India-Operating a business

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Published: 06 Oct 2008 17:41:46 PST

Setting up a company

Legal business entities

Different types of companies	Number of partners/shareholders	Maximum and/or minimum capital	Liabilities	Registration fees
Sole Proprietorship	One	No minimum capital	Unlimited liability.	For details, see below (Registration Cost under ‘Creation procedures’)
Partnership	Minimum number is 2, while as the maximum number can be 10 in case of banking business and 20 in all other types of business.	No minimum capital	Liability of the partners is unlimited.	For details, see below (Registration Cost under ‘Creation procedures’)
Private Limited	Minimum number is 2; while as the maximum number is 50.	Minimum paid up capital of INR 100,000	Limited liability to the amount contributed.	For details, see below (Registration Cost under ‘Creation procedures’)
Public Limited	Minimum number is 7; while as there is no limit on the maximum number of members/shareholders.	Minimum paid up capital of INR 500,000	The liability of a member is limited to the face value of the shares he owns.	For details, see below (Registration Cost under ‘Creation procedures’)

Business setup procedures: Depend on the structure created (Branch office, Subsidiary, Joint-Venture partnership, Private or Public Limited company). For more information, visit the site of Ministry of Corporate Affairs.

Working conditions

Legal weekly duration

Maximum 48 hours (9 hours a day).

Retirement age

It varies from 58 to 65 years. Early retirement schemes called Voluntary Retirement Scheme (VRS) also exist in the country.

Working contracts

Permanent (more than 90%)
Temporary
Fixed-term

Cost of labor

Minimum wage

The national minimum wage has last been revised upwards to INR 66 per day with effect from 1.02.2004. All the State Governments have been requested by the country’s Labor Ministry to ensure fixation/revision of minimum rates of wages not below INR 66 per day.

Average wage

On an average, the industrial wages range from about USD3 per day for unskilled workers, to over USD150 per month for skilled production workers.

Social security contributions paid by employers

	Contributions by Employer
Provident Fund	3.67% of monthly payroll, plus 1.1% of monthly payroll for administrative costs.
Survivor (deposit-linked) Insurance	0.5% of monthly payroll, plus 0.01% of monthly payroll for administrative costs.
Pension	8.33% of monthly payroll.
Gratuity	An average of 4% of monthly payroll.
Social Assistance	None

Social security contributions paid by employees

Contributions by Employee

Contributions by Government

Provident Fund

12%

None

Social partners

Bargaining power: With some exceptions, India has company unions rather than trade unions. These are often affiliated with national labor organizations. Political parties promote various trade unions. The bargaining power of the unions is declining as the government pushes forward its reform agenda.
Unionization rate: Although there are more than 7 million unionized workers, unions represent less than 25% of the workers in the organized sector (primarily in state-owned organizations), and less than 2% percent of the total work force.
Labor regulation bodies: Ministry of Labor and Employment

Labor Bureau