India as a step to boost business startups in India with foreign funds, the government has eased the procedures now. Popularly termed as FDI (Foreign Direct Investment), has many obligations to invest in India. As per the latest relaxations, nearly $3 Million every year can be fed from abroad investors and lenders for startup companies.
In Union Budget 2016, the FDI in startup companies was a major issue. After months later, the central government has opened the gates for relaxations in a cautious manner. Both B2B and B2C will get a benefit of Rs.20 crore from foreign investors. Technically this is termed as “External Commercial Borrowings (ECB)”. The fund can give either in foreign currency or the Indian currency.
In 2016, March, the center has allowed 100% investment in online B2B (Business to Business) market businesses. But Business to Consumer (B2C) not included in that decision. The latest decision is a step towards B2C FDI.
The government of India has taken precautionary measures to define as what exactly a “Startup company means.” Such definitions will lead to eradicating the misutilization of FDI concept. This is a primary step because the 30% tax imposition has uncapped for the investments that were laid earlier on such foreign capitals.
Companies Act 2013, was revived by the central government as to make the latest laws effective. Another promotional decision is the abolition of Capital Gains Tax from May 2016. This step is an encouragement for the businesses to increase their productivity. Ministry of Entrepreneurship has been keen in making Indian small entrepreneurs market less vulnerable from great entrepreneurs.
With this decision, the Indian government has strongly signaled that in future many reforms will flood in the industry. By Oct 31st, 2016 Reserve Bank of India (RBI) is likely to announce officially about the FDI relaxation through a notification.