A foreign company can commence operations in India by incorporating a company under the Companies Act as a subsidiary (including a wholly owned subsidiary) or as a joint venture company.
Two routes of FDI: The automatic route (no prior approval is required) and the approval route. For more information on the FDI policy visit: 1) https://dipp.gov.in/investors/Investor%20Guidance/entry-strategies-foreign-investors , 2) https://dipp.gov.in/sites/default/files/CFPC_2017_FINAL_RELEASED_28.8.17_0.pdf
Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) can invest in the primary and secondary capital markets in India through the portfolio investment scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian companies through the stock exchanges in India. For more information on investment in Indian Companies by FIIs/NRIs/PIOs visit: https://www.rbi.org.in/fiilist/index.html
Standard Operating Procedure detailing the online application procedure, authority issuing approvals, timelines, documents required for FDI.
The Ministry of Corporate Affairs defines the different company structures based on its size/ number of members/ basis of control or liability/ ownership/ access to capital.
For more information check: http://www.mca.gov.in/MinistryV2/classification+and+registration+of+companies.html
Considering the nature of investment, investment strategy most widely preferred route for investors is private limited company.
There are few differences between Private Ltd company and LLP viz, during the registration process a Pvt. Ltd will propose Directors while an LLP shall propose Partners. LLP incorporation fee, checklists of documents required are relatively lesser than Pvt Ltd company.
Further, limited liability companies enjoy the liability protections of a corporation as well as structural and tax advantages of a partnership. Significant difference between LLCs and LLPs is that LLPs must have at least one managing partner who bears liability for the partnership's actions.
Some pros and cons for each type of company structure are presented below:
A partnership is formed when two or more people start a business with a goal of making a profit.
The Ministry of Corporate Affairs website should be accessed for any details regarding company registration http://www.mca.gov.in/
The Ministry of Corporate Affairs regulates corporate affairs through the Companies Act, 1956, 2013 and other allied Acts, Bills and Rules. For more information http://www.mca.gov.in/MinistryV2/homepage.html
Company name availability can be checked here http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do
The Ministry of Corporate affairs defines minimum and maximum number of directors and their age limits, manner of appointment, removal and resignation, mode of appointment, remuneration etc. For detailed information check: http://www.mca.gov.in/MinistryV2/management+and+board+governance.html
Once incorporation is complete a softcopy of the certificate is sent to the company, however, on request a hardcopy is issued by the Ministry of Corporate Affairs for a nominal fee. http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do
'Capital Instruments' are equity shares, debentures, preference shares and share warrants issued by the Indian company.
Non-convertible/ optionally convertible/ partially convertible preference shares issued as on and up to April 30, 2007 and optionally convertible/ partially convertible debentures issued up to June 7, 2007 till their original maturity are reckoned to be FDI compliant capital instruments. Non-convertible/ optionally convertible/ partially convertible preference shares issued after April 30, 2007 and optionally convertible/ partially convertible debentures issued after June 7, 2007 shall be treated as debt and shall require conforming to External Commercial Borrowings guidelines regulated under Foreign Exchange Management (Borrowing and Lending in Foreign Exchange Regulations), 2000, as amended from time to time.
For more details visit: More details
All foreign investments are repatriable (net of applicable taxes) except in cases where the investment is made or held on non-repatriation basis.
Investment in sector like defence wherein the foreign investment may be subject to a lock-in period. Dividends (net of applicable taxes) declared on foreign investments can be remitted freely through an authorized dealer bank.
Optionality clauses are allowed in equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares under FDI scheme, subject to the following conditions:
There is a minimum lock-in period of one year which shall be effective from the date of allotment of such capital instruments.
After the lock-in period and subject to FDI Policy provisions, if any, the non-resident investor exercising option/right shall be eligible to exit without any assured return, as per pricing/valuation guidelines issued by RBI from time to time.
The Finance Bill 2020 has proposed to abolish Dividend Distribution Tax. More details
A private limited company is a ?oclosed corporation?. Transfer of shares may be restricted by the Articles of Association (AOA) of the company. The AoA must be reviewed prior to beginning the share transfer procedure.
Section 2(68) of the Companies Act, 2013 provides that the Articles of a private company shall restrict the right to transfer the company's shares. More details
GIS Map showcasing land banks availabilities More details
Land bank details More details
Criteria for land allotment More details
SIPCOT industrial estates have a well-established ecosystem and industrial infrastructure.
SIPCOT land bank details are available here: More details
All SIPCOT industrial parks, provide investors with following incentives - 50% exemption of stamp duty. Additional 50% capital subsidy ranging from $22-160k.
