Should You Start A Business In India Or Indonesia?

If you are planning on starting a business in Asia, you may be considering India and Indonesia as two of the options. Both economies are growing rapidly, offering plenty of opportunities for innovation.

India has seen some amazing advancements in the last few years, innovating in sports tech and having Apple expand there to manufacture iPhones.

On the other hand, Indonesia boasts a number of unicorns valued at $1 billion, with a steady startup growth.

While starting a new venture in one of these foreign countries can be undoubtedly exciting, there are plenty of factors that will contribute to your decision on which one you choose.

How Startup-Friendly Are India And Indonesia?

India is conducive environment for startups, with access to a range of venture capitalists, angel investors as well as government-backed funding. The country also has a Startup India initiative to encourage entrepreneurs and their new ventures. The business registration process is relatively quick, ranging from one to two weeks. However, regulations are known to be quite complex.

Indonesia has a lot of startup-focused initiatives although funding is more limited. In recent years, most funding has come from international investors. While regulations are not as stringent as India’s, the registration process is much longer and can take up to three months.

The Cost Of Living In These Countries

India: A one-bedroom apartment in major cities like Mumbai or Delhi can cost between £150 and £600, but outlying areas can be more affordable. For an expat, you could be looking at a range of £600 t0 £1,500 for all of your monthly living expenses including food and utilities.

Indonesia: Similarly, main centres like Jakarta and Bali are pricier and can range between £200 and £900 for a one-bedroom apartment in these areas. Foreigners can expect to pay between £750 and £2000 per person each month.

Overall, India does have a more affordable cost of living especially if you can live and work in the smaller cities. Due to Jakarta and Bali being popular tourist spots, accommodation is naturally more expensive there.

Tax Regulations In India And Indonesia

India: The country’s corporate tax rate is 25% and 30% for multinational corporations. Personal income tax can range from 5% to 30% and Value Added Tax varies from 5% to 27% depending on the industry. Newly registered startups are able to receive a tax holiday for their first three years in operation.

Indonesia: The standard corporate tax rate is 22% with a personal income tax ranging from 5% to 35%, which is similar to India’s. Their VAT increased to 12% this year and while some industries have reduced tax, it’s quite limited for startups specifically.

Both countries offer tax incentives to some degree for startups, but India’s is more extensive than Indonesia’s.

Are There Any Language Barriers?

India: There are 22 official languages, with Hindi and English being the dominant ones. In urban areas, you generally won’t have an issue with speaking English so there is a very limited language barrier.

Indonesia: The official language is Bahasa Indonesia and while you may hear English in major cities, it’s very uncommon in the outlying areas. All business and registration documentation will be in the official language, so this could pose a challenge.

In terms of language, India definitely has the advantage but conducting business in Indonesia can still be possible by using a translator or bilingual staff.

Visa And Residency Requirements

India: A Business Visa is ideal for entrepreneurs and valid for one year. A work permit or investor visa are also options however, it is not easy for foreigners to obtain permanent residency.

Indonesia: There are multiple-entry businesses visas available for a year as well as work visas and investor visas that allow business ownership. There are also visas available for long-term stays or retirement options. To become a resident, an expat needs to invest in the country or receive sponsorship from a local company.

For long-term visa options, Indonesia would be the better option due to India’s stricter policies.

Potential Challenges Of Starting A Business In India Or Indonesia

India: There is a fair amount of bureaucracy and red tape along with corruption which can slow down the business process significantly. Some industries will also restrict foreigners from owning their own businesses. The level of infrastructure also varies greatly between rural and urban areas.

Indonesia: Some sectors require expats to have a local partner and some corruption is also present. Similarly to India, the level of infrastructure is not the same between areas which can affect business activities.

Both countries have corruption risks and some hurdles, although foreign ownership is allowed in India.

How To Start A Business In India Or Indonesia

India: First, you can decide between a sole proprietorship, LLP or private limited as your business structure and register the business name with the Ministry of Corporate Affairs. If your industry requires a business license, you can apply for those and VAT if applicable. The last step will be to open up a business bank account.

Indonesia: For business structures, you can choose between a limited company or representative office. To register your business name, you can apply through the Investment Coordinating Board. To open a business bank account, you will need a local director.