procedure to setup business in india

8/8/2019 Procedure to Setup Business in India

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Topic:- Procedure to setup business in India

M.B.A

Term Paper

2009-2010

MGT-511

Submitted by: Guided by:

Chandan Kumar Singh Miss Impreet Kaur

Section-RT-1902

Roll number A-27

Regi No-10903162

Lovely Professional university


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INDEXAcknowledgement.ObjectiveIntroductionProcedure to set the businessConclusion.Bibliography.

AcknowledgementI provide full justice to this term paper which is prepared by visiting various

web-sites, magazines, articles etc.

An interesting part of this term paper is research methodology which is

prepared with the help of corporate and business law.

I would like to take an opportunity to thank all the people in collecting the

necessary information and making of the report. I am grateful to all of them for

their time and wisdom.

My project becomes a reality only due to cooperation of many people who had

helped me in completing this project. I sincerely extend my gratitude to Mis

IMPREET KAUR who has given me this precious opportunity to have an insight

of business strategies of different companies, who has been source of guidance

and support.


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OBJECTIVE OF THE TERM PAPER

The main objective of the term paper is the to know the procedure

of the setup business in India. If any person inside of India or out

sided of the India to know how start the business in India. Theoverview of the Indian economy or know about the business

environment of India.

Indian Economy Overview

India has been one of the best performers in the world economy in recent

years, but rapidly rising inflation and the complexities of running the worlds

biggest democracy are proving challenging.

Indias economy has been one of the stars of global economics in recent years,

growing 9.2% in 2007 and 9.6% in 2006. Growth had been supported by

markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an

IT and real estate boom, and a flourishing capital market.

Like most of the world, however, India is facing testing economic times in

2008. The Reserve Bank of India had set an inflation target of 4%, but by the

middle of the year it was running at 11%, the highest level seen for a decade.

The rising costs of oil, food and the resources needed for Indias constructionboom are all playing a part.

India has to compete ever harder in the energy market place in particular and

has not been as adept at securing new fossil fuel sources as the Chinese. The

Indian Government is looking at alternatives, and has signed a wide-ranging

nuclear treaty with the US, in part to gain access tonuclear power

plant technology that can reduce its oil thirst. This has proved contentious

though, leading to leftist members of the ruling coalition pulling out of the

government.

As part of the fight against inflation a tighter monetary policy is expected, but

this will help slow the growth of the Indian economy still further, as domestic

demand will be dampened. External demand is also slowing, further adding to

the downside risks.


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During this period of stable growth, the performance of the

Indian service sector has been particularly significant. The growth rate of the

service sector was 11.18% in 2007 and now contributes 53% of GDP. The

industrial sector grew 10.63% in the same period and is now 29% of GDP.

Agriculture is 17% of the Indian economy.

Growth in the manufacturing sector has also complemented the countrys

excellent growth momentum. The growth rate of the manufacturing sector rose

steadily from 8.98% in 2005, to 12% in 2006. The storage

and communication sector also registered a significant growth rate of 16.64%

in the same year.

Additional factors that have contributed to this robust environment are

sustained in investment and high savings rates. As far as the percentage ofgross capital formation in GDP is concerned, there has been a significant rise

from 22.8% in the fiscal year 2001, to 35.9% in the fiscal year 2006. Further,

the gross rate of savings as a proportion to GDP registered solid growth from

23.5% to 34.8% for the same period.

Sectors OF INDIA

Agriculture

India ranks second worldwide in farm output. Agriculture and allied sectors

like forestry, logging and fishing accounted for 16.6% of the GDP in 2007,

employed 60% of the total workforce and despite a steady decline of its share in

the GDP, is still the largest economic sector and plays a significant role in the

overall socio-economic development of India. Yields per unit area of all crops

have grown since 1950, due to the special emphasis placed on agriculture in

the five-year plans and steady improvements in irrigation, technology,

application of modern agricultural practices and provision of agricultural credit

and subsidies since Green revolution in India. However, internationalcomparisons reveal that the average yield in India is generally 30% to 50% of

the highest average yield in the world.

