India

Operating a Business in India

Setting up a company | Working conditions | Cost of labor | Social partners

Setting up a company

Legal business entities

Types of companies and capital (max/min)	Number of partners/shareholders and liability	Registration fees
Sole Proprietorship No minimum capital	One Unlimited liability.	INR 4,000
Partnership No minimum capital	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. Liability of the partners is unlimited.	INR 4,000
Private Limited Minimum paid up capital of INR 100,000	Minimum number is 2; while as the maximum number is 50. Limited liability to the amount contributed.	INR 4,000 + INR 300 per bracket of INR 10,000 of the authorized capital.
Public Limited Minimum paid up capital of INR 500,000	Minimum number is 7; while as there is no limit on the maximum number of members/shareholders. The liability of a member is limited to the face value of the shares he owns.	INR 4,000 + the following additional fees regulated according to the amount of nominal capital: - Between INR 0.5 million and 5 million: INR 200 per bracket of INR 10,000 of the authorized capital; - Between INR 5 and 10 million: INR 100 per bracket of INR 10,000 of the authorized capital; - For more than INR 10 million: INR 50 per bracket of INR 10,000 of the authorized capital.
Co-operative No minimum capital requirement	Minimum number is 10; while as there is no limit on the maximum number of members. However, the members must be residing or working in the same locality. The liability of a member is limited to the extent of his capital contribution.	INR 4,000
Hindu United Family Business (HUF) No minimum capital	All members of a Hindu undivided family can do business jointly under the control of the head of the family who is known as the 'Karta'. The members of the family are known as 'Co-parceners'. The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.	INR 4,000

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.
The competent organization: Registrar of Companies (ROC)

Company Law Board

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: 1. Permanent (more than 90%)
2. Temporary
3. 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 contributions

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

Social dialogue and involvement of social partners: 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.
Unions
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