It takes about 4-6 weeks to start a company in India. This includes getting DIN (Director Identification Number) for Directors, Incorporation of the company, getting PAN/TAN, opening of a bank account and other registrations that may be required by local authorities.
However, come August 11, all this will change. As least that is what the Ministry of Corporate Affairs (MCA) recent circular promises. The entire process of incorporating a company will be completed in 24 hours and a digital certificate of incorporation will be issued to the company. If this becomes a reality, India will be at par with other global economies where average time taken to start a company is about 4 days.
MCA has been streamlining the incorporation process for many months now. Initiatives such as online DIN verification, E-stamping of documents etc have already been in place that cut down the incorporation time. However, other procedures still take time. If the MCA circular is to be believed, all activities can be finished online including company name approval and with in 24 hours the certificate of incorporation will be available. There are provisions for penal action if entrepreneurs provide false information during company formation.
If this system is implemented, it will give a big boost to current entrepreneurship ecosystem in the country. However it is required to be seen if other government departments will also go the online way to help entrepreneurs cut down the operation start time. Other procedures, especially with local government, are not online and can take from few days to weeks for completion.
Overall this is a good move by the MCA. A step in the right direction!