Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of pursuing manners while retaining its status as the 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 among the company’s products as well as to explore further chances. Liaison offices are not allowed to preserve any business or earn any income in India and all sorts of expenses are in order to become borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish a home-based business presence in India, if the object is to have a presence for a smallish period of time. It is essentially a branch office launched 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 Online LLP Registration Process in India India.

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

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

oConducting research, during which the parent company is engaged, provided outcomes of this research are made in order 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 is definitely an Indian Company through having an independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either the particular automatic route, if for example 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. economical collaboration with an Indian business house/company in India, which can 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 build any kind of office stated previously activities portion of the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain a prior approval for the 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 to secure a period of three years, depending upon the condition that expenses of such office will met exclusively out of inward remittances; such offices are not permitted produce any income in India.