Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of the next manners while retaining its status as being a foreign company:

Liaison Offices – A foreign company can open a liaison office in India to take good care of its Indian operations, to promote its business interests, to spread awareness among the company’s products so you can explore further chances. Liaison offices are not allowed to carry on any business or earn any income in India and every one expenses are to be borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish a home-based business presence in India, if the object is to possess a presence for modest period of time. It is essentially a branch office make with the limited purpose for executing a specific projects. Foreign companies engaged in turnkey construction or installation normally set-up a project office for their operations in India.

Branch Offices – Foreign companies engaged in manufacturing and trading activities outside India may open branch offices for the purpose of:

oRepresenting the parent company or other foreign companies in a variety of matters in India, like acting as buying and selling agents.

oConducting research, in which the parent company is engaged, provided the final results of this research are made there for Indian companies

oUndertaking export and import trading activity.

oPromoting technical and financial collaborations between Indian and foreign companies.

Trading companies – Foreign companies may invest in trading companies engaged primarily Online LLP Incorporation in India exports. Such trading companies are treated at par with domestic trading companies in accordance with the trade policy.

The RBI accords automatic approval for foreign equity around 51 per cent for setting up trading companies engaged primarily in exports. All other proposals, which do not meet the criteria for automatic approval, can be addressed to the Foreign Investment Promotion Board, i.e. “FIPB”.

Wholly owned subsidiaries – Foreign companies may set up a wholly owned subsidiary, which a good Indian Company through having an independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either underneath the automatic route, in the event the conditions specified therein are complied with (specific high priority industries) or ask for approval from the FIPB.

Joint venture companies – Foreign companies may set up a joint venture company i.e. fiscal collaboration with an Indian business house/company in India, could be an Indian Company with an independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a joint venture can be established either under the automated route, if the conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to make any regarding office mentioned previously activities component the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain a prior approval from the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of this cases, permission is granted initially for finding a period of 3 years, depending upon the condition that expenses of such office can met exclusively out of inward remittances; such offices are not permitted to generate any income in In india.

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