For more details visit: More details
State Industries Promotion Corporation of Tamil Nadu: Identifies, develops and maintains industrial areas
For detailed information check:
Criteria for land allocation: More details
Small Industries Development Corporation: Develops industrial estates with infrastructure facilities, provision of work sheds & developed plots
Details on criteria for land allocation, procedure, timeline, documents required are available here: More details
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and The Tamil Nadu Acquisition of Land for Industrial Purpose Act, 1997 guide and governs land acquisition.
In the case of land acquisition for private companies, the prior consent of at least eighty percent, of the affected families must be obtained.
The provisions relating to rehabilitation and resettlement under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 shall apply in cases (a) a private company purchases land, equal to or more than such limits in rural areas or urban areas, as may be prescribed by the appropriate Government, through private negotiations with the owner of the land; (b) a private company requests the appropriate Government for acquisition of a part of an area so prescribed for a public purpose: Provided that where a private company requests the appropriate Government for partial acquisition of land for public purpose, then, the rehabilitation and resettlement entitlements under the Second Schedule shall be applicable for the entire area which includes the land purchased by the private company and acquired by the Government for the project as a whole.
No, land cannot be acquired on free-hold basis from SIPCOT.
The current minimum lease period is 99 years.
Yes, lease hold rights can be transferred if there is a change in the share holding pattern where more than 50% of the share holding is transferred to new persons resulting in total/ substantial change in ownership in the existing allottee unit or transfer to a unit where original promoters of the existing allottee hold less than 50% shares in the new transferee unit.
For more details visit: More details
Land has been allotted for creating plug & play facility with regard to manufacturing activities including support infrastructure.
For more details: More details
Mahindra World City also provides plug & play facility More details
Soil testing report is provided on request and contour map is available for the entire estate, not plot wise.
Yes, TWAD/SIPCOT/CMWSSB provides both industrial and domestic water supply.
Yes, water channel/ body can be re-routed within the SIPCOT estate. The investor must represent its case to SIPCOT or PWD post which inspection will take place and cost implications will be borne by the investors.
Since labour is a concurrent subject in the Indian Constitution, minimum wage rates are determined both by the Central and State Government. Minimum wage rates in India depends on national, state, sectoral and skill/occupational levels. Also, minimum wage is established for trainees, youth and piece-rate workers. Minimum wage is determined by considering the cost of living.
The minimum wage is mandated as per the Minimum Wages Act, 1948 More details
For rates of daily wage payable within the Chennai district please check: More details
As per The Factories Act, no adult worker shall be required or allowed to work in a factory for more than forty-eight hours in any week. With reference to overtime work, the worker is entitled to wages at the rate of twice his/her ordinary rate of wages. 1) More details , 2) More details
The Tamil Nadu Chapter III of the Shops and Establishment Act defines the daily and weekly working hours. Details in More details
The employer shall contribute towards the Employees State Insurance Corporation for all employees earning Rs. 21,000 or less per month as wages. The rates are revised from time to time. Currently, the employee's contribution rate (w.e.f. 01.07.2019) is 0.75% of the wages and that of employer's is 3.25% of the wages paid/payable in respect of the employees in every wage period. Employees in receipt of a daily average wage upto Rs.137/- (~US$ 2.0) are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees. More details
The employer shall contribute towards the employee provident fund (EPF), employees deposit linked insurance scheme (EDLI) and employee pension scheme (EPS). Details for this are available on the following link. More details
Companies may choose to offer benefits and perks as they deem fit. This is not mandatory. Many companies in India structure their employee pay packages with medical insurance, leave travel allowance etc., as it is exempted up to a limit under income tax for salaried individuals.
As per the Tamil Nadu Industrial Policy 2014, flexibility in employment conditions including flexible working hours for women and shorter and longer duration of working hours, 24x7 operations (3 shifts), employment of women in the night shifts and flexibility in hiring contract labour will be permitted.
Some other Acts that guides and safeguards the interest of employees are:
The Equal Remuneration Act, 1976, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, The Industrial Employment (Standing Orders) Act, 1946, The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, The Contract Labour (Regulation and Abolition) Act, 1970, The Payment of Bonus Act, 1965, The Tamil Nadu Payment of Subsistence Allowance Act, 1981, The Minimum Wages Act, 1948 More details
TN Labour Welfare Board details out certain benefits for industrial workers. More details
Companies may choose to offer accommodation facilities however, it is not mandatory. Many companies in India structure their employee pay packages with a house rent allowance as it is exempted up to a limit under income tax for salaried individuals.
