|
Overseas organizations looking at setting up operations
in India need to consider the following factors:
Incorporating a company
There are mainly two types of companies in India: public
and private companies. Overseas organizations will find
it easier to set up a private company rather than a
public one as private companies have more flexibility
and are easier to operate. It takes around 20 - 14 days
to incorporate a company in India.
Registering with the STPI
The STPI grants approval to establish a unit and
specifies the amount of capital goods that can be
imported, the minimum export performance and the net
foreign exchange earnings as a percentage of exports.
The units in the STPI are also granted certain indirect
tax benefits, such as exemption from the payment of
custom duties.
DoT approval
The DoT has to give its approval for the setting up of a
call center in India. The DoT guidelines on call centers
classify them within the ambit of other service
providers.
Exit options
Exit options take the following forms:
-
Shareholders of Indian BPO companies can exit the
company either through a transfer of shares or other
routes.
-
Under Indian exchange control laws, the transfer of
shares from a resident to a non-resident will require
the prior approval of the Foreign Investment Promotion
Board (FIPB) and the Reserve Bank of India (RBI)
The transfer of shares from a non-resident to a resident
requires the prior approval of the RBI. The RBI ensures
that the price of the transfer is not above a maximum
price, which is based on the NAV (net asset value) of a
private company and the price on the stock exchange for
a listed company.
Under the provisions of the IT Act, gains realized on
sale/transfer of shares on the Indian company by the
foreign company would attract capital gains tax in
India.
Long term capital gains realized on sale of shares of
Indian companies not listed on a recognized stock
exchange in India will be taxed at the rate of 20
percent and a surcharge of five percent.
Long term capital gains realized on sale of shares of
Indian companies listed on a recognized stock exchange
in India will be taxed at the rate of 20 percent.
Short term capital gains realized by a domestic company
will be subject to tax at the rate of 36.75 percent.
It may be possible to reduce the capital gains tax to
zero, if the investments are routed through Mauritius
and the operations are structured so as to avoid a PE in
India.
The shareholders of the BPO company can exit at an IPO.
However, if the shareholders are treated as promoters of
the company, there are certain lock in requirements on
the shares held by such promoters. The shareholders can
exit from the BPO company through a merger of the BPO
company with another company or after a winding up of
the Indian company.
Drawing up the BPO agreement
The BPO agreement, which defines the relationship
between the concerned parties and the nature of the
transaction can take myriad forms including the
following:
-
a third party agreement, where the customer and the
vendor are not related
-
a captive agreement, where the customer and vendor are
related parties
-
Build-Operate-Transfer agreements where the vendor
builds and develops the BPO operation for the customer
and at a future date transfers it to the customer.
Why Interactive
World?
For you to setup an offshore unit successfully, in time
and within our budget, our resources give you a big
picture of the overall market and channel strategies, so
you can see how to better fit your offshore unit into
them. We also advise you on
outsourcing options,
site selection, agent and manager recruitment &
training, and analyzing your center's performance.
|
Knowledge
Center
