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Setting up Business
Understand the fundamentals and regulations involved in establishing an entity
  • Investor Type
  • Route
  • Incorporation of Entity
  • IEM/IL Registration
  • Land Parcel Identification
  • Incentive Sanction Subject to Eligibility
  • Pre-establishment Clearances
  • Construction
  • Pre-operation Clearances
  • Commercial Production
  • Post-operation Renewals
  • Investor Type
  • Route
  • Incorporation of Entity
  • IEM/IL Registration
  • Land Parcel Identification
  • Incentive Sanction Subject to Eligibility
  • Pre-establishment Clearances
  • Construction
  • Pre-operation Clearances
  • Commercial Production
  • Post-operation Renewals
Note : Click on any tab to see it in detail
Route (for FDI only)
Automatic Approval
  • No Prior Approval Required; RBI has to be Notified within 30 days of Inward Remittances or Issue of Shares to Non-Residents
  • Sectors under Automatic Route: Click Here
Government Approval
  • Foreign Investment Proposed, but not covered under the ‘Automatic Route’ are considered for Governmental Approval on the Recommendations of the Entrusted to the concerned Administrative Ministries/Departments.
  • Single Point Interface to Facilitate Foreign Direct Investment in Sectors where Government Approval is required: Click Here
  • Sectors where Government Approval is required: Click Here
Incorporation Of Entity
For setting up a business in India, an investor will need to decide which form of legal entity the business will take to start the operations. The favourable options for carrying out manufacturing/services and other related business operations are:
  • Private Limited Company - A Private Limited Company is a Separate Legal Entity, which offers Limited Liability to its Shareholders. The Shareholders are Limited and usually is closely held within the Group
  • Public Limited Company - A Public Limited Company is a Separate Legal Entity that offers Limited Liability. The Shares are widely held and offered to the General Public.
  • Limited Liability Partnership - Limited Liability Partnership is a Separate Legal Entity and is Liable to the full Extent of its Assets but the Liability of the Partners is Limited to their agreed Contribution in the LLP.
Comparative Analysis of different Business Establishments in India:
Particulars Private Company Public Company LLP
Minimum Members 2 7 2 partners
Maximum Members 200 Unlimited No Limit
Minimum Directors 2 3 2 Designated Partners
Maximum Directors 15 15 NA
Resident Director (mandatory) 1 1 1 Designated Partner
Transfer of Ownership Ownership can be transferred Ownership can be transferred Ownership can be transferred
Subscription of shares​ Public subscription not allowed Public subscription allowed Public subscription not allowed
Legal Status Pvt Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act​ Public Co is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act​ LLP is a separate legal entity registered under LLP Act, 2008. The Designated partners of LLP are liable for contraventions under the act​
Annual statutory filings​ Annual statement of​ accounts &​ annual return with ROC​ Annual statement of​ accounts &​ annual return with ROC​ Annual statement of​ solvency &​ annual return with ROC
Additional Information
No minimum paid up capital, No filing for SPICe+ company incorporation form and filing of eMoA, eA0A. It takes ~ 18 days for the company incorporation process.
  • Pre-requirements for Company Incorporation
    • Minimum of two Persons should act as Directors and two Persons as Shareholders
    • Memorandum of Association and Articles of Association (Charter Documents) have to be Executed
    • Resolution to be passed by the Foreign Company’s Board for Incorporating a Company in India and Authorizing a Person to Sign on its behalf Duly Notarized and Apostilled
  • Company Incorporation
    • Simplified Single web based form SPICe+ to be filed online in order to Incorporate a new Company in India, which includes Processes such as Name Reservation, etc.
    • Digital Signature Certificates (DSC) to be Applied for Directors
    • Other Tax and Regulatory Registrations can be Processed through a Simplified form AGILE-PRO, and Bank Accounts may also be opened
    • The Registrar of Company will Issue a Certification of Incorporation on Successful Formation of the Company
  • Post Incorporation compliances
    • Appointment of Statutory Auditor should be done within 30 days of Incorporation. Board of Directors must Appoint a practicing Chartered Accountant to act as the Statutory Auditor.
    • Within 180 days of Incorporation, mentioned Capital in the Charter Documents has to be deposited in the Indian Bank Account and a Commencement Certificate needs to be obtained from the MCA.