The minimum wage is mandated as per the Minimum Wages Act, 1948 (Both for salaried employees and daily wage labourers) More details
Consumer price index captures the cost of living. More details
As per The Factories Act, no adult worker shall work in a factory for more than forty-eight hours in a week. Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, the worker is entitled to wages at the rate of twice his/her ordinary rate of wages. More details
The Tamil Nadu Chapter III of the Shops and Establishment Act defines the daily and weekly working hours. More details
Section 79 of The Factories Act, 1948 states that every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed leave with wages during the subsequent calendar year. More details
Government of India has introduced a pension scheme for unorganised workers called Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) to ensure old age protection. Each subscriber shall receive minimum assured pension of Rs 3000/- per month after attaining the age of 60 years. During the receipt of pension, if the subscriber dies, the spouse of the beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as family pension which is applicable only to spouse. For more details More details
Laws and Rules Governing Employee Benefits and Labour Welfare Measures and Social Securities Benefits More details
Alternate Dispute Resolution in India consist of the following types - arbitration, conciliation, negotiation and mediation.
Mediation is a voluntary process where the disputing people decide to mutually find a solution to their legal problem by entering into a written contract and appointing a mediator. The decision-making powers remain with the disputing parties with the mediator acting as a buffer to bring them to an understanding.
To adopt arbitration as a dispute resolution mechanism an agreement to that effect is signed between the disputing parties. The parties can either opt for a separate arbitration agreement to be signed between them or include an arbitration clause in the main contract between the parties.
The Arbitration and Conciliation (Amendment) Act, 2015 governs and regulates dispute resolution in the country. More details
The Child Labour (Prohibition and Regulation) Act, 1986 defines the permittable work-age as 14/ 15 years depending on the nature of commercial undertakings. More details
Chapter IV of the TN Shops and Establishments Act More details
TN Catering Establishments Act prohibits employment of children below the age of 14-16 More details
Chapter 25 of the Tamil Nadu Handloom Workers (Conditions of Employment and Miscellaneous Provisions) Act, 1981 More details
Chapter 18 of the Tamil Nadu Manual Workers Act More details
This is based on labor contract signed between the employee and the employer. However, labor laws supersede the provisions of labor contracts. In absence of a contract, State law has to be followed.
Tamil Nadu Shops and Establishments Act, 1947, an employer cannot terminate an employee that has been with the enterprise for more than six months, except for a reasonable cause?T. In addition, an employer must provide 1 month notice. If misconduct is the cause for termination, no notice or associated payoff is required.
Employment of women at night invites certain regulations, few are listed below:
For detailed guidelines for employment of women in night shifts check: More details
Persons with Disability Act 1995 Chapter VI Employment defines the Government initiative on employing differently abled individuals. More details
The appropriate Governments and the local authorities shall, within the limits of their economic capacity and development, provide incentives to employers both in public and private sectors to ensure that at least five per cent. of their work force is composed of persons with disabilities. More details
Section 54 in Chapter VI of the Factories Act, 1948 states that no adult worker shall be required or allowed to work in a factory for more than nine hours in any day. More details
Section 56 of the Act stipulates that the period of work of an adult worker in a factory shall be so arranged that, inclusive of his intervals for rest under Section 55, it shall not spread over more than ten and half hours on any day. The Chief Inspector, may, however, increase the spread over upto twelve hours on specific grounds. More details
The rate of contribution under the ESI Act is 4% (employers contribution is 3.25% and employees contribution is 0.75%) More details
The contribution to be paid by the employer to the Fund shall be [ten per cent] of the basic wages, [dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees [(whether employed by him directly or by or through a contractor)], and the employees contribution shall be equal to the contribution payable by the employer in respect of him and may, [if any employee so desires, be an amount exceeding [ten per cent] of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable. More details
A minimum bonus which shall be 8.33% of the salary/ wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether the employer has any allocable surplus in the accounting year or not.
Maximum bonus shall be an amount in proportion to the salary /wage earned by an employee during the accounting year subject to a maximum of twenty percent, of such salary or wage. More details
Section 4 of the Payment of Gratuity Act, 1972 states that Gratuity shall be payable to an employee on the termination of his/ her employment after he/ she has rendered continuous service for not less than five years, - (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. More details
For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages last drawn by the employee concerned. In the case of a monthly rated employee, the fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. (3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand] rupees.
As per the Maternity Benefit Act, 1961 every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence immediately preceding and including the day of her delivery and for the six weeks immediately following that day.