Industry and services


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Industry accounts for 27.6% of the GDP and employ 17% of the total

workforce. However, about one-third of the industrial labour force is engaged in

simple household manufacturing only. In absolute terms, India is 16th in the

world in terms of nominal factory output. India's small industry makes up 5%

of carbon dioxide emissions in the world.

Economic reforms brought foreign competition, led to privatisation of certain

public sector industries, opened up sectors hitherto reserved for the public

sector and led to an expansion in the production of fast-moving consumer

goods. Post-liberalisation, the Indian private sector, which was usually run by

oligopolies of old family firms and required political connections to prosper was

faced with foreign competition, including the threat of cheaper Chinese

imports. It has since handled the change by squeezing costs, revamping

management, focusing on designing new products and relying on low labour

costs and technology.

Banking and finance

The Indian money market is classified into: the organized sector (comprising

private, public and foreign owned commercial banks and cooperative banks,

together known as scheduled banks); and the unorganized sector (comprising

individual or family owned indigenous bankers or money lenders and non-

banking financial companies (NBFCs)). The unorganized sector

and microcredit are still preferred over traditional banks in rural and sub-

urban areas, especially for non-productive purposes, like ceremonies and shortduration loans.

Prime Minister Indira Gandhi nationalized 14 banks in 1969, followed by six

others in 1980, and made it mandatory for banks to provide 40% of their net

credit to priority sectors like agriculture, small-scale industry, retail trade,

small businesses, etc.

Natural resources

India's total cultivable area is 1,269,219 km

(56.78% of total land area), which

is decreasing due to constant pressure from an ever growing population and

increased urbanization.

India has a total water surface area of 314,400 km

and receives an average

annual rainfall of 1,100 mm. Irrigation accounts for 92% of the water

utilization, and comprised 380 km

in 1974, and is expected to rise to


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1,050 km

by 2025, with the balance accounted for by industrial and domestic

consumers. India's inland water resources comprising rivers, canals, ponds

and lakes and marine resources comprising the east and west coasts of

the ocean and other gulfs and bays provide employment to nearly 6 million

people in the fisheries sector. In 2008, India had the world's third largest

fishing industry.

Some Basic Facts about India

Is the world's second largest small car market Is one of only three countries that makes its

own supercomputers

Is one of six countries that launches its ownsatellites

One hundred of the Fortune 500 have R & Dfacilities in India

Has the second largest group of softwaredevelopers after the U.S.

Lists 6,500 companies on the Bombay StockExchange (only the NYSE has more)

Are the world's largest producer of milk, andsecond largest producer of food, includingfruits and vegetables

Is a world economic power, with growth over the past few years averaging8%

Is the world's fourth largest economy, based on purchasing power parity Sends more students to the U.S. A. colleges than any other country in

the world (In 2007, over 84,000 Indian students enrolled in the U.S. A.)

Has the world's second largest pharmaceutical industry after China Has a middle class estimated at 300 million out of a total population of 1

billion

With its large base of English speaking skilled human resource, it ismost sought after destination for business process outsourcing,

Knowledge processing etc.

Is the second largest English-speaking scientific, technical and executivemanpower in the world

Produces more than 900 movies a year - significantly more than the USA Has become increasingly attractive to foreign investors in various sectors


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Its low costs and huge, English-speaking, workforce have made itpopular with multinationals for work including manufacturing and call

centers.

Provides many tax exemptions to companies set up in Special EconomicZone

Provides many tax incentives available to IT companies, business processoutsourcing and KPO companies

Has a stable political system based on parliamentary democracy Has a common law legal system with English as a court language Is emerging as a major market and investment destination. India: the second fastest growing market in Asia

India is the largest country in South Asia and the seventh largest in the world.