IL/IEM Registration
Industrial Entrepreneur Memorandum (IEM)
  • Industrial undertakings exempted from the requirements of Industrial Licensing under Industries (D&R) Act, 1951 are required to file information relating to setting up of industries
  • Existing Units, New undertaking having an investment of Rs 10 Crore or above in the 'manufacturing sector' and Rs. 5 Crore or above in the 'services sector are required to file an IEM
  • Cannot be considered as a clearance /approval to carry on any industrial activity contemplated in the IEM unless the provisions of statutes/regulations/notifications etc., issued by the Central/ State Governments or any specific directions or Stay Orders issued by the Court/competent authority relevant to such an activity, are also fully complied with
  • For Detailed Overview: Click Here
Industrial Licensing (IL)
  • Licensing is done under Industries (Development & Regulation) Act 1951. Post 1991 de-licensing, presently only five industries require compulsory licensing :
    • Electronic Aerospace and Defence Equipment
    • Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches 
    • Cigars and cigarettes of tobacco and manufactured tobacco substitutes
    • Specified hazardous chemicals i.e., (i) hydrocyanic acid and its derivatives (ii) Phosgene and its derivatives and (iii) Isocyanates & disocyanates of hydrocarbon not elsewhere specified (example methyl Isocynate)
    • Distillation and brewing of alcoholic drinks​
  • Any non-MSME unit manufacturing these items, need an IL which is issued with an obligation to export 50% of the new additional annual production to be achieved within a maximum period of 3 years​
  • For Detailed Overview: Click Here
  • FAQ: Click Here
Land Parcel Identification
The following points need to be considered before finalizing the land parcel by any investor:
Qualitative Parameters Quantitative Parameters
  • Park/ zone special package/ incentives (special economic zone, free trade zone, etc.)
  • Buy v/s Built to Suit cost
  • Plot size, shape and number of land lease options
  • Industrial ecosystem: distance to suppliers/ customers
  • Infrastructure: Quality of industrial park infrastructure development
  • Connectivity: Distance or proximity to ports, airports, outbound logistics, Proximity to residential areas for employees
  • Industrial ecosystem: Presence of major customer/ supplier base
  • Manpower costs
  • Manpower availability
  • Utilities: Cost for electricity, water supply, natural gas etc.
  • Utilities: Quality of power supply, water supply, fuel etc.
  • Categorization of business and land from a Pollution Control Board perspective i.e. (Red, orange and green categories)
Categorization Based on Particulars
Land Private Land, Private Industrial Parks, Government Parks
Business Type SEZ, EOU, DTA
Ownership Freehold, Lease, BTS, RBF
EIA Classification Category A, B, B1
For more details visit:
SIPCOT Locations: Click Here
Special Economic Zone (SEZ) Schemes: Click Here
Export Oriented Unit (EOU) Schemes: Click Here
Incentive Sanction (Subject to Eligibility)
Tamil Nadu offers competitive policies to support the investors in their capital investment through a wide range of incentives like-
  • Capital Subsidy
  • SGST Reimbursement​
  • Land Cost Subsidy​
  • Stamp Duty Exemption
  • Training Subsidy
  • Green Industry Incentive​
  • Electricity Tax Exemptions​
Customized packages can be structured on case to case basis.
For more details, visit:
Pre-establishment Clearances
Name of the Clearance Department
Allotment of Land in Industrial Area
  • State Industries Promotion Corporation of Tamil Nadu (SIPCOT)
  • Small Industries Development Corporation (SIDCO)
Planning Permission for the Factory Buildings
  • Chennai Metropolitan Development Authority (CMDA)​
  • Directorate of Town and Country Planning (DT & CP)
Building Permit
  • Greater Chennai Corporation​
  • Municipal Corporation/Municipality
  • Town Panchayat
  • Village Panchayat
Approval for Factory Plans
  • Directorate of Industrial Safety and Health (DISH)​
Fire Safety - No Objection Certificate
  • Fire and Rescue Services​
Statutory Approval of Electrical Drawings
  • Tamil Nadu Electrical Inspectorate​
Power Connection
  • Tamil Nadu Generation and Distribution Corporation (TANGEDCO)​
Water Connection
  • Chennai Metropolitan Water Supply and Sewerage Board​
Water Connection
  • Tamil Nadu Water Supply and Drainage Board (TWAD Board)​
Consent to Establish (CTE)
  • Tamil Nadu Pollution Control Board​​
Registration of Establishments for Employing Building and Other Construction Workers
  • Directorate of Industrial Safety and Health (DISH)​
Change of Land Use for lands located in non-planned areas​
  • Directorate of Town and Country Planning (DT & CP)​
Approval for Boiler Manufacturer from Directorate of Boilers​​
