Skip to content

Setting up Business in India – What Foreign Companies Must Know

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

Liaison Offices - A foreign company can open a liaison office in India to pay attention to its Indian operations, to promote its business interests, to spread awareness of the company's products so you can explore further chances. Liaison offices are not allowed to stick with it any business or earn any income LLP Incorproation Online in India India and all 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 venture presence in India, if the object is to possess a presence for a smallish period of any time. It is essentially a branch office fitted with the limited purpose for executing a specific undertaking. Foreign companies engaged in turnkey construction or installation normally put in 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 extra of:

oRepresenting the parent company or other foreign companies a number of matters in India, like acting as buying and selling agents.

oConducting research, during which the parent company is engaged, provided the outcomes of this research are made in order 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 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 your automatic route, generally 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. in financial 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 conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to build any kind of office already stated activities on the part of the parent company or foreign trading companies in India for promotion of exports from India in order to be obtain an earlier approval of the 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 a period of 3 years, cause to undergo the condition that expenses of such office will met exclusively out of inward remittances; such offices are not permitted create any income in In india.