China, Nepal and Bhutan are the neighboring countries in the north,

Bangladesh and Burma in the east and Pakistan and Afghanistan in the west.In the south the country tapers off into the Indian Ocean. India is the second

most populous country in the world, with over one billion people. India is the

largest democracy in the world. English is extensively used for business and is

understood almost all over India. The Indian Rupee (International symbol is

INR) is the countrys currency. India is committed to a free economy after

having an economy controlled by licensing until 1991. India has become a

member of the WTO and is disbanding quantitative restrictions on imports.

Brief Profile & Key Economic Indicators

Official Name: Republic of India

Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal,between Burma and Pakistan

Population: 1.16 billion (May 2009)

Languages: Hindi (national language primary tongue of 30% of population);

English enjoys associate status but is the most important language for

national, political, and commercial communications

Currency: Indian Rupee (Rs)

Capital City: New Delhi

Financial Center: Mumbai (formerly known as Bombay)


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GDP: $1.16 trillion

Per Capita (PPP): $4,139 (2007-08)

U.S. India Trade

Total Trade (2008): $63.63 billion

U.S. Exports to India (2008): $32.44 billion, a 85 percent increase from the

previous year

Imports from India (2008): $39.89 billion, a 65 percent increase from the

previous year

Business in India

Starting any business in India has become rather easy and quick. According tothe latest World Bank report of 2007, the incorporation of a company takes

approximately 35 days in India. Government of India has been developing and

refining the supporting infrastructures continuously including the power

supply, telecommunication network, besides facilitating foreign investment in

almost all sectors, especially in the tourism, information technology, and

agriculture sectors. Indias economy is galloping ahead quite prominently, and

plays the pivotal role in the world trade and economy.

India- has fathomless growth potential

India is the second largest country in respect of population with a population

over 1.5 billion, and with an enormous number of talented and competent

youth and unemployed people. Thus, there is fathomless scope for investment

in various business sectors of India, especially in the tourism, information

technology, and agriculture sectors, with rapid growth and huge profitability.

Moreover, Indias economy is the fifth biggest economy of the world, and is still

fast-developing, while maintaining amazing stability. Indias democratic,financial, judicial, etc. infrastructures too, are quite conducive to better

business and bright future, as compared to other countries of the world.

India- is continuously expanding


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India commands the third greatest GDP in the Asia continent, which makes it

the fifth biggest economy of the world. Besides being an active member of WTO,

India has established and extensive trade relations with a large number of

developing and developed countries of the world. Liberalization andglobalization have tremendously boosted business activities and foreign

investment in India since 1991, which is perhaps larger than that in any

country and still, India has tremendous growth potential with rather

economical availability of requisite resources.

Guide to set up your business in India

Do you nurture dreams of setting up your business in India? The entire

process of setting up a business in India is exciting, but the procedure and

legal formalities can be tedious and confusing. So should you consider settingup shop in India or is your business better off overseas? Heres what you

should consider before you go ahead with your plans.

Is starting business in India a good idea?

Setting up a business in India is still an extremely difficult task when

compared to other countries. Long legal formalities and procedural delays are

common. This can turn your plans into a time-consuming effort. Consider this

setting up a business in India takes 33 days and closing your business here

takes 10 days. (Source: World Banks Report: Doing Business in 2008)

According to the same report, the number of procedures involved in setting up

business in India is 13. On the whole, the Doing Business 2008 Rank for

India is 120 for 2008.

What are the type ofBusiness Entities Available

in India?

The following types ofBusiness entitles areavailable in India:

Private Limited Company Public Limited Company Unlimited Company Partnership


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Sole Proprietorship

In addition to the above legal entities, the following types of entities are

available for foreign investors/foreign companies doing business in India:

Liaison Office Representative Office Project Office Branch Office Wholly owned Subsidiary CompanyJoint Venture Company

Instructions1.Step1

Company is a separate legal entity, which is registered under the company act.Every country has different procedure of company registration. Companyregistration India is registered under Companies act 1956, which provides easyand effective procedures to register a company in India. Incorporation ofCompany is yet another important area of concern. The Companies Act of 1956sets down rules and regulations for the establishment of both public andprivate companies. The most commonly used corporate form is the limitedcompany, unlimited companies being relatively uncommon.

