Establishing Business in India – What Foreign Companies Must Know
Foreign companies may set up business in India in any one of pursuing 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 with the company’s products so you can explore further open positions. Liaison offices are not allowed to stick with it any business or earn any income in India and every one of expenses are for you to become borne by remittances from abroad.
Project Offices – The project office is the ideal method for companies to establish a business presence LLP Registration Online in India India, if the object is to have a presence for a smallish period of time. It is essentially a branch office launched with the limited purpose for executing a specific projects. 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 write-up 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, during which the parent company is engaged, provided the outcome of this research are made there for 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 as much 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 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 the particular automatic route, in the event 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. fiscal 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 physical conditions specified therein are complied with or obtain an approval from the FIPB.
Foreign companies intending to construct any form of office mentioned previously activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain an earlier approval from the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of such cases, permission is granted initially a period of 3 years, foreclosures 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 Of india.
