Establishing 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 a foreign company:

Liaison Offices – A foreign company can open a liaison office in India to handle its Indian operations, to promote its business interests, to spread awareness with the company’s products as well as to explore further avenues. Liaison offices are not allowed to stick with it any business or earn any income in India and every one of expenses are for you to 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 a smallish period of time. It is essentially a branch office arranged with the limited purpose for executing a specific problem. Foreign companies engaged in 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 on the road 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, the spot that the parent company is engaged, provided the outcomes of this research are made to be able to 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 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 can be an Indian Company a great independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, generally 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. economical collaboration with an Indian business house/company in Online LLP Registration Procedure 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 automatic route, if the physical conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to make any form of office mentioned above activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India should obtain a prior approval for this 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 for your period of three years, subject to the condition that expenses of such office can met exclusively out of inward remittances; such offices are not permitted produce any income in Of india.