2. Step2A company is formed by registering Articles of Association with the StateRegistrar of Companies of the state in which the main office is to be located.There are many companies in India, which provide Company Registration IndiaServices, Taxation and Licensing Services, and Vat registration so that theprocess of registering a company will be easy and effective. These companiesoffer services like limited company registration, online company registration,foreign company registration and new company registration services in India.Company registration services in India not simply offer a registration service,but also provide you with advice and support for your business to flourish aslong as you need it. Company registration India is very essential to showexcellence in any business flourishing in India as it safeguards the profits and

rights of a company. It includes company formation, company incorporationand a long procedure to be followed. But today, it has been done by differentcompany registration services online that saves money and time of anentrepreneur as well.

3. Step3Company registration India has made your business successful and efficientbecause of registering a company in India & across the globe. Non-


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Governmental Organization (Ngo formation) is a voluntary organization set-upto work in social and development sector, which covers a wide spectrum fromsmall loose-knit local organizations to nationwide federations and internationalnetworks. There is a pressing need to understand the forces and processes,which shape organization and operations of NGOs in order to scale up and

replicate their people-centered approach. New IPO in India is launched throughvarious different methods like book building method, fixed price method or acombination of both. Generally, New IPOs in India have a registrar and alsolead managers. The main objectives of New IPO in India are to use the proceedsfrom the issue to fund the company's plans for the expansion of operations andto meet the expenses of the issue. Online VAT registration is easy and fastprocess to register a tax on the final consumption of certain goods andservices.

4. Step4Online company registration in India is a new aspect of Company registrationin India, which is also easy and comfortable. The online facilities to get thecompany registration process, form and registration of company name makeperson comfortable. The online company registration process is very easy, fastand cheap within law. The online company registration services also providehelp and advice on starting business development, corporate recovery,and financial planning regarding to register a company in India.

Setting up business in India: the necessary checklist

y Check your eligibility to set up business here. Remember only NRIs andPIOs can invest in proprietary concerns or partnership firms in India

today.y Make sure that you get a PAN card issued by the Indian Income Tax

department. Youll need a PAN for all your business transactions. Theprocess to obtain your PAN card is easy and can be done online as well.

y Identify and select your business partners and also peruse your financeoptions carefully. Seek the services of an established lawyer oraccountant to draw up the necessary contracts.

y Check for restrictions on setting up a business in India. As an NRI youcannot start any business in the following areas agriculture, real estateor the print media.

What is the procedure in obtaining a name approval for theproposed Company?

An application in Form No. 1A needs to be filed with the Registrar of

Companies (ROC) of the state in which the Registered Office of the proposed

Company is to be situated. The application is required to be signed by one of

the promoters. The details to be state in the said application are as follows:1.


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Four alternative names for the proposed company. (The name can be coined

names from the objects of the proposed company or the names of the directors,

etc. but should definitely be indicative of the main object of the company.

Justification for the name needs to be specified along with the application)2.

Names and addresses of the promoters (Minimum 7 for a public company while

2 for private company).3. Authorized Capital of the proposed company.4. Main

objects of the proposed company.5. Names of other group companies. On

submitting the application, the ROC scrutinizes the same and sends the

approval / objections in about 10 days to the applicant. On fulfilling of the

objections a formal letter of name approval is issued.

What are the Memorandum ofAssociation (MOA) and the

Articles ofAssociation (AOA) of a company and what is the

procedure in their regard?

On receipt of the name approval letter from the ROC the MOA and the AOA are

required to be drafted. The MOA states the main, ancillary / subsidiary and

other objects of the proposed company. The AOA contains the rules and

procedures for the routine conduct of the proposed company. It also states the

authorized share capital of the proposed company and the names of its first /

permanent directors. After the MOA and AOA are required to be stamped.

A stamp duty is required to be paid on the MOA and on the AOA. The stamp

duty depends on the authorized share capital.

What are the documents required to be executed for

incorporation?

