There are mainly two types of legal entities that can be established by foreign nationals or foreign companies intending to do businesses in India.
1. Registration of a Company
2. Establishing a Branch /Liaison office.
Incorporation of a Private Limited Company is the easiest and fastest method of setting up a business enterprise in India by foreign nationals and foreign companies. Since FDI in Medical devices in India is via the automatic route no central government permission is required for establishing a company in India. Hence, incorporation of a private limited company as a wholly owned subsidiary of a foreign company or joint venture is the cheapest, easiest and fastest method for foreign companies and foreign nationals to do business in India.
Registration of branch office, liaison office or project office requires RBI and / or Government approval. Therefore, the cost and time taken for registration of branch, liaison office or project office for a foreign company is higher than the cost and time associated with incorporation of a private limited company. Further, foreign nationals cannot open branch office, liaison office or project office. Hence, this option is limited only to foreign companies.

The esablishment of Andhra Pradesh Medtech Zone Ltd in Visakhapatnam by the Government of Andhra Pradesh comes at the right time to provide impetus to the indegenous Medical Devices industry in India.
The Medical Device Industry is a critical industry that has so far been largely import dependent thereby impacting the end prices of medical diagnostics and treatment in India.

To start a company in India, a minimum of two persons and an address in India are required. A Private limited company in India must have a minimum of two directors (persons) and a minimum of two shareholders (can be persons or corporate entities).
Further, the incorporation rules in India states that one of the Director of the Company must be both an Indian citizen and Indian resident (any person who has lived in India for over 186 days is considered an Indian resident). The preferred legal entity structure for foreign companies is to establish a company with three directors, two being foreign nationals from the parent company and one director being a local Indian citizen. Since, there are no requirements for minimum shareholding with the
Indian director, 100% of the shares of the Indian company can be held by foreign nationals or entities. An address in India is required to serve as the registered office of the company

To register the company, foreign nationals who will serve as Directors of the company will have to submit a copy of their passport along with an address proof (Drivers license, bank statement, etc). The copy of the original documents must be notarized by a Notary in the home country or by the Indian embassy in the country of the foreign director.
In case of a corporate entity becoming a shareholder in the Indian company, then board resolution from the foreign company authorizing the investment in the Indian company would also be required. The board resolution must be attached with notarized copy of the certificate of incorporation of the foreign entity. The presence of any of the foreign directors is not required in India at any time during the incorporation process. Thus foreign citizens can easily establish and operate a business in India without hassles of travelling to India. The cost for registering a company in India is relatively inexpensive. For example, a company with a paid up capital of Rupees One Million can be started with an amount of Rs.40,000/- (Rupees Forty thousand only) which includes mandatory requirements of obtaining Director Identification Number and Digital Signatures for promoters. It takes about one month to incorporate a company in India including all documentation, filings and registration.

Post registration of the company in India, the Indian director can help open a bank account for the company in India. Once the bank account is opened, the company must make FOREIGN DIRECT INVESTMENT reporting to the reserve bank of India.
The procedure for reporting FDI inflow into the company is simple and can be completed easily by the legal and accounting professional by submitting required documents like FC-GPR (Foreign Collaboration – General Purpose Route) within 30 days of receipt of inward foreign remittance in India. To issue shares to foreign investors within a period of 180 days from inward remittance and from their within 30 days to be filed in Form FC-GPR to RBI declaring shares allotted for FDI.

ABC Private Limited, a company incorporated in Vizag having two shareholders, one is Mr. A, an individual holding 200 equity shares of Rs.10 each and other is ABC Inc. (a body corporate) situated in Germany, holding 9800 equity shares of Rs.10 each. Hence total paid up capital of ABC Private Limited is Rs. 100,000/- (Rupees One Hundred Thousand). After incorporatation, ABC Inc. has remitted Rs. 98000 to ABC Private Limited towards issue of Equity shares to ABC Inc.
1) Information to be provided by ABC Inc to Authorized dealer of ABC Pvt Ltd :
a) Name of the beneficiary : ABC Private Limited
b) Name and place of the remitter : ABC Inc. Germany
c) Name and place of the remitter bank : ABC Inc’s Bank
d) Foreign currency amount: e.g. INR 98000
e) Purpose of remittance : e.g. Foreign Direct Investment in Equity
An authorized dealer after receipt of remittance and above information, will initiate the process of issuing FIRC( Foreign Inward Remittance Certificate) to ABC Pvt . Ltd. ***Authorized Dealer—authorized dealer means a Institute/Bank authorized as an authorized dealer.
2) Reporting of advance remittance by ABC Pvt Ltd to RBI
After receipt of FIRC, ABC Pvt.Ltd shall be required to report inward remittance to RBI through Authorized Dealer by submitting concerned KYC documents. RBI will allot UNIQUE IDENTIFICATION NUMBER to the company which can be used for future transactions with the bank.

