Establishing 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 look after its Indian operations, to promote its business interests, to spread awareness belonging to the company’s products in addition to explore further opportunities. Liaison offices are not allowed to preserve any business or earn any income in India and expenses are for you to 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 modest period of season. It is essentially a branch office launched with the limited purpose for executing a specific problem. Foreign companies engaged in turnkey construction or installation normally install 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 medicine of:

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

oConducting research, where the parent company is engaged, provided the outcome 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 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 significantly as 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 a good 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. monetary collaboration with an Indian business house/company in India, that is 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 circumstances specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to set up any regarding office already mentioned activities on the part of the parent company or foreign trading companies in India for promotion of exports from India in order to be obtain a prior approval of the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of cases, permission is granted initially to secure a period of 3 years, foreclosures the condition that expenses of such office can met exclusively out of inward remittances; such offices are not permitted to get any income in India.