The Ministry of Corporate Affairs (MCA) regulates corporate affairs in India through the Companies Act, 2013 and other allied Acts, Rules, and Regulations. The Companies Act consolidates and amends the law relating to companies. This Act regulates a wide range of activities, including incorporation, operationalization, governance, liquidation, and winding up of companies.
The MCA has a three-tier organizational structure with its headquarters in New Delhi; 7 offices of Regional Directors in Ahmedabad, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, and Shillong; 19 Offices of Registrars of Companies; and 24 Official Liquidators in States and Union Territories of India.1 Other attached/ subordinate offices/organizations of the MCA include:
Companies in India are broadly classified into public and private companies. A public company may further be listed or unlisted. Listed public companies have to additionally comply with the regulations issued by the Securities and Exchange Board of India (SEBI).
A foreign company planning to set up business operations in India can incorporate a company under the Companies Act, 2013 as a joint venture or a whollyowned subsidiary. A foreign company could also set up a liaison office/representative office, project office, or branch office of the foreign company, which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.
A foreign company may also invest in a Limited Liability Partnership (LLP) under the Limited Liability Partnership Act, 2008 - a relatively new but popular concept in India. Please see Chapter 4: Business Entities to know more about LLPs in India.
FDI in India is governed by the Foreign Exchange Management Act, 1999, and is undertaken in accordance with the FDI Policy, formulated and announced by the government.
The Department for Promotion of Industry and Internal Trade (DPIIT), earlier known as the Department of Industrial Policy & Promotion (DIPP), is a part of the Ministry of Commerce and Industry functioning under the Government of India. The DPIIT usually issues a 'Consolidated FDI Policy Circular' on a yearly basis elaborating on the policy and process with respect to FDI in India. The most recent consolidated FDI Policy was published on 15 October 2020.3
An Indian company may receive FDI either under the automatic route or the government (approval) route subject to the conditions laid down for this route. FDI is allowed under the automatic route without prior approval of the government or of the Reserve Bank of India (RBI) in certain activities/sectors as specified in the 'Consolidated FDI Policy Circular' and amended via Circulars and Press Notes released from time to time. FDI in activities not covered under the automatic route requires prior approval of the government. The Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the government created to facilitate FDI for investors4 . This portal is being administered by the DPIIT. This portal will continue to facilitate the single-window clearance of applications that are made through the government route. Upon receipt of the FDI application, the concerned Administrative Ministry/Department shall process the application as per the Standard Operating Procedure (SOP). If the online filing of the application contains a digital signature by an authorized signatory, the physical submission of the copy is not required. For applications without a digital signature, once the e-filing of the application is completed, the applicant is required to file/courier only a single signed copy of the printed version of the online application, along with the duly authenticated copy of the documents attached with the application, to the Nodal Officers of the concerned Administrative Ministry/Department as per the SOP.
FDI is prohibited in lottery businesses, including government/private lottery, online lotteries; gambling and betting including casinos; chit funds; Nidhi companies (borrowing from members and lending to members only); trading in Transferable Development Rights (TDRs); real estate businesses (other than construction development, real estate broking services and Real Estate Investment Trusts (REITs)) or construction of farm houses; manufacturing of cigars, cheroots, cigarillos, and cigarettes, or tobacco or of tobacco substitutes. The activities/sectors not open to private sector investment are namely atomic energy and railway transport (other than construction, operation, and maintenance of (i) suburban corridor projects through a public-private partnership, (ii) highspeed train projects, (iii) dedicated freight lines (iv) rolling stock including train sets, and locomotives/ coaches manufacturing and maintenance facilities (v) railway electrification (vi) signaling systems (vii) freight terminals (viii) passenger terminals (ix) infrastructure in industrial parks pertaining to railway line/sidings including electrified railway lines and connectivity to the main railway line, and (x) mass rapid transport systems.)5
Depending on the nature of the business to be carried out by the Indian entity, specific registrations, approvals, and licenses, such as Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), Shops and Establishments Registration/Factories License, Goods and Service Tax Identification Number (GSTIN), etc. are required to be obtained.
|Sector||Automatic route||Government route|
|Construction development : Townships, housing, built-up infrastructure||100%||-|
|Telecom Services - (including Telecom Infrastructure Providers Category-I)||49%||49%|
|Agriculture and Animal husbandry||100%||-|
|Manufacturing of medical devices||100%||-|
|Mining and Exploration of Coal and Lignite for captive consumption||100%||-|
|Mining and Exploration of Titanium bearing minerals||-||100%|
|White label ATM projects||100%||-|
|E-commerce: marketplace model||100%||-|
|Plantations: tea, coffee, rubber, cardamom, palm oil tree and olive oil tree plantations||100%||-|
|Duty-free shops located and operated in Customs bonded areas||100%||-|
|Limited liability partnerships (LLP) operating in sectors/ activities where 100% FDI is allowed||100%||-|
|Credit information companies||100%||-|
|Broadcasting Carriage Services
(Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable Networks , Mobile TV, Headend-in-the Sky Broadcasting Service (HITS) and Cable Networks)
|Broadcasting content services
1. Up-linking of 'Non-news & Current Affairs’ TV Channels/Down-linking of TV Channels
2. Terrestrial Broadcasting FM (FM radio)
3. Up-linking of ‘News & Current Affairs’ TV Channels.
|100%||Up to 49%
Up to 49%
1. Greenfield and Existing Projects
2. Scheduled air transport service/ domestic scheduled passenger airline and regional air transport service
3. Non-scheduled air transport service
4. Helicopter services/seaplane services requiring DGCA approval
49% (Up to 100% for NRIs)
|Private security agencies||Up to 49%||Up to 74%|
|Pharmaceuticals (greenfield)||Up to 100%||-|
|Pharmaceuticals (brownfield)||Up to 74%||Up to 100%|
|Defense||Up to 74%||Up to 100%|
|Insurance Brokers / Third-party administrators / Surveyors & Loss assessors and Other Insurance Intermediaries||100%||-|
|Trading of food products manufactured or produced in India, including through e-commerce||-||100%|
|Print Media (Publishing of newspaper and periodicals or Indian editions of foreign magazines dealing with news and current affairs)||-||100%|
|Publication of facsimile edition of foreign newspapers||-||100%|
|Single Brand Retail Trading||100%||-|
|Multi Brand Retail Trading||-||51%|
|Satellites: Establishment and operation||-||100%|
|Banking (Private sector)||49%||74%|
|Banking (Public sector)||-||20%|