Setting Up A Business With 100% EOUs along with FDI

Setting Up A Business With 100% Export Oriented Units (EOUs) along with FDI

Foreign investors must first assess their entry route into India, which is determined by their area of operation and the sectoral caps. The automatic route is now available for most sectors, except for a few. Under the automatic route, investors can proceed with their investment first and then comply with the reporting and other required compliance within the stipulated time frame.

For sectors not classified under the automatic route or those not falling within the sectoral caps, foreign investors must seek approval from the Foreign Investment Facilitation Portal (FIF) and/or other relevant authorities.

Entry Routes for Foreign Investment:

1. Automatic Route:

1. • Most sectors fall under this route.
   • Investors can proceed with their investment without prior approval.
   • Required compliance and reporting must be done within the stipulated timeframe after the investment is made.
   • Key forms for compliance under this route include Form FC-GPR (for reporting the issue of shares) and Form FC-TRS (for transfer of shares).

2. Approval Route:

1. • Certain sectors do not fall under the automatic route and require prior approval.
   • This includes sectors with specific sectoral caps and those not fully open to automatic investment.
   • Approval must be obtained from the Foreign Investment Promotion Board (FIPB) and/or other relevant authorities like the Department of Economic Affairs (DEA), Ministry of Finance, or Department of Industrial Policy & Promotion (DIPP).

As a business setting-up intermediary service provider, Rajput Jain & Associates assists in obtaining the necessary permissions/approvals from the appropriate authorities, such as the Foreign Investment Facilitation Portal (FIF) , Department of Economic Affairs (DEA), Ministry of Finance, or Department of Industrial Policy & Promotion.

Rajput Jain & Associates will also facilitate and complete all formalities related to filing the necessary information and returns with the Reserve Bank of India (RBI) under the automatic route, including the filing of Form FC-GPR and FC-TRS. Rajput Jain & Associates, as a business setting-up intermediary service provider, assists foreign investors in navigating these regulatory requirements. Their services include:

• Obtaining Permissions/Approvals:
  • They help secure necessary approvals from authorities like Foreign Investment Facilitation Portal (FIF), DEA, Ministry of Finance, or DIPP for sectors not covered under the automatic route.
• Compliance and Reporting:
  • They facilitate and complete all formalities related to reporting to the Reserve Bank of India (RBI) under the automatic route.
  • This includes filing Form FC-GPR for the issue of shares to foreign investors and Form FC-TRS for the transfer of shares.

FDI Filing with Reserve Bank of India

FDI Reporting the inflow of foreign investment into an Indian company to ensure compliance with FDI policy and regulations.

Forms Involved: Form FC-GPR/ FC-TRS

Mandatory for: Indian companies receiving foreign investments in equity shares, compulsorily convertible preference shares or debentures, warrants, or partly-paid shares.

Process Overview of FDI Filing with RBI:

1. Preparation:

1. • Obtain an Authorized Dealer (AD) Code from an RBI-approved bank.
   • Register on the RBI’s FIRMS portal and create Entity Master.

2. Form Filing:

1. • Prepare Form FC-GPR with details of the foreign investor, investment amount, equity percentage, etc.
   • Certify and sign the form by the company’s authorized signatory and the AD bank’s authorized signatory.

3. Submission:

1. • Submit Form FC-GPR electronically on the RBI’s FIRMS portal within 30 days of receiving the foreign investment.
   • Upload required documents such as Foreign Inward Remittance Certificate (FIRC), KYC documents of the foreign investor, valuation report, etc.

4. Acknowledgement:

1. • Receive an acknowledgement receipt from the FIRMS portal upon successful submission.

5. Follow-up:

1. • Follow up with the AD bank to ensure acceptance by the RBI.
   • Address any discrepancies or clarifications promptly if required by RBI.

Details about the Doing Business in India   http://carajput.com/Admin/ProImage/1__DD744811-L.pdf

NEW PRIVATE LIMITED COMPANY REGISTRATION (FOREIGN CITIZEN IS AS SHARE HOLDER)

New Private Limited Company Registration (Foreign Citizen as Shareholder)

Rajput Jain & Associates can incorporate a Private Limited Company within 15 to 25 days, depending on the Registrar of Companies (ROC) processing time and the availability of required documents. Once the registration documents are submitted to the Ministry of Corporate Affairs (MCA), the application for incorporation is usually approved within 5 to 7 days, subject to MCA’s processing time.

Minimum Requirements

• Minimum Persons: 2
• Minimum Capital: Rs. 100,000
• Director Identification Number (DIN): Required for both persons
• Digital Signature Certificate (DSC): Required for all directors
• Consent: From the subscriber or director

Documents Required

1. Photographs:

1. • 3 color passport size photographs

2. Proof of Identity:

1. • PAN Card – Self Attested
   • Any one of the following self-attested documents (Driving License / Passport / Aadhar Card / Voter ID Card)
   • For foreign nationals: Documents need to be notarized by the respective embassy. If they belong to non-commonwealth countries, they also need to be apostilled, and a Business Visa is required.

