Our business philosophy helps you enrich your business
India is one of the most accelerating countries in the world comprises of colossal human resources and a pool of diversified potential customers. Sighting this huge market, foreign direct investments (FDIs) