Setting up Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India Online LLP Formation in India any one of the next 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 within the company’s products in addition to explore further open positions. Liaison offices are not allowed to persevere any business or earn any income in India and all sorts of expenses are to be 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 constrained period of a period of time. It is essentially a branch office arranged 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 extra of:

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

oConducting research, during which the parent company is engaged, provided the results of this research are made open to 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 up to 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 good Indian Company by 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 the 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, could be 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 construct any kind of office stated previously activities on behalf of 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 cases, permission is granted initially for finding a period of three years, depending upon the condition that expenses of such office is actually met exclusively out of inward remittances; such offices are not permitted create any income in In india.