Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of next manners while retaining its status as 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 among the company’s products so you can explore further chances. Liaison offices are not allowed to stick with it any business or earn any income in India and every one of expenses are to 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 limited period of time. It is essentially a branch office arranged 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 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 LLP Formation Online 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 open to Indian companies

oUndertaking export and import trading games.

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 through having an 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, when the conditions specified therein are complied with (specific high priority industries) or get the approval from the FIPB.

Joint venture companies – Foreign companies may set up a joint venture company i.e. economic 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 automated route, if the circumstances specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to construct any involving office mentioned above activities on the part of the parent company or foreign trading companies in India for promotion of exports from India have 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 of this cases, permission is granted initially to secure a period of 3 years, foreclosures the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted produce any income in Japan.