Establishing Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of the following 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 in addition to explore further placements. Liaison offices are not allowed to embark on any business or earn any income in India and every one of 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 venture presence in India, if the object is to have a presence for a limited period of time. It is essentially a branch office arranged with the limited purpose for executing a specific projects. 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, where the parent company is engaged, provided the outcomes of this research are made available to Indian companies

oUndertaking export and import trading activity.

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 is an Indian Company through having an independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either the actual automatic route, in the event 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, 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 automatic route, if the physical conditions 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 the parent company or foreign trading companies LLP Registration Online in India India for promotion of exports from India in order to be obtain an earlier approval of 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 3 years, depending upon the condition that expenses of such office will be met exclusively out of inward remittances; such offices are not permitted to generate any income in In india.