Eligible for maternity benefit: A woman should have worked in an establishment of the employer from whom she claims maternity benefit for a period of not less than one hundred and sixty days in the twelve months immediately preceding the date of her expected delivery. More details
As per the Maternity Benefit (Amendment) Act, 1961 the maximum period of leave of absence for a woman having two or more than two surviving children shall be twelve weeks of which not more than six weeks shall precede the date of her expected delivery. More details
The Employees' State Insurance Scheme is an integrated measure of Social Insurance embodied in the Employees' State Insurance Act and it is designed to accomplish the task of protecting 'employees' as defined in the Employees' State Insurance Act, 1948 against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families. The ESI Scheme applies to factories and other establishment's viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. More details
HT supply to industries, registered factories, Textiles, Tea estates, IT services, start up power provided to generators etc., starts from Rs. 356.35 per kVA per month and HT Temporary Supply for construction and other temporary purposes is Rs. 366 per kVA per month.
Electricity Tariff rates: More details
Water Tariff for the period from 01.04.2021 to 31.03.2022:
For Rural Local Bodies-Rs. 8.51/1000 Litres
For Urban Local Bodies- Rs. 10.94 /1000 Litres
Tamil Nadu is a power surplus state with 32.3GW of installed capacity. Tamil Nadu has a dedicated Policy for 24x7 power to Industrial Consumers.
For more details visit: More details
Water supply sources Construction of 45mld capacity tertiary treatment and reverse osmosis plant at koyambedu. For more information visit: More details
https://chennaimetrowater.tn.gov.in/seweragesystem.html More details
Underground sewerage scheme: More details
Chennai city underground sewerage scheme: More details
The Indian Telegraph (Amendment) Rules, 2017, provides that every telecom equipment must undergo mandatory testing and certification prior to sale, import of use in India. More details
India has trade agreements with most countries. India also has Double Taxation Avoidance Agreements with many countries.
DTAA between India and Singapore: More details
DTAA between India and Korea: More details
DTAA between India and China: More details
DTAA between India and Japan: More details
DTAA between India and Canada: More details
Bilateral Investment Treaties Agreements with 10 different nations More details
If the firm in India requires specific capital or machinery, can it be directly purchased from a foreign country, and invested as capital? (Furthermore, will it be the same for raw materials?)
Machinery imported is considered as part of capital investment for calculating ?~eligible investment?T size. Approval may be sought for second-hand machinery to be considered as eligible investment on a case to case basis. Machinery will be considered based on the certification by charted engineer and duties paid. Imported raw materials are not considered to be eligible investment.
Regulations on import of machinery is simple for most sectors, however, sectors like defence are tightly regulated.
More details (Annexure B)
For more information on foreign trade policy visit: More details
Information on valuation of second hand machinery visit: More details
India Trade portal provides detailed information on trade agreements, procedure for export & import, Import Export schemes, identifying of HS Code etc., More details
Goods & Services Tax: Rate schedule for goods More details
Export Duty calculator More details
Export Tariff More details
Transfer pricing under Sections 92 to 92F of the Indian Income Tax Act, 1961 (the Act) covers intra-group cross-border transactions. For details on transactions check: More details
Details on GST: More details
Foreign nationals residing in India with income more than Rs.2.5 lakhs p.a. file income tax return as per the Income Tax Act, 1961.
Liable to pay tax when resides in India:
Foreign Exchange Management (Insurance) Regulations, 2015 governs General/Health Insurance and Life Insurance in India. More details
Both the central and state governments offer various schemes and subsidies to firms in certain sectors.
Modified Special Incentive Package Scheme(M-SIPS)- capital subsidy of 20% in SEZ (25% in non-SEZ) for units engaged in electronics manufacturing. More details
Corporate Income Tax of 15 % for new manufacturing companies. Any new domestic company incorporated on or after 1st October 2019 making fresh investment in manufacturing shall have an option to pay income-tax at the rate of 15% (effective tax rate of 17.01% inclusive of surcharge & cess) and are not required to pay Minimum Alternate Tax. This makes India more competitive on tax rates as compared to Southeast Asian countries.
For the list of all available incentives as per the present GST regime- More details
Industrial Policy 2014:
Incentives relating to Power supply: All units with demand of more than 10 MVA will be provided with reliable supply at 110 KV or 230 KV level depending on the eligibility.
Captive power plants will be treated as eligible fixed assets for the purpose of the structured package of assistance.
Refund of 50% of the VAT paid on purchase of capital goods exclusively for captive power generation within the construction period, provided they are manufactured in Tamil Nadu.
Water: Incentives to set up desalination plants/ waste-water treatment and recycling plants
For MSME: Floor Space Index (FSI) incentive of 50% will be given for non-Multi Storyed Building.