The following documents are required to be executed (signed) before they are

submitted to the ROC:

MOA and AOA - These are required to be executed by the promoters intheir own hand in the presence of a witness in quadruplicate stating

their full name, father's name, residential address, occupation, numberof shares subscribed for, etc.

Form No. 1 - This is a declaration to be executed on a non-judicial stamppaper of INR 20 by one of the directors of the proposed company or other

specified persons such as Attorneys or Advocates, etc. stating that all

the requirements of the incorporation have been complied with.


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Form No. 18 - This is a form to be filed by one of the directors of thecompany informing the ROC the registered office of the proposed

company.

Form No. 29 - This is a consent obtained from all the proposed directorsof the proposed company to act as directors of the proposed company.

(Not required in case of private company).

Form No. 32 - This is a form stating the fact of appointment of theproposed directors on the board of directors from the date of

incorporation of the proposed company and is signed by one of the

proposed directors.

Name approval letter in original. Power of Attorney signed by all the subscribers of MOA authorizing one

of the subscribers or any other person to act on their behalf for the

purpose of incorporation and accepting the certificate of incorporation.

Power of Attorney in case of a subscriber who has appointed anotherperson to sign the MOA on his behalf.9. Filing fees as may be applicable.

How is the certificate of incorporation issued?

After the documents in FAQ 5 are filed, the ROC calls the attorney on a

specific date for scrutiny and making the corrections in the MOA and AOA

filed. On complying with the same, the certificate of incorporation is granted to

the attorney.

When can the newly formed company start its business

operations?

On receipt of the certificate of incorporation, the public company has to

complete certain other legal formalities such as a statutory meeting (within 6

months),

RBI Automatic Approval

Obtaining an automatic and instant approval from the Reserve Bank of India

(RBI) has now become rather easy and convenient for the foreign investments.

Investments in certain selected business sectors, fully export oriented units,

and select technological investment in India, are privileged to get instant and

automatic approval from the reserve bank of India.


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Company Registration

In India, the incorporation of a company is governed by the Companies Act

1956, which is administered by the Central Government of India. It applies to

whole of India and to all types of companies, whether registered under this Actor an earlier Act. But it does not apply to universities, co-operative societies,

unincorporated trading, scientific and other societies. Incorporation is the most

important piece of legislation which empowers the Central Government to

regulate the formation, financing, functioning and winding up of all types of

companies. Under the Companies Act, an entrepreneur can form two types of

companies, namely a private company or a public company.

The Registrar of Companies (ROC) primarily controls the task of incorporation

of new companies and the administration of running companies. For

registration and incorporation of a company, an application has to be filed withthe Registrar of companies of the State in which the company is proposed to be

incorporated. The Application for the registration is to be accompanied by the

list of selected names, Memorandum of Association, Articles of Association, and

other requisite documents.

The Registrar of Companies (ROCs) appointed under Section 609 of the

Companies Act 1956, covering various States and Union Territories, are vested

with the primary duty of registering companies floated in the respective States

and the Union Territories, and ensuring that such companies complyscrupulously with the statutory requirements under the Act.

statutory report, etc. On completion of the said formalities and on filing of the

statutory report with the ROC the ROC issues the certification of

commencement of business to the company. Thereafter, the Public Company

can start the business operations. The Private Company can start its business

immediately on incorporation.

How do we comply with the legal formalities when we are not

stationed in India?

You can give Power of Attorney to a person to sign the documents on your

behalf. After the Company is incorporated, you can appoint Alternate Directors,

to function on your behalf while you are not in India. But at least once, you

should be in India within one month of the incorporation of the Company.

There can be one meeting of Board of Directors during your stay in India and


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all other formalities including those of appointment of Alternate Directors can

be complied with.

What other approvals are required for foreign investor in India?

Generally, prior approval is required from the RBI before investing in India.Some categories of businesses are covered under automatic approval process.

However, one has to apply for the same. There are some post-incorporation

filing formalities after the remittance of capital from overseas to India and on

issue of shares.

What are other formalities before or after incorporation?

