Establishing Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of the following manners while retaining its status like 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 of the company’s products in addition to explore further avenues. Liaison offices are not allowed to stick with it any business or earn any income in India and expenses are in order 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 constrained period of schedule. 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 set up 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 on the road 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 the final results 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 Online LLP Registration 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 up to 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 good 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 underneath the automatic route, generally 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. in financial collaboration with an Indian business house/company in India, and 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 put in any type of office already stated activities component the parent company or foreign trading companies in India for promotion of exports from India should obtain an earlier approval for 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 for finding a period of three years, foreclosures the condition that expenses of such office will met exclusively out of inward remittances; such offices are not permitted create any income in In india.