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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 pursuing manners while retaining its status as a foreign company:

Liaison Offices - A foreign company can open a liaison office in India to look after its Indian operations, to promote its business interests, to spread awareness of the company's products and to explore further chances. Liaison offices are not allowed to persevere any business or earn any income in India and all sorts 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 time. It is essentially a branch office arranged 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 Online LLP Registration Procedure India.

Branch Offices - Foreign companies involved in manufacturing and trading activities outside India may open branch offices for medicine 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, in which the parent company is engaged, provided the outcome of this research are made in order to Indian companies

oUndertaking export and import trading ventures.

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 Indian Company by independent legal status, distinct from parents foreign company.

Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, when the conditions specified therein are complied with (specific high priority industries) or ask for 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 physical conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to set up any involving office already stated activities on the part the parent company or foreign trading companies in India for promotion of exports from India should obtain a previous approval for 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 for finding a period of 3 years, depending upon 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 Of india.