Obtaining Permanent Account Number (PAN) from Income Tax Department

Obeying Shop and Establishments Act Registration for Import Export code from

Director General of Foreign Trade Software Technologies Parks of Indiaregistration (STPI) if required RBI approval for foreign companies investing in

India and FIPB approval, if required. The directors of an Indian company, both

Indian and foreigner directors, are required to obtain Director Identification

Number - DIN and Digital Signature Certificate DSC

Procedure involved to Start a Company (Private Limited)

in India

This information will be useful for those who are looking in a nutshell the

steps involved to start a Private Limited company in India1. First and foremost identify the Directors of the Company. Minimum of two

directors need to present and maximum of 8 is allowed.

2. All Directors should have DIN (Directors Identification Number). If you do

not have one you can apply DIN online

Documents required for DIN

Identity Proof (Any one of the following)

PAN CardDriving License

Passport

Voter ID Card

Others (to be specified)


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B. Residence Proof (Any one of the following)Driving License

Passport

Voter ID CardTelephone Bill

Ration Card

Electricity Bill

Bank Statement

Others (to be specified

Detailed Product Description

1.Details of proposed company to be incorporated

Proposed names of the company in order of preference Main objects of the company. Authorized share capital of the company

2.Details of Directors ( Provide details of 2 directors in case of

private company and 3 directors in case of public company ).

Complete Name Address including (city, state, pincode, country)

Fathers Name Date of Birth Nationality OccupationThree photographs of every proposed Directors. (scanned photographs

will do)

Copy of passport as a proof of identity and copy of proof of address(electricity bill/ telephone bill/ bank statement/driving license). (scanned

copy will do)

3.Details ofShareholders (Provide details of 2 shareholders incase of private company and 7 in case of public company)

Individual Complete Name Address including (city, state, pincode, country) Fathers Name


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Date of Birth Nationality OccupationThree photographs of every proposed shareholders. (scanned

photographs will do)

Copy of passport as a proof of identity and copy of proof of address(electricity bill/ telephone bill/ bank statement/driving license). (scanned

copy will do)

Corporate Shareholders

Copy of Certificate of incorporation Copy of Memorandum and Articles of Association Board resolution of the existing company authorizing for shareholding in

the proposed company.

SETTING UP BUSINESS IN INDIABYFOREIGN COMPANIES

A foreign company planning to set up business operations in India has the following

TWO options:

1. ASAN INDIAN COMPANY

A foreign company can commence operations in India

by incorporating a company under the Companies Act,

1956 through:

a. Joint Ventures; orb. Wholly Owned Subsidiaries

Foreign equity in such Indian companies can be up to

100% depending on the requirements of the investor,

subject to equity caps in respect of the area of activities

under the Foreign Direct Investment (FDI) policy.

Details of the FDI policy, sectoral equity caps &

procedures can be obtained on a specific request.

1. a) Joint Venture With An

Indian Partner

Foreign Companies can set up their operations in India

by forging strategic alliances with Indian partners.

Joint Venture may entail the following advantages for a

foreign investor:

y Established distribution/ marketing set up of the


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Indian partner

y Available financial resource of the Indianpartners

y Established contacts of the Indian partnerswhich help smoothen the process of setting up ofoperations

1. b) Wholly Owned

Subsidiary Company

Foreign companies can also set up wholly owned

subsidiary in sectors where 100% foreign direct

investment is permitted under the FDI policy.

Incorporation ofCompany For registration and incorporation, set of applications

have to be filed with Registrar of Companies (ROC).

Once a company has been duly registered and

incorporated as an Indian company, it is subject to

Indian laws and regulations as applicable to other

domestic Indian companies.

2. ASAFOREIGN COMPANY

Foreign Companies can set up their operations in India

through:

y Liaison Office/Representative Officey Project Officey Branch Office

Such offices can undertake any permitted activities.

Companies have to register themselves with Registrar o

Companies (ROC) within 30 days of setting up a place o

business in India.

