I was just reading what I wrote exactly a year ago. It is indeed a Sankranthi time (harvest) for entrepreneurs. 2015 saw not only many Indian start ups, a tsunami of investments, a couple of unicorns (billion dollar companies) but also many also-rans, many more that fell on the wayside including laid-off employees and dissatisfied customers. However all this has not dampened the quintessential entrepreneurial spirit. Each day there are more and more enterprises taking shape. There is lot of expectation from the Start Up India, Stand
Up India initiative of the Government of India to be launched on 16th January, 2016 by PM Narendra Modi. He is expected to announce the action plan of the government to promote start ups. It is expected that life will be simpler for start ups with innovative business ideas – lesser compliances, less regulatory intervention, tax exemptions perhaps and faster turnaround time. I am as eager to know as any entrepreneur is.
On the ground level, not much has changed. We see top level vision statements, policy announcements, state-wise start up policies and digital platforms for regulatory approvals (be it MCA, RBI, DGFT, VAT or Customs). But somehow the human interaction in the name of ‘follow up’ and ‘discretionary approvals’ which give room to ‘speed money’ still exist. There are vested interests at every level in the bureaucratic system which allow this to thrive. I am not talking of big ticket projects clearances, sanctions or approvals but the first brush that an entrepreneur has with the government system – name availability & incorporating an LLP or a Company, mandatory business registrations (like Profession Tax, VAT, CST, Service Tax, Excise, IEC, ESI, PF, Shops & Establishments etc) for getting the entity up and running. All these are currently in the ‘e-form’ or ’semi e-form’ but not enough to get upto speed for an entrepreneur. Either simplify the registrations, consolidate them or reduce them to bare minimum. These are irritants like the cough and cold that persist and sap the energy of the founders.
Way back in 1991, the Government was forced to liberalise and open doors to new ways of doing business in India. 25 years down the line, things have changed and changed for the better in many ways. But challenges are also different now. Different doors need to be opened. Simply widening the existing doorway will not do ! What got you here, won’t get you there !! So, let’s wait for Modiji’s ‘Mann ki baat’ on the ‘Start up India, Stand up India’ initiative. Hope this signals change from red and amber to GREEN !
Each new year, all of us set goals, set standards and also measure them to improve. From this issue, we are carrying the Secretarial Standards in detail, say a short synopsis of each standard that has become mandatory for every company to follow from July, 2015 onwards. We carried a couple of articles on this in the past, but find the awareness amongst directors and companies far from desired. May be one at a time under a special section will draw their attention.
Should you wish to refer to any of our older issues of Lexspeak, do visit our Resource Centre at sharadasc.com
Reserve Bank of India (RBI) has issued Master Directions on foreign exchange related matters, consolidating relevant circulars issued so far under Foreign Exchange Management Act (FEMA) which replaces Master Circulars. It is not clear whether the Master Directions will be announced every year in January or in July like the Master Circulars.
Compounding of Contravention under FEMA, 1999
Direct Investment by residents in Joint Venture (JV) & Wholly Owned Subsidiary (WOS) Abroad
Establishment of Liaison / Branch / Project Offices in India by Foreign Entities
Exports of Goods and Services
External Commercial Borrowings (ECBs) and Trade Credits
Import of Goods and Services
Non-Resident Ordinary Rupee (NRO) Account
Money Changing Activities
Reporting under FEMA, 1999
Deposits and Accounts
Remittance of Assets
Acquisition and transfer of immovable property under FEMA, 1999
Liberalised Remittance Scheme (LRS) etc
Recent changes in FDI Policy announced by the Government in November, 2015 have not been incorporated in above Master Directions giving raise to certain grey areas especially in relation to FDI in LLPs under automatic route.
Central Government has delegated its power to Regional Directors (RDs) to receive the report from Registrar or from inspector which recommends action for violation of offences / imprisonment of less than 2 years subject to certain conditions. This is with regard to inspection or enquiry by the Registrar or inspector. RD can initiate prosecution as recommended or inform the Central Government of action taken if he disagrees with the inspection report.
Note: The contents of this
Newsletter are only a summary and has not dealt with any issue in detail. Any action
taken or proposed to be taken must be in consultation with professionals and not
merely based on the articles / news updates. Lex Valorem disclaims all liability on action taken without professional advice.