the mainstream solutions for the NRIs to start business in India.

 

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What are the challenges for NRIs to do business in India?

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NRIs are the citizens of India, residing temporarily in a foreign country. Owing to the constructive initiative of the Indian Government, the NRIs can do business in India with ease. The NRIs are likely to invest in businesses and plays an important role in several businesses. But it is a rare case, having NRIs as the direct owner of any business in India. This is due to the challenges the NRIs have to face to facilitate business in their names. Some of the challenges are: they are legally blocked during the initiation process due to various reasons and conditions, requirement of an office in the country, issues over handling necessary documents such as DIN, PAN and TAN registration.

NRIs are actually Indian citizens with a temporary residence in a foreign country. The NRIs in India usually tend to invest in businesses and play a vital role in various other businesses but finding NRIs as direct owners of any particular business are such a rare sight.  This is because the challenges NRIs face to facilitate business under their name are plenty.

As always if you’d like to know more about professional help on startups, registrations or
compliance, browse our services and find our how we do it differently from others.

 

 Some of the challenges that NRIs encounter are:

    • The legal deadlock that starts at the process of initiation. Due to varied reason and other available conditions, the NRIs usually have the only option of using Private Limited company registration as all other options tend to be less viable. The general rules are that, even though the NRIs register as a Private Limited Company with a minimum of two shareholders,  one must definitely be a resident of India.
    • The other important problem is the need for an office in the country which can be stated to be of the company which will be an important criterion needed to register the business. The NRIs usually tend to find it difficult to have an office space with the Electricity bill, telephone bill addressed to the owner (i.e. NRI), as these pose geographical challenges.
    • Issues over the necessary documents: To make things worse, there exists another roadblock in which the NRIs have to get a Director Identification Number (DIN) which is necessary for a company to hold. A DIN can be obtained by NRIs only with verification and attestation by the Indian Embassy of the country in which the NRIs are staying.
    • The next obligation is now for the company to have a PAN and TAN registration done. These complexities resist NRIs to withhold the investments they have in India through his/her own business entities.

Start Your Business

Scenario Analysis

The above are the problems that were common in registering a firm. But now let us see the current scenario. And also on how the law has made a way for any NRI to initiate a business in India. Most of the NRIs are aware of the recent changes that have been made in India on the enhancement of minimization in entry barriers. So what were these changes and how has the government given NRIs the liberty of owning a business?  

The flow of funds from foreign investors have increased. This leads to the testimony of the fact that the analysis of more interest to do business lies in the Indian territory.

SPICe to the Rescue:

The major improvement allowing NRIs to initiate business plans in the country is through the SPICe Form which stands for Simplified Proforma for Incorporating Company Electronically. This form withholds all the hardships that a new entrant has to face to apply separately for every new registration. The SPICe form transforms the cumbersome task into an easy one. It stands as an easy option to apply for PAN, TAN, DIN, DSC and complete all the processes.

Virtual Set-Ups:

Setting up office spaces in the country is another roadblock NRIs face. To offer a solution to this problem, the government has introduced the process of having virtual directors and virtual offices. These concepts tend to catch up fast in Indian Business Scenarios. There are various Startups which are ready to share office space for remuneration to keep the office space intact for a certain amount of period.

In spite of these developments, the scenario is looking a lot tougher than what is expected out of a country which is leaping its way forward in the ease of making NRIs do business. However, the solutions offered to these challenges are not mainstream solutions.  For example, the first and foremost issue is the need of an Indian citizen for the post of directors. Indeed, this challenge is being satisfied by the people who are ready to work for a salary as a director. And the office space as mentioned above has been provided by many institutions and incubation centres which tends to be a hosting space for the NRIs.

Conclusion:

Therefore, starting a business has never been easy as it is now. There will always be issues and problems which can be stated to be teething problems. The easy way is to be optimistic and use the initiatives of the ministry of corporate affairs to ease business doings. However, it would be the perfect time to have a new law in place to encourage more business-doers who are NRIs.

The major improvement which allows the NRIs to initiate business is through the SPICe form. SPICe means Simplified Proforma for Incorporating Company Electronically. Moreover, this makes it easier to apply for PAN, TAN and DIN and complete the process. The government has come up with the process to have virtual offices and directors. However, even after these developments, it is not the mainstream solutions for the NRIs to start business in India.

 

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