Establishing Business in India – What Foreign Companies Must Know

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

Liaison Offices – A foreign company can open a liaison office LLP Formation Online in India India to handle its Indian operations, to promote its business interests, to spread awareness with the company’s products so you can explore further avenues. Liaison offices are not allowed to embark on any business or earn any income in India and 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 minimal 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 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 the purpose of:

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

oConducting research, the spot that the parent company is engaged, provided the outcome of this research are made available to Indian companies

oUndertaking export and import trading activity.

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 is definitely 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 your automatic route, if the conditions specified therein are complied with (specific high priority industries) or obtain 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, 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 stipulations specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to make any type of office stated previously activities on the part of the parent company or foreign trading companies in India for promotion of exports from India to be able to obtain an earlier 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, subject to the condition that expenses of such office will be met exclusively out of inward remittances; such offices are not permitted to generate any income in In india.

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