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 as being 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 as well as to explore further opportunities. Liaison offices are not allowed to carry on any business or earn any income Online LLP Registration in India India and all expenses are to 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 have a presence for minimal period of season. It is essentially a branch office fitted with the limited purpose for executing a specific upgrade. Foreign companies engaged in turnkey construction or installation normally set up 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 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, during which the parent company is engaged, provided outcomes of this research are made in order 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 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 definitely an Indian Company by independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either the particular 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. economic 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 regarding office mentioned above activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India for you to obtain a prior approval of the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of cases, permission is granted initially a period of 3 years, prone to the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted to get any income in Of india.