Establishing Business in India – What Foreign Companies Must Know

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

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

Project Offices – The project office is the ideal method for companies to establish a business presence in India, if the object is to possess a presence for modest period of any time. It is essentially a branch office set up with the limited purpose for executing a specific undertaking. Foreign companies engaged LLP Formation Online in India turnkey construction or installation normally put in 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, wherein the parent company is engaged, provided the outcomes of this research are made there for Indian companies

oUndertaking export and import trading ventures.

oPromoting technical and financial collaborations between Indian and foreign companies.

Trading companies – Foreign companies may invest in trading companies engaged primarily in 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 is an Indian Company by independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either underneath the automatic route, when 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. in financial 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 set up any involving office mentioned previously activities on the part the parent company or foreign trading companies in India for promotion of exports from India have to obtain a previous approval for this 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 three years, depending upon the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted to generate any income in Japan.