The esablishment of Andhra Pradesh Medtech Zone Ltd in Visakhapatnam by the Government of Andhra Pradesh comes at the right time to provide impetus to the indegenous Medical Devices industry in India. The Medical Device Industry is a critical industry that has so far been largely import dependent thereby impacting the end prices of medical diagnostics and treatment in India.
In identifying the Medical Devices manufacturing as a sunrise industry under the Make In India program, the Government of Andhra Pradesh has once again demonstrated its visionary leadership. The location of the zone in Visakhapatnam has been carefully chosen to not only allow manufacturers access to all modes of world class transportation facilities but also provide significant tax benefits for their investments. Under the Andhra Pradesh Re-Organisation Act, 2014 the Government of India is extending special assistance to four districts of Rayalseema and three districts of North Coastal Region of Andhra Pradesh. The seven districts of Andhra Pradesh notified as backward areas vide Notification in S.O.3075 (E) dated 28.09.2016 are:
1. Anantapur
2. Chittoor
3. Cuddapah
4. Kurnool
5. Srikakulam
6. Vishakhapatnam
7. Vizianagaram
The CBDT has notified these seven districts for availing additional tax incentives under section 32(1)(iia) and section 32AD of the Income-tax Act. The benefit is available to the extent of 50% of the cost of new plant and machinery acquired and installed in new units established in the notified areas. This is over and above the Investment Allowace available under section 32AC and normal depreciation under section 32. The total benefits that can be availed under the various sections of the Income Tax Act are as follows:
1. Additional Depreciation available u/s 32(1)(iia) – 35%
2. Additional Depreciation u/s 32 AD - 15%
3. Investment Allowance u/s 32 AC - 15%
4. Normal Depreciation u/s 32 - 15%
As such a minimum of 80% of the cost of new plant and machinery installed in AMTZ and other notified areas would be eligible for tax benefit. In certain cases of life saving medical devices the normal depreciation under section 32 is upto 50% of the cost of the machinery. This means that a company can virtually claim deduction from its taxable income to the extent of its entire investment in plant and machinery in the year in which sush investment is made. The conditions that must be fulfilled to claim or avail the benefits of additional depreciation @15% available under section 32AD is as below: 1. The investment has to be made in setting up an undertaking or enterprise for the production or manufacturing of any article on or after April 1, 2015 in the notified areas only.
2. The investment must be made in acquiring and installing new plant and machinery only for the said undertaking or enterprise.
3. The investment has to be made in the period on or after April 1, 2015 and before March 31, 2020.
4. New plant and machinery for this purpose does not include:
a. any ship or aircraft
b. any second hand machinery which has been used wither within or outside India
c. any plant or machinery installed inside any office premises or residential accomodation or guest house
d. any office appliance including computers or computer software
e. any vehicle
f. any plant or machinery the whole cost of which has already been allowed as deduction in computing taxable income.
5. This new plant and machinery on which additional depreciation u/s 32(1)(iia) and 32AD has been availed cannot be sold, transferred or otherwise disposed off before the expiry of 5 years from the date of its installation.
The conditions that must be fulfilled to claim or avail the benefits of additional depreciation @35% available under section 32(1)(iia) is given below:
1. The investment has to be made in setting up an undertaking or enterprise for the production or manufacturing of any article on or after April 1, 2015 in the notified areas only.
2. The investment must be made in acquiring and installing new plant and machinery only for the said undertaking or enterprise.
3. The investment has to be made in the period on or after April 1, 2015 and before March 31, 2020.
4. New Plant and machinery includes all machinery other than Ships and Aircrafts
5. Such additional depreciation to be restricted to one-half i.e. 17.5% of the cost of new plant and machinery acquired in case if it is put to use for the purpose of business for a period of less than 180 days in the year of its acquisition and installation.
6. The balance 50% of additional depreciation i.e. 17.5% would be allowable in the immediately succeeding year.
The Investment Allowance under section 32AC @15% of the cost of new plant and machinery is available to encourage large investments in Plant and Machinery exceeding Rs 25 crore investments. This deduction is available to corporate assessee’s only.
As such investment in setting up large, medium and small scale industrial enterprises in AMTZ would accrue significant and attractive tax benefits to the investors.
This should encourage investors to utilize the golden opportunity being provided by the Governement of Andhra Pradesh to utilize the infrastructural, financial and tax incentives and become part of the sunrise medical devices industry in India. This initiative shall go a long way in making the dream of our Prime Minister of providing affordable health care to all the citizens of our great nation India. Jai Hind!