Establishing Business in India – What Foreign Companies Must Know

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

Liaison Offices – A foreign company can open a liaison office in India to take good care of its Indian operations, to promote its business interests, to spread awareness among the company’s products and to explore further avenues. Liaison offices are not allowed to persevere 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 a home-based business presence in India, if the object is to have a presence for constrained period of season. It is essentially a branch office arranged with the limited purpose for executing a specific projects. Foreign companies engaged in turnkey construction or installation normally set up 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 on the road of:

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

oConducting research, in which the parent company is engaged, provided outcomes of this research are made there for 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 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 by 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, 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. monetary collaboration with an Indian business house/company in India, which 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 conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to build any regarding office already stated activities on the part the parent company or foreign trading companies LLP Incorproation Online in India India for promotion of exports from India for you to obtain a previous approval of this 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 to secure a period of three years, subject to the condition that expenses of such office is actually met exclusively out of inward remittances; such offices are not permitted to generate any income in In india.