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Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India any kind of one of subsequent manners while retaining its status as the foreign company:

Liaison Offices - A foreign company can open a liaison office in India to take good care of its Indian operations, to promote its business interests, to spread awareness belonging to the company's products as well as to explore further placements. Liaison offices are not allowed to persevere 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 home-based business presence in India, if the object is to possess a presence for minimal period of season. It is essentially a branch office launched with the limited purpose for executing a specific upgrade. Foreign companies engaged in turnkey construction or installation normally put in 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, the spot that 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 LLP Formation Online in India 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 a Indian Company through having an 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, when 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. in financial 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 conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to put in any kind of office mentioned previously 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 this Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval for these cases, permission is granted initially for a period of three years, prone to the condition that expenses of such office is actually met exclusively out of inward remittances; such offices are not permitted to generate any income in In india.