Consulting engineers Association of India (CEAI) former president K K Kapila has written to Prime Minister Narendra Modi, saying there is an urgent need to change the definition of Indian company in the Companies Act to make the country self-reliant.
''The current definition of an Indian company is 'any company registered in India, which pays taxes in India is considered as an Indian company'. The flaw being, this company could be a wholly-owned subsidy of a Chinese, American or a British company. Chinese have registered many companies in India and so have many other countries. This needs an immediate correction. Currently, most of foreign companies are misusing this provision and deriving benefits meant for Indian companies,'' Kapila said in a recent letter to the Prime Minister.
To correct this scenario, there is an urgent need to correct the definition of an Indian company. This is an absolutely inescapable necessity, so that the benefits of Atmanirbhar Bharat are not harnessed by the foreign companies, the letter said.
As per the current definition of Indian company, foreign companies are enjoying the benefits meant for Indian companies, it said.
''Once registered in India under the Companies Act 2013 (erstwhile Companies Act 1956), the company operates as an Indian company duly complying with the provisions of the Indian Company Law and Indian tax laws,'' it added.
Thus, a foreign company has virtually become an Indian company and is able to do business as an Indian company, after paying taxes and then take away all the profits out of the country.
''There is thus an urgent need to rectify this anomaly...and re-define an 'Indian company'. It should be governed by nationality of the shareholders, as is done in many countries in the West and the Middle-East,'' it added ''It is thus proposed, that the Companies Act, 2013 should re-define an Indian company, as one which is registered in India with more than 60 per cent shareholding of the company, is held by Indian nationals,'' it said This will then enable the government to restrict tendering amongst the Indian companies which have in-house expertise.
''I humbly solicit your kind indulgence...so that the benefits of Atmanirbhar Bharat as per your vision, could be reaped only by the Indian Companies,'' the letter said.
(With inputs from PTI)