Setting up 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 a foreign company:

Liaison Offices – A foreign company can open a liaison office in India to maintain 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 persevere 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 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 undertaking. Foreign companies engaged in turnkey construction or installation normally established 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 extra of:

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

oConducting research, during which the parent company is engaged, provided the results of this research are made open to Indian companies

oUndertaking export and import trading activities.

oPromoting technical and financial collaborations between Indian and foreign companies.

Trading companies – Foreign companies may invest Online LLP Incorporation in India 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 as much 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 by independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either the actual automatic route, if the conditions specified therein are complied with (specific high priority industries) or ask for 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 automated route, if the stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to build any form of office already stated activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India for you to obtain a previous approval from the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of such cases, permission is granted initially a period of three years, depending upon 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 Japan.