Establishing Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of subsequent manners while retaining its status for a foreign company:

Liaison Offices – A foreign company can open a liaison office in India to look after its Indian operations, to promote its business interests, to spread awareness of 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 expenses are become borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish profitable business presence in India, if the object is to possess a presence for a limited period of any time. It is essentially a branch office fitted with the limited purpose for executing a specific project. 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 write-up of:

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

oConducting research, where the parent company is engaged, provided the outcomes of this research are made in order to Indian companies

oUndertaking export and import trading activities.

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 Online LLP Formation in India 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 can be an Indian Company a good independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either the actual automatic route, generally if the conditions specified therein are complied with (specific high priority industries) or obtain an 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 automatic route, if the stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to construct any form of office already stated activities portion of the parent company or foreign trading companies in India for promotion of exports from India in order to be obtain a previous approval for the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of the cases, permission is granted initially to secure a period of three years, subject to the condition that expenses of such office will met exclusively out of inward remittances; such offices are not permitted produce any income in Of india.