Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of subsequent manners while retaining its status as being a 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 belonging to the company’s products in addition to explore further avenues. Liaison offices are not allowed to stick with it any business or earn any income in India and all sorts of expenses are become borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish a venture presence in India, if the object is to have a presence for constrained period of schedule. It is essentially a branch office launched with the limited purpose for executing a specific projects. Foreign companies engaged in turnkey construction or installation normally established a project office for their operations in India.

Branch Offices – Foreign companies involved in manufacturing and trading activities outside India may open branch offices for extra of:

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

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

oUndertaking export and import trading situations.

oPromoting technical and financial collaborations between Indian and foreign companies.

Trading companies – Foreign companies may invest Online LLP Formation in India 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 up to 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 Indian Company with 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, if the conditions specified therein are complied with (specific high priority industries) or get an 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, and 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 involving office already stated activities on the part the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain an earlier approval of the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval for these cases, permission is granted initially a period of three years, cause to undergo the condition that expenses of such office will met exclusively out of inward remittances; such offices are not permitted to generate any income in India.