Investment Promotion Center Govt. of HARYANA

Haryana

Key State Agencies

Key GoI Agencies

Apex Forum

Getting Started

The Indian Economy has witnessed a paradigm shift and is on a robust growth trajectory. The Indian economy today boast of a burgeoning annual growth rate, deep capital markets and liberalized foreign direct investment regime. As per the data available from various published sources, the Indian economy opened up to the globe in 1991 and has not looked back since. As a result of liberalization, average GDP growth rate rose to nearly 6% per year during the 1990s, compared to moderate rate of 4% per year which was the norm during the first 40 years following independence.

The spirit of an entrepreneur lives in most of us and the desire to make it big as an enterprise is one requires only an ambition most of us possess. To kick start an enterprise is an idea and a vision to make it click.

To a person desirous to set up an enterprise, the most important hindrance is the lack of awareness of the various options available. It aims to give a brief insight about the various modes in which an enterprise can be started and the possible funding options available.

TYPE OF ORGANISATION

SOLE PROPRIETORSHIP: One of the ways of starting a one man-show is through a sole proprietorship concern. Sole proprietorship is the oldest and most common form of business. It is one-man organization where a single individual owns, manages and controls the whole business. Just think of a name for the concern and start. The greatest advantage of such an organization is that it requires minimal of legal documentation. The risk in such a setup is solely in the hands of the sole proprietor. The liability of the proprietor to pay all creditors and lenders is unlimited.

PARTNERSHIP FIRM: Two or more people coming together may start through a partnership firm. A deed of Partnership in writing must be made. This deed must clearly specify the name of the partnership firm, the names of the partners, the capital to be contributed by each partner, the profit or loss sharing ratio between partners, the duties, rights, powers and obligations of each partner and other relevant details. The partnership deed must be made on paper which is duly stamped as per the laws prevalent at the place of signing. It must be signed by all partners and witnessed by independent persons. The maximum number of partners which are permissible in firm is 20. A partnership firm must be registered with the Registrar of Firms. This entitles the partnership firm to contract in its own name. The advantage of this form of set up is that two or more people can come together and start a new business. The disadvantages of this set up is more or less the same as that a sole proprietorship concern.

Limited Liability Partnership (LLP): LLP has emerged as a new corporate form of business that aims to provide benefits of limited liability of a company and at the same time allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement. LLP is a body corporate and legal entity, which has perpetual succession and is separate from its partners. The liability of the partners is limited to their agreed contribution to the LLP.

COMPANY: The legal status of a company is different form that of its members. The risk which any person takes by investing personal money in a company is restricted to the amount of his investment. The creditors and lenders of company cannot force the member to pay debts due to them by the company out of the member's personal funds. A company may either be a private limited company or it may be formed as a public limited company. The members of the company appoint directors who are responsible for the management of the company. The Directors are collectively known as the Board of Directors. A private limited company can be formed with a minimum of 2 members and a public company may be formed with a minimum of 7 members. A private limited company can have a maximum of 50 members excluding employee-members whereas there is no maximum limit on the number of members of a public company.

A memorandum of association and articles of association have to be filed with the Registrar of Companies in order to incorporate a company. The memorandum of association is the charter of the company and specifies the name of the company, the business and activities it can carry, its address, the capital of the company and details of the persons who have formed the company. The articles of association of the company specify rules and regulations of the company, the rights, duties and liabilities of the members and directors.

The major advantage of a company set up is the liability of the members is restricted to the extent of members ' investment in the company, his personal property is not put at risk. The company form of organization is most suitable for modern times because it provides a route whereby ownership (members) can be separated from management (directors). Though members can become directors it is not always necessary. Even outsiders can be appointed as directors. The funding may be provided by the investor-members and the management may be in the hands of the promoter-members.

Some basic comparison between private and public companies are given below:

S.No. Particulars Private Company Public Company
1. Minimum number of shareholders 2 7
2. Maximum number of shareholders 50 Unlimited
3. Minimum number of directors 2 3
4. Maximum number of directors As per the Article of association of the company 12 (can be increased with the government's approval)
5. Minimum paid-up capital requirement in general INR 100,000(US$ ,223) INR 500,000 (US$ 11,112)

AVAILABILITY OF LAND / PLOT

The next important question is, where to set up the unit in the Haryana State? The entrepreneur may like to locate the business in industrial estates, townships, parks, complexes developed by HSIIDC. Availability of land/plots in the existing developed Industrial estates and estates/townships likely-to-be-announced can be obtained from the HSIIDC - key agency for the development of industrial infrastructure in Haryana.

SOURCES OF FUNDS:

HSIIDC and HFC are the leading State level financial institutions engaged in funding enterprises. Generally, they lend for a medium term to long term basis i.e. from 4 to 7 years. These loans are generally be on term basis for acquiring capital investments, such as acquisition of land, construction of building and new machinery or setting up a new plant, etc. Apart from this loans for short term periods for working capital requirements are also available. Lending is generally done against hypothecation of the assets of the enterprises. Besides, personal guarantee of the entrepreneur is also taken so that recourse may be had to him in case of default by the enterprise.

Loans are also available from IDBI, ICICI, SIDBI and BANKS as per the viability of projects. Banks generally lend on a short to medium term basis i.e from 6 months to 3 years for working capital purposes.

