Some welcome news at last from the Indian Government regarding the local company incorporation process. The Ministry of Corporate Affairs (MCA) has announced plans to simplify this with a view towards cutting down the time it takes to incorporate a company to one day.
As those of you who have had experience of incorporating companies in India will be aware, this is a laborious and bureaucratic process. In recent months, it has been taking on average between 12-15 weeks to jump through the numerous hoops stipulated by the MCA. This is alarming when you consider that in the UK, a private limited company can be set up within less than a day. Over the years, the complexity of the Indian company incorporation process has been a source for much frustration for foreign investors who have had a commercial imperative to incorporate as soon as possible.
The MCA proposes to make greater use of IT to speed up the company incorporation process. For example, when applying for Director Identification Numbers (DINs) it will no longer be necessary to file hard copies of supporting documents. Scanned copies will suffice.
In our view, this is undoubtedly a step in the right direction taken by the Indian Government. As India integrates more and more with the global economy and seeks to attract more foreign investment, it will have to tackle head on the levels bureaucracy involved in dealing with public authorities for activities such as incorporating companies. The increased use of online filing systems should be championed as a means to reduce corruption levels by eliminating those so-called “middlemen” or “Babus” working at Indian public authorities.
A copy of the MCA Circular bringing to notice the proposed changes can be found at http://www.icsi.edu/webmodules/LinksOfWeeks/Circular_6-2011_8mar2011.pdf
