There isn’t much of a decision making involved as all the regulatory approvals need to be in place anyways. There are a bunch of approvals. Here’s a quick (but not exhaustive) list: Registrar of Companies, Reserve Bank of India, Shops and Establishment, Tax registration numbers (GST, Permanent Account Number (PAN), Professional tax, Provident fund etc.,).
However, the Government of India (GoI) has made all these seamless and made it a single window system. There are several local and multinational companies who’d assist in getting all these done. Still, the following decisions need to be made by the parent:
- The company (local/multinational) company to be engaged. Cost, time, and reputation need to be analysed and a call need to be made.
- The directors of the India entity. Usually this’d be from the company assisting in getting the registration done, along with the Site Leader. During registration a lot of documents need to be signed and to speed up the process the founders and other senior execs are brought in to the board later, in place of the directors from the company assisting with the registration process.
- STPI or SEZ? These are the two incentives that GoI offers to encourage foreign investment and offers different tax incentives. For smaller (<200) set-ups STPI sounds good, as it is little more flexible.
Good to know:
- Costs involved in registration (both the government fee and consultation fees)
- Dependencies (for example, bank account, lease agreements are needed before applying for some of the approvals)
- Transfer pricing (the profit that the India entity can claim). Most GCCs operate on cost+profit model for the India entity. The profit margin is usually around 15-20% and periodically the India entity will do dividend repatriation. This has been a messy issue with GoI demanding higher profits for the India entity, especially for bigger companies that claim to do end-to-end product development out of India.
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