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Establishing Business in India – What Foreign Companies Must Know

Foreign companies may set up business in India in any one of pursuing manners while retaining its status like a 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 with the company's products this particular explore further placements. Liaison offices are not allowed to preserve 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 business presence in India, if the object is to possess a presence for a limited period of a period of time. It is essentially a branch office fitted with the limited purpose for executing a specific upgrade. 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 on the road of:

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

oConducting research, during which the parent company is engaged, provided outcomes of this research are made in order to Indian companies

oUndertaking export and import trading games.

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 a good 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 under the automatic route, if for example 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. economic 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 physical conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to make any kind of office mentioned previously activities on the part the parent company or foreign trading companies in India for promotion of exports from India have to 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 a period of 3 years, prone to the condition that expenses of such office can met exclusively out of inward remittances; such offices are not permitted to get any income in India.