Establishing Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of subsequent manners while retaining its status for 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 with the company’s products and to explore further open positions. Liaison offices are not allowed to stick with it any business or earn any income in India and all expenses are 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 smallish period of schedule. It is essentially a branch office launched with the limited purpose for executing a specific project. 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, in which the parent company is engaged, provided the final results 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 around 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 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 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, 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 set up any type of office already stated activities on the part of the parent company or foreign trading companies Online LLP Incorporation in India India for promotion of exports from India should 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 the cases, permission is granted initially for finding a period of three years, depending upon the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted to create any income in Japan.

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