2. a) Liaison Office/

Representative Office

Liaison office acts as a channel of communication

between the principal place of business or head office

and entities in India. Liaison office cannot undertake

any commercial activity directly or indirectly and

cannot, therefore, earn any income in India. Its role islimited to collecting information about possible market

opportunities and providing information about the

company and its products to prospective Indian

customers. It can promote export/import from/to India

and also facilitate technical/financial collaboration

between parent company and companies in India.


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Present Indian Economic condition:

In the revised 2007 figures, based on increased and sustaining growth, more

inflows into foreign direct investment, Goldman Sachs predicts that "from 2007

to 2020, Indias GDP per capita in US$ terms will quadruple", and that theIndian economy will surpass the United States (in US$) by 2043. In spite of the

high growth rate, the report stated that India would continue to remain a low-

income country for decades to come but could be a "motor for the world

economy" if it fulfills its growth potential. Goldman Sachs has outlined 10

things that it needs to do in order to achieve its potential and grow 40 times by

2050.

Behind China, India is the second fastest growing economy.According to a survey by Goldman Sachs, India will become the

3rd largest economy by 2035. This is measured in $US. If we usePPP (purchasing power parity) which takes into account localpurchasing power, India already has the 3rd largest economy.

However, despite having a GDP of US $1.09 trillion (2007). Thisworks out as an average GDP per capita of $964 ($4,182 at PPP cost of living is relatively cheaper in India)

Growth in 2007 is forecast to be 9.2%. Growth will slow slightlynext year. The RBI estimates the economy to grow at 8.5% in thefinancial year ending March 2008.

Furthermore, despite the rapid growth, poverty remains a realproblem, especially in rural India. In 2008 and beyond India facesthe real challenge of making sure that all sections of thepopulation continue to benefit. Current estimates suggest that27% of the Indian population live below the poverty line. Accordingto this article77% of Indians live on less than half a dollar a day.Most of these low wages are in the informal sector, working in

agriculture on doing odd jobs.

Indian economy 2009

After several yars of ra[od growth, 2009 will prove a testing

year for India.


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Inflation : Inflation continues to pose a threat. Inflation peaked at 12% in early

August 08. Inflation, is being cause by rapid growth (demand pull factors) but,

also the cost push inflation factors (rising oil prices). Hopefully, the fall in oil

prices and higher interest rates will reduce inflation without causing too much

of a slowdown.

Economic Growth: After reaching growth of 9.8% in 2007/2008, growth is

expected to slow down to 7%. This might not be a bad thing as it will avoid

inflationary pressures building further. However, some worry the global credit

crunch could reduce growth much more.

Global Recession and Indian Economy: It appears that Europe, Japan and

the US are entering into recession. Falling house prices, crisis in the financial

system, and lower confidence could lead to sharp downturn, with the worst still

to come. Many argue, that Indias growth is not so dependent on growth in the

West. However, the Indian stock markets have been hit by the global crisis.Indias growing service sector and manufacturing sector would be adversely

impacted by a global downturn. However, I still feel that Indias economic

success is not dependent on growth in the West, and at worst Indias growth

rate will be less than hoped for.

Challenges for Indian economy in 2009

Getting inflation under control Spreading the benefits of growth more equitably. Completing investment projects which are essential for long term

development of economy.

Dealing with global financial uncertainty, which will make capital flowsand exports more difficult.

Conclusion:

When we see the all condition of above information then we allrelease that it is the very lindy process to start a business. But the

present Indian economy condition is very good to other country. In

present aprox the all over the world faces the recession problem but

the Indian economy not effected to the recession. In the present the

Indian govt do everything for foreign investment. The Indian govt


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make easy to easy process to setup business in India. So the all

over the outsider is wants to do business in India. It is the all

processes to setup business in India.

Bibliography.Books:-

Mercantile law (ND kapoor)

Mercatile law (KC gerg)

Company law (Avatar singh)

Websiteswww.britannica.com/EBchecked/topic/86266/business-lawwww.jstor.org/stable/4503875www.mca.gov.inwww.indialegalservice.comwww.indiagoverment.in