Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of the following 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 of the company’s products in addition to explore further placements. Liaison offices are not allowed to persevere any business or earn any income in India and expenses are for you to become borne by remittances from abroad.

Project Offices – The project office is the ideal method for companies to establish profitable business presence in India, if the object is to have a presence for modest period of season. 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 established 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 within a matters in India, like acting as buying and selling agents.

oConducting research, where the parent company is engaged, provided the results of this research are made there for Indian companies

oUndertaking export and import trading activities.

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 can be an Indian Company with an independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, if the conditions specified therein are complied with (specific high priority industries) or get the approval from the FIPB.

Joint venture companies – Foreign companies may set up a joint venture company i.e. economical collaboration with an Indian business house/company Online LLP Incorporation in India 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 conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to build any regarding office stated previously activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India should 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 such cases, permission is granted initially for your period of 3 years, depending upon the condition that expenses of such office can met exclusively out of inward remittances; such offices are not permitted to get any income in Japan.