  • Directorate of Boilers​
Approval for Boiler Erector from Directorate of Boilers​​​
  • Directorate of Boilers​
Registration of Partnership Firms​​​​
  • Registration Department​​
Registration of Societies​​​​​
  • Registration Department​​
Registration of immovable property​
  • Registration Department​​
Property mark registration and issue of transit permit for Red Sander Wood​​
  • Department of Forest​​​
Property mark registration and issue of transit permits for Non-exempt trees other than Red Sanders Trees/ Timber​​​
  • Department of Forest​​​
No Objection Certificate​
  • Directorate of Public Health and Preventive Medicine​​​​
Registration and mutation of land records​
  • Revenue Department​
Permission for road cutting/ Right of Way​​
  • Greater Chennai Corporation​
  • Municipal Corporation/Municipality​
  • Town Panchayat​
  • Village Panchayat​
NOC for felling and selling of sandal wood trees​​​
  • Department of Forest​
NOC for prior intimation of felling of Red sanders, Black wood, Silver oak, Rose wood and Teak trees​​​​
  • Department of Forest​
For more details visit: Click Here
Pre-operation Clearances
Name of the Clearance Department
Issue of Trade License​
  • Greater Chennai Corporation​
  • Municipal Corporation/Municipality​
  • Town Panchayat​
  • Village Panchayat​
Final Safety Certificate​
  • Tamil Nadu Electrical Inspectorate​​
Factory Registration and License​
  • Directorate of Industrial Safety and Health (DISH)​​
Fire & Rescue Services License​
  • Fire and Rescue Services​​
Compliance Certificate​
  • Fire and Rescue Services​
Consent to Operate (CTO)​
  • Tamil Nadu Pollution Control Board​
Authorization for Handling Hazardous Wastes​
  • Tamil Nadu Pollution Control Board​​
Boiler Registration and Issue of Certificate for the use of Boiler​
  • Directorate of Boilers​​
Registration of Principal Employer Establishments for Employing Contractual Workmen​
  • Directorate of Industrial Safety and Health (DISH)​​
Registration of Principal Employer Establishments for Employing Inter-State Migrant Workmen​
  • Directorate of Industrial Safety and Health (DISH)​
License for Manufacturer/Repairer/Dealer of Weights or Measures
  • Labour Department​
License for Contractor for Employing Contractual Workmen​
  • Labour Department and Directorate of Industrial Safety and Health (DISH)​​
License for Contractor for Employing Inter-State Migrant Workmen​
  • Labour Department and Directorate of Industrial Safety and Health (DISH)​
Grant of a License to Sell, Stock or Exhibit or offer for Sale or Distribute Drugs​
  • Food Safety and Drug Administration Department​
Grant of a License to Manufacture/ Loan License to Manufacture/ Repack for Sale or for Distribution of Drugs​​​​​
  • Food Safety and Drug Administration Department​​
For more details visit: Click Here
Post-operation Clearances
Name of the Clearance Department
Renewal of Consent to Operate (for enterprises that had applied initial approval through the single window portal)​
  • Tamil Nadu Pollution Control Board​
Renewal of Authorization for Handling Hazardous Wastes​
  • Tamil Nadu Pollution Control Board
Renewal of Certificate Authorizing the Use of Boiler (for enterprises that had applied initial approval through the single window portal)​
  • Directorate of Boilers​
Renewal of Factories License (for enterprises that had applied initial license through the single window portal)​
  • Directorate of Industrial Safety and Health (DISH)​​
Renewal of Fire & Rescue Services License​
  • Fire and Rescue Services​
Renewal of License for Manufacturer/Repairer/Dealer of Weights or Measures​
  • Labour Department​​
Renewal of License for Contractor for Employing Contractual Workmen​
  • Labour Department and Directorate of Industrial Safety and Health (DISH)​​
Renewal of License for Contractor for Employing Inter-State Migrant Workmen​
  • Labour Department and Directorate of Industrial Safety and Health (DISH)​​
Renewal of Approval for Boiler Manufacturer (for enterprises that had applied initial approval through the TN e-Sevai Open Portal)​
  • Directorate of Boilers​​
Renewal of Approval for Boiler Erector (for enterprises that had applied initial approval through the TN e-Sevai Open Portal)​
  • Directorate of Boilers​
Renewal of License to Sell, Stock or Exhibit or offer for Sale or Distribute Drugs (for enterprises that had applied initial license through the TN e-Sevai Open Portal)​
  • Food Safety and Drug Administration Department​
Renewal of License/ Loan License to Manufacture/ Repack for Sale or for Distribution of Drugs (for enterprises that had applied initial license through the TN e-Sevai Open Portal)
  • Food Safety and Drug Administration Department​t​
For more details visit: Click Here
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