Industrial units in existence in the state for over 10 years will be given suitable extra benefits for expansion projects More details
Incentives to Micro Small & Medium Enterprises
Subsidy schemes for micro manufacturing enterprises
For MSME manufacturing units, online application available here: More details
The Government will offer training subsidy as an incentive on a case to case basis taking into account the capacity of employment generation and the potential for significant improvement of skills. More details
Stamp duty and registration fee: More details
Stamp duty exemption on lease or purchase of land meant for industrial use to the extent of 50% would be available for all manufacturing industries setting up new or expansion units with an investment in eligible fixed assets of more than Rs 5 crores in private industrial parks. More details
Stamp Duty concession: 50% Exemption from Stamp duty on lease or sale of land meant for industrial use shall be offered for projects located in Industrial parks promoted by SIPCOT in A and B category districts. In the case of Ultra Mega projects, it will be 100%, irrespective of location. More details
Tamil Nadu Skill Development Corporation has been formed to transform the state into a skill hub and thereby enhance their employability and match the expectations of the industry. It provides multitude of schemes for unskilled, semi-skilled workers and upskilling requirements. More details
Work force participation rate: More details
Estimation of working age population for Tamil Nadu by 2022 is 5,77,13,558. More details
Availability of high-quality human resource for all focus sectors ?"mechanical, electrical & electronics, computers and communication, civil, chemical, biotechnology domains.
Tamil Nadu is home to some of the best educational institutes in India viz. I. Indian Institute of Technology II. Chennai, National Institute of Technology III. Trichy, Anna University, IV. VIT University, V. PSG College of Technology etc.
About 553 engineering and technology educational Institutions and 479 Polytechnic Colleges in the State. More details
The Architects Act, 1972 regulates education and practice of profession throughout India as well as maintains the register of architects. More details
Tamil Nadu Combined Development and Building Rules, 2019 regulates development and construction in the entire state. This also includes rules and regulations with regard to fire and safety. More details
Tamil Nadu Combined Development and Building Rules, 2019 states various inspections carried out during construction. More details
Arbitration and Conciliation (Amendment) Act, 2015 provides strict timelines for completion of the arbitral proceedings along with the scope for resolving disputes by a fast track mechanism. More details
the 2015 Amendment Act provides for assistance from the Indian courts, even in foreign seated arbitrations, in the form of interim relief before the commencement of the arbitration.
The Indian Customs Electronic Gateway (ICEGATE) is the national portal of Indian Customs of Central Board of Indirect Taxes and Customs (CBIC) that provides e-filing services to the Trade, Cargo Carriers and other Trading Partners electronically More details
Customs duty, is governed under the Customs Act, 1962, are evaluated on specific or ad valorem basis and the value of the product is defined by Rule 3(i) of Customs valuation (Determination of value of goods imported by someone) Rules, 2007 More details
Provision of calculation of customs duty is available at the icegate portal of the central Government, Custom Duty calculator More details
RBI states that all payment systems data to be stored exclusively in India without creating mirror sites overseas. For further details: More details
Tamil Nadu is considered as a rain shadow region as it lies on the eastern (leaward) side of western ghats.
Geological details of the state is available here: More details
Availability of minerals in the state: More details
About 1800 Single specialty hospitals across various districts in the State and more than 1000 multi-specialty hospitals. The renowned Apollo Hospitals headquarters are based in Chennai.
And on educational front, there are about 80+ International Baccalaureate & Cambridge curriculum schools.
To obtain an employment visa, the foreign individual should draw a gross salary in excess of Rs. 16.25 lakhs per annum. For details on duration of employment visa, registration requirements / extension of the visa check More details
As per Census 2011 (census is conducted every 10 years), total population of Tamil Nadu is 7,21,38,958 with a decadal population growth of 15.60%.
More details available here: More details
4 international and 2 domestic airports in the state
2400 weekly flights to and from Tamil Nadu
540 international flights and 1850 domestic flights weekly
17,000 km of Highways (National and State Highways)
3 major ports in Tamil Nadu
240 MT per annum cargo is handled by Chennai, Kamarajar (Ennore), VOC (Thoothukudi), Kattupalli and Karaikal ports
4 Major Industrial Corridors " CKIC, CBIC, KBIC & Defence
39 Industrial Clusters across the state spanning multiple sectors
Power surplus state with 32.3 GW installed power capacity
Highest bandwidth of 14.8 Tbps amongst Indian states
Directorate General of Commercial Intelligence and Statistics provides all export/ import data. More details
The Ministry of Environment, Forest and Climate Change lays down regulations for Category A project (expansion and modernization of existing projects).
For further details: More details
Tamil Nadu Government has made online payment for various services provided through the Singe Window Portal.