3. Proof of Address:

1. • Any one of the following self-attested documents (Latest Bank Statement / Electricity Bill / Telephone Bill / Mobile Bill)
   • For foreign nationals: Documents need to be notarized by the respective embassy. If they belong to non-commonwealth countries, they also need to be apostilled, and a Business Visa is required.

4. NOC from Landlord:

1. • Required if the property is rented

5. Company Details:

1. • Main objects of the proposed company and activities to be undertaken

6. Affidavit for DIN:

1. • Signature required

7. Consent Form:

1. • Signature required

8. Subscriber Sheet:

1. • Signature required if the subscription sheet is submitted later (after DIN and DSC and name approval)

By ensuring all these documents and requirements are met, Rajput Jain & Associates facilitate the smooth incorporation of a Private Limited Company with foreign shareholders in India.

FOR DSC & DIRECTOR INFORMATION NUMBER (DIN)APPLICATION:

Documents Required:

• Scanned Copy of Passport-sized Photograph
• Proof of Identity:
  • Scanned copy of PAN card (for Indian nationals)
  • Passport (for foreign nationals)
  • Driver’s License, Voter ID, or Latest Utilities Bill (any one)
• Attestation Requirements:
  • Documents must be self-attested.
  • For foreign nationals:
    • Documents need to be notarized by the Indian embassy.
    • If from a non-commonwealth country, the documents also need to be apostilled.

OTHER REGISTRATION PROCESS

·        PAN NUMBERS

·        TAN NUMBERS

·        MSME Registrations,

·        Import Export Code (IEC)

·        GST Registration

Export Oriented Units (EOUs)

Export Oriented Units (EOUs) are specialized units that commit to exporting their entire production of goods and services, barring permissible sales in the Domestic Tariff Area (DTA). EOUs are units that commit to exporting their entire production of goods and services. They are involved in various activities including manufacturing, repair, re-making, reconditioning, re-engineering, rendering of services, development of software, and activities related to agriculture, biotechnology, floriculture, and more. Trading units are not covered under the EOU scheme.

1. Document Required FOR EOU setting UP

The EOU has to apply to with the following documents for executing B-17 bond.

• Notification declaring the area in which EOU is located as a warehousing station.
• LOP
• Lease Agreement of the premises
• Copy of LUT executed with Development Commissioner
• Details Project report
• Calculation sheet authenticated by the authorized signatory showing the details of imported/indigenous material covered by the Bond.
• List of CG attested by Development Commissioner
• IE Code

2. Application Procedures and Approvals for Setting Up an EOU

Application Submission:

• Application Submission: Fill and submit ANF 6A (in triplicate) to the Development Commissioner’s office.
• Fee and Documents: Application fee of Rs 5000/- (via demand draft), along with documents like Certificate of Incorporation, Articles of Association, Partnership Deed (if applicable), and details of existing and proposed capital structure.

Approval Process:

• Approval Process: The Unit Approval Committee (UAC) will approve or reject the application within 15 days based on the criteria specified in Appendix 6A.
• Letter of Permission (LoP): Upon approval, the Development Commissioner issues an LoP valid for 5 years (excluding 2 years for commencement of production).

3. Investment Criteria

• Minimum investment of Rs.1 Crore in plant & machinery is required for EOUs.
• Exceptions include existing units, units in EHTP/STP/BTP, and EOUs in specific sectors like Handicrafts, Agriculture, IT, etc.
• The Board of Approvals (BOA) may allow EOUs with lower investment criteria.

4. Second-hand Capital Goods

• EOUs can import second-hand capital goods without age restrictions, with or without payment of duty/taxes.

5. Leasing of Capital Goods

• EOUs can source capital goods from domestic/foreign leasing companies with or without payment of duties/taxes.
• Both the EOU and the leasing company must jointly file documents for import/procurement.

6. Monitoring of NFE

• Performance Monitoring: Units Approval Committee monitors EOU performance as per guidelines in the Handbook of Procedures (HBP).

7. Location Restrictions

• EOUs can select their project location freely.
• In cities with populations over a million, the project should be at least 25 km away from urban limits unless it is in a designated industrial area before July 25, 1991.
• Exemptions exist for electronics, computer software, printing, and other non-polluting industries.

8. FDI Approval by Development Commissioner

Specific conditions include distance requirements from Bangalore/Cochin urban limits, adherence to export/value addition norms, no existing financial/technical collaborations in the same field, and no acquisition of shares in existing Indian companies. The Development Commissioner can approve FDI for new EOUs if:

• The activity does not require compulsory licensing.
• The location complies with distance requirements or is in a designated industrial area.
• EOUs commit to achieving prescribed export and value addition norms.
• The foreign collaborator has no prior financial/technical collaboration in the same field in India.
• No share acquisition in existing Indian companies by foreign/NRI/OCB investors is involved.

9. EOU Scheme in GST Regime

• Registration: EOUs must register under GST and comply with all GST provisions.
• Basic Customs Duty exemption on imports continues. Exemption on imports continues under GST.
• Input Tax Credit: EOUs can claim Input Tax Credit for GST paid to suppliers.

10. Tax Benefits in GST Regime

• Duty-free imports are restricted to Basic Customs Duty.
• Exemptions from additional duties under Section 3(1), 3(3), and 3(5) of the Customs Tariff Act, 1975, and Central Excise duty for specific goods.
• EOUs can take Input Tax Credit for GST paid to suppliers.

11. GST on Supplies to/from EOU

• Supplies to EOUs are not exempt from GST; EOUs can claim Input Tax Credit.
• Supplies from EOUs are not exempt from GST except for zero-rated supplies (physical exports or supplies to SEZ units/developers).

12. Legal Undertaking (LUT)

• Execution: EOUs must execute a Legal Undertaking (LUT) in the prescribed format on Rs.100 stamp paper.
• Submission: Submit the original and two copies to the Development Commissioner.
• Approval: The LUT must be vetted and approved by the Zone Office, and a Green Card will be issued for import clearance.

13. Bonding of Premises by Customs

• EOUs must bond their premises with Customs/Central Excise authorities.
• Execute a multi-purpose bond with the jurisdictional Dy. Commissioner of Customs/Central Excise.
• Required documents Include notification of warehousing station, LOP, lease agreement, project report, and other required documents.
• A surety or bank guarantee is required. Provide surety or a bank guarantee equivalent to 5% of the bond value.

14. Import Export Code (IEC)

• EOUs need an IEC for imports and exports, Apply for an IEC if not already obtained.
• The application form, fee, bank certificate, photographs, and PAN must be submitted.
• The IEC is linked to a Business Index Number (BIN) for all import/export transactions.

Detailed Project Report (DPR)

A Detailed Project Report (DPR) is a comprehensive, in-depth document that outlines the complete scope, objectives, planning, and execution strategy for a project. It serves as a blueprint for project implementation and provides stakeholders with all necessary information to assess, approve, and proceed with the project. Checklist of documents to be submitted at Market Viability and Financial Viability stage and during JIT. Below is a general structure for a DPR:

1. Executive Summary

• Project Overview: Brief description of the project.
• Objectives: Main goals and objectives of the project.
• Key Highlights: Key features and unique selling points.
• Financial Summary: Snapshot of the financial aspects including cost, funding, and expected returns.
• Conclusion: Summary of the overall feasibility and benefits of the project.

2. Introduction

• Background: Context and background of the project.
• Purpose: The need and purpose of the project.
• Scope: Detailed scope of the project.
• Stakeholders: Identification of all stakeholders involved.

3. Project Description

• Location and Site Analysis: Details about the project location, site conditions, and analysis.
• Technical Specifications: Technical details and specifications of the project components.
• Design and Architecture: Architectural designs and blueprints.
• Materials and Equipment: List of required materials and equipment with specifications.

4. Market Analysis

• Market Demand: Analysis of market demand for the project’s outputs.
• Competitor Analysis: Overview of competitors and market competition.
• SWOT Analysis: Strengths, weaknesses, opportunities, and threats.

5. Implementation Plan

• Project Schedule: Detailed timeline and milestones.
• Work Breakdown Structure (WBS): Breakdown of tasks and activities.
• Resource Allocation: Allocation of human, financial, and material resources.
• Risk Management: Identification and mitigation strategies for potential risks.
• Quality Control: Measures for ensuring project quality and standards.

6. Financial Plan

• Cost Estimates: Detailed cost estimation for all project components.
• Funding Plan: Sources and plans for project funding.
• Revenue Projections: Expected revenue and financial projections.
• Profitability Analysis: Analysis of project profitability and return on investment (ROI).

7. Environmental and Social Impact

• Environmental Impact Assessment (EIA): Analysis of the environmental impact and mitigation measures.
• Social Impact: Assessment of the social impact on the local community and stakeholders.
• Sustainability Measures: Steps taken to ensure project sustainability.

8. Legal and Regulatory Framework

• Compliance Requirements: Legal and regulatory requirements and compliance.
• Approvals and Clearances: Required approvals and clearances from authorities.
• Contracts and Agreements: Details of contracts, agreements, and legal considerations.