LEGAL COMPLIANCES

An entrepreneur has to comply with several laws. The following are some of the most important legal compliances which a start-up entrepreneur must comply with:-

INCOME TAX: The financial year for the purpose of income tax is from 1 stApril to 31 st March each year. Every year at the end of the year, the entrepreneur must file his return of income. If the proprietor is not already a tax payer or does not have a PAN No., apart from filling his income tax return, he must make application for permanent account No.(PAN No.)

SALES TAX : If the business consists of buying and selling goods and materials, a sales tax registration number must be obtained by making an application to the concerned authorities. In case, sales or purchase are likely to take place outside the state as well as within the State, both Central Sales Tax Registration number as well as the Local Sales Tax Registration number must be obtained.

PROFESSION TAX : The entrepreneur has to pay profession tax at the rates prescribed in the laws of each state. Generally, such payments are one time payments to be made on or before a specified date. An application must be made to obtain the Profession Tax Registration Number.

EXCISE DUTY : Excise duty has to be paid on goods manufactured Excise registration number must be obtained if the business consists of manufacturing goods.

COMPANY LAW : These provisions are applicable only to companies. Several records and registers have to be maintained by a company.

IMPORT-EXPORT CODE NUMBER : In case the business involves import or export of goods including software, n importer-Exporter code number(IEC No.) of Foreign Trade. This number is necessary for receiving and making forex payments for goods or services.

POLLUTION CLEARANCE

PROCEDURES FOR GRANT OF CONSENT TO ESTABLISH or No Objection Certificate (NOC):

Industry on the basis of their pollution load have been categorized as 17 Categories, 19 Categories and Other Large and Medium industries including Additional Industries Beyond 17 & 19 Categories.

The industrial units falling under 17 categories of highly polluting, 19 Category of polluting, additional polluting categories (as per categorization list ) & Other Large and Medium Industries including Additional Industries Beyond 17 & 19 Categories shall apply for consent to establish (NOC) directly in the Head Office on the prescribed form along with necessary documents & requisite NOC fee in duplicate & each has to be signed by authorized signatory to avoid delay.

The necessary documents, which are required to be submitted along with NOC application, are as under:

(The permission from the irrigation department for discharge of effluent into water bodies such as Rivers/Canals/Drains is required in those cases, which can adversely affect the quality of such water bodies.)

Site Clearance of new projects or Expansion projects from Environmental Angle

The projects requiring site clearance and environmental clearance from the state competent authority and govt. of India Ministry of Env. & Forest respectively are given as under

For this purpose, the Government of Haryana has constituted Competent State Authority as per notification no 16/25/97-Envo-III,dated 21/11/97 in pursuance of clause(i) of para 1 of the Government of India, Ministry of Industry (Department of Industry development) press note no. 17/10/60/83-LP, dated 10/12/1984, the Governor of Haryana hereby declares the Department of Environment as Competent State Authority to accord approval for suitability of site from Environment angle for following 20 types of highly polluting large and medium industrial units.

For more details, visit the official website of Haryana State Pollution control Board at www.hspcb.org

POWER CONNECTION

The activity of distribution and retail supply of power was entrusted to Dakshin Haryana Bijli Vitran Nigam Limited (DHBVNL) for south circles (Bhiwani, Faridabad, Gurgaon, Mahendergarh, Rewari, Hissar, Sirsa, Fatehabad and Mewat) and Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) for north circles (Ambala, Yamunanagr, Kaithal, Panchkula, Kurukshetra, Karnal, Panipat, Sonepat, Rohtak, Jind and Jhajjar) of Haryana.

Procedure for getting HT (Industrial/Bulk Supply Connection) connection :- 

An application for electric HT should be made on the prescribed form (UHBVN C.S.-1 or DHBVN C.S. –1) obtainable from the concerned UHBVN/DHBVN office of the area. Application with together with the ACD (Advance Consumption Deposit) and meter security charges should be presented to the officer who has been delegated powers to sanction the applied load (herein after called load sanctioning Authority) as under :

Authority and delegation of power for HT connection

Authority Delegation of power to sanction load (Inclusive of extension in load)
SDO L.T. connection up to 50 KW
XEN Up to contract demand of 500 of KVA
SE Up to contract demand of 2000 KVA
CE Op Contract demand above 2000 KVA

Amount payable

  1. Advance Consumption Deposit
    1. HT Industrial Supply ---- Rs.7500/- per KW or part thereof
    2. HT bulk supply ---- Rs.1000/- per KW or part thereof
    3. HT (non-domestic) ---- Rs.1000/- per KW or part thereof

  2. Meter security Charges
    1. HT Industrial Supply Rs.40,000.00 (HT electronic trivector meter above 50 KW)
    2. HT Bulk Supply Rs.40,000.00 (HT meter without trivector meter)
    3. HT Bulk Supply (Domestic) Rs.40,000.00
    4. HT Bulk Supply (Non Domestic) Rs.40,000.00

  3. Application processing Charges Rs.25.00 per KW subject to maximum Rs.10,000
  4. Meter installation 2% of the cost of metering equipment
Note:-
  1. The amount is payable through Demand Draft in the name of UHBVN or DHBNV (according to the area) payable at the Head Quarter of the Sub- Division concerned.
  2. No interest is payable on the ACD

Sales Manual : This manual provides detailed information and guidelines governing the supply of Electricity to the consumers. This Manual is NOT FOR SALE. It is available in the office of SE of concerned area only for consultation. This manual is not for sale.