Setting up 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 as the 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 belonging to the company’s products in addition 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 business presence in India, if the object is to possess a presence for a smallish period of any time. It is essentially a branch office launched 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 involved in manufacturing and trading activities outside India may open branch offices for the purpose of:

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

oConducting research, wherein the parent company is engaged, provided the final results of this research are made available 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 LLP Registration Online in India 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 is an Indian Company a great independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either your automatic route, when 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. fiscal 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 stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to construct any involving office mentioned previously activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India should obtain a prior 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 for finding a period of three years, cause to undergo the condition that expenses of such office will be met exclusively out of inward remittances; such offices are not permitted to create any income in United states of america.