Establishing Business in India – What Foreign Companies Must Know
Foreign companies may set up business in India any kind of one of subsequent manners while retaining its status as 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 belonging to the company’s products in addition to explore further opportunities. Liaison offices are not allowed to persevere any business or earn any income in India and every one expenses are to 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 smallish period of time. It is essentially a branch office make with the Limited Liability Partnerhsip Registration in India Online purpose for executing a specific project. Foreign companies engaged in turnkey construction or installation normally install 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 the purpose 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, where the parent company is engaged, provided the final results of this research are made in order 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 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 is an 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 the particular automatic route, if for example the conditions specified therein are complied with (specific high priority industries) or get an approval from the FIPB.
Joint venture companies – Foreign companies may set up a joint venture company i.e. monetary collaboration with an Indian business house/company in India, which can 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 mentioned activities on the part of the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain a previous approval for this Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of the cases, permission is granted initially for your period of 3 years, cause to undergo the condition that expenses of such office is actually met exclusively out of inward remittances; such offices are not permitted to create any income in Of india.
