Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any 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 take good care of its Indian operations, to promote its business interests, to spread awareness within the company’s products in addition to explore further placements. Liaison offices are not allowed to carry on 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 possess a presence for minimal period of season. It is essentially a branch office set up with the limited purpose for executing a specific project. Foreign companies engaged in turnkey construction or installation normally put Online LLP Incorporation in India 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 in various matters in India, like acting as buying and selling agents.

oConducting research, where 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 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 with 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, 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, 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 stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to put in any involving office already mentioned activities on the part of the parent company or foreign trading companies in India for promotion of exports from India for you 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 for these cases, permission is granted initially for your 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 United states of america.