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 for a foreign company:

Liaison Offices – A foreign company can open a liaison office in India to pay attention to its Indian operations, to promote its business interests, to spread awareness with the company’s products this particular explore further placements. Liaison offices are not allowed to carry on any business or earn any income in India and every one expenses are 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 have a presence for minimal period of a period of time. It is essentially a branch office make with the Limited Liability Partnerhsip Registration Online India purpose for executing a specific projects. Foreign companies engaged in turnkey construction or installation normally put in 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 extra of:

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

oConducting research, in which the parent company is engaged, provided the results of this research are made available 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 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 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 can be an Indian Company with an independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either underneath the automatic route, in the event 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, could be 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 physical conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to put in any regarding office mentioned above activities on the part the parent company or foreign trading companies in India for promotion of exports from India in order to be obtain an earlier approval for this 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 for a period of 3 years, cause to undergo the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted to create any income in India.