Reason Why NRIs Dont Do Business In India:
No single person can form a company:
With the coming of the New Companies Act, 2013, a new concept of one person company has come in but the restriction is that that one person should be a resident Indian. NRIs, PIOs, Foreign Nationals are not eligible for forming this type of limited company in India.
Need of Indian resident:
Companies Act, 2013 permits NRIs, PIOs, Foreign Nationals and Foreign Residents to act as directors of an Indian Company.
Notarization of documents from Indian Embassy In forming a company, the first step is to get the Digital Signature Certificates (DSCs) of the proposed directors and then apply for Directors’ Identification Number (DIN). In all these cases, the ID and address proofs of proposed directors are needed. In case of NR/NRIs, clear instructions have been issued by the government that if the present address of the NR/NRIs is outside India then each document of the person should be notarized from the Indian embassy of the country where the person presently resides.
Non availability of address proof for registered office:
For registered office of the company, the electricity bill/property tax receipts/gas bill, No Objection Certificate from owner will be needed. In the initial stage, when a NRI/NR plans to open up a company in India he/she does not have a registered office address proof which is the last step in company incorporation because of their belonging to different nations. Resolutions to some extent Availability of Indian residents: Many Indian firms help to introduce NRIs to persons who are willing to work in their company as directors in lieu of some remuneration which takes care of the problem of one resident Indian in the company.
Single Person Company is not viable:
For Foreign Nationals/NRIs, One Person Company is not a viable option as this concept has been introduced by the government to promote registered proprietorship in India and not with the aim to attract foreign nationals or NRIs to invest in India individually.
Availability of registered office address:
The concept of a virtual office in India is new but very effective. A Foreign National/NRI can resolve the registered office problem by opting for a virtual office presence in India. Many startup hubs, incubation centers and institutions provide this virtual office concept in lieu of some remuneration. Conclusion Although, the Indian government is making a continuous attempt to ease the process of doing business in India, there are some points which create disinterest in the mind of foreign citizens about the Make in India concept. The government should think of ways to promote and attract foreign investors by removing these difficulties in order to make doing business in India hassle free.
Some of the challenges that NRIs encounter are:
By summarising above we can say that 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