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If you're starting your own business in India, two of the most pressing tasks are registering the company, and finding staff. The government has made great strides in simplifying the bureaucracy involved in registering a new business, but the process is still complex, and takes around one month to complete. Fortunately hiring staff is relatively straightforward- but the challenge lies in retaining them. You can streamline the many steps involved in registering your business under the guidance of a good local chartered accountant. When choosing your company name, consider a number of alternatives, and check informally at the Register of Companies (ROC) to see if any of these would present issues. The ROC will need to see formal proof that the use of any parent company name has been formally approved by the parent company. India's unique competitive advantage is a plethora of young people, many of them well-educated and relatively inexpensive to employ. In some sectors, India's labor costs may be as low as an eighth of those in more developed economies.
In 2008 you would expect to pay a project leader around US$20,000 in India, compared to approximately US$100,000 in the US; graduates entering BPO call centers were starting on salaries of under US$500 per month, though sought-after technology and management graduates can command far more. Skilled engineers and IT professionals may command up to 75 percent of the salary in the US. India has an independent judiciary and well defined contract law, which has been strengthened by case law. But its judges preside over a failing justice system, beset by corruption and rendered immobile under the weight of huge backlogs. In December 2006, there were more than three million cases pending in the Indian High Courts; and Transparency International's 2005 report found that 77 percent of Indian respondents regarded their judiciary as "corrupt," while 36 percent said they had paid bribes to judges. The World Bank ranked India second-lowest of 178 Asian countries in enforcing contracts in 2004. It is against this background that you must think very carefully about the partners you choose and the type of contracts you sign. When your partner says the contract is not so important to him or her, it is partly because enforcing it in an Indian court would be very difficult.
This naturally puts a premium on trust in any agreement, but it also requires additional provisions for enforcement. Support a detailed contract with all relevant documents. These include due diligence reports, self-warranted declarations by your partner, and an alternative dispute resolution mechanism-such as a mediator, Indian or otherwise, who can help resolve any dispute. In any joint venture, establish clear objectives and make sure your targets are compatible with your partner's. These must be clearly set out in a document known as a "Memorandum of Understanding" or "Heads of Agreement." Attach a Shareholders' Agreement if applicable. A Memorandum of Understanding, or Heads of Agreement, should include statements on the following: each party's goals; how the venture should develop; the commercial terms-in as much detail as possible, including each party's contribution to the joint venture; management; early costs; the legality of the Memorandum; arbitration; exclusivity. India has, in the past, been identified as a "high-risk area" for theft of intellectual property (IP). But as the Indian R&D economy grows, and software design continues to be a key Indian industry, the government and leading businesses are tightening up on IP protection. The Indian government has established its own IP protection regime to meet the requirements of the World Trade Organization's Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS). Its copyright act protects not just the "authors" of film and the written word, but also the creators of software programs, databases, digital recordings, and satellite broadcasts. The period of protection is 50 years, and the laws are enforced by the Copyright Enforcement Advisory Council. Software copyright is specifically protected, and pirates can be heavily fined and jailed for up to three years. However, India remains a highrisk country for IP theft. You should make full use of the protective laws, but remember that in many cases, the answer lies not so much in a legal remedy as in effective internal security. India operates a "first to file" policy, so it is important to stake your claim to any mark as soon as possible. Appoint a registered trademark agent to carry out initial searches, then submit your application to the Ministry of Commerce and Industry.
If no objection is received within three months of publication, your mark will be registered and the Trademarks Registry will issue a registration certificate. The whole process usually takes two to three years. Patenting is a complex procedure in India, taking around four years. The easiest approach is to use a patent agent recommended by the Patent Office. If you file for patent in India within a year of doing so in your own country, your application will be prioritized, and the application backdated to your application date at home. Always work on the assumption that someone will try to steal your creation. Carry out thorough risk assessments and consider hiring IP security specialists to advise you. There are four ways to resolve a contractual dispute in India: negotiation, mediation, arbitration, and litigation. However, given the monetary and PR costs of entering the formal dispute process, your best initial tactic may lie in adopting the Indian approach and accepting that the contract is not as important as the relationship. It has become a common feature of foreign investment contracts in India to make provision for arbitration and conciliation overseas. However, it is always worth considering the cost and damage this could cause, and asking yourself whether you would benefit from using a local Indian mediator. As the number of investors in India has multiplied, so has the number of Indian organizations specializing in alternative dispute resolution. Some have specialists with qualifications from Europe and the US, and advisory panels that include retired senior judges.
Even if mediation fails to resolve the dispute, it can narrow the gap between the two sides, and minimize the loss in a later arbitration award. India has signed more than 45 bilateral investment treaties with Russia, Japan, Korea, Australia, and most European Union countries. The treaties set out clear provision for disputes to be resolved through negotiation, and if there is no agreement within six months, arbitration. Arbitration may be carried out in India or your home country, or through an international body such as The International Center for the Settlement of Investment Disputes.