Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of pursuing manners while retaining its status like a foreign company:

Liaison Offices – A foreign company can open a liaison office LLP Formation Online in India India to pay attention to its Indian operations, to promote its business interests, to spread awareness within the company’s products as well as to explore further opportunities. Liaison offices are not allowed to preserve any business or earn any income in India and all sorts of expenses are to borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish a legitimate income opportunity presence in India, if the object is to possess a presence for a smallish period of time. It is essentially a branch office make with the limited purpose for executing a specific undertaking. Foreign companies engaged in turnkey construction or installation normally install 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 within a matters in India, like acting as buying and selling agents.

oConducting research, where the parent company is engaged, provided outcomes of this research are made open to Indian companies

oUndertaking export and import trading situations.

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 can be an Indian Company a great 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 ask for 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 is 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 stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to build any kind of office stated previously activities on the part the parent company or foreign trading companies in India for promotion of exports from India in order to be obtain a prior approval for 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 a period of three years, prone to the condition that expenses of such office will be met exclusively out of inward remittances; such offices are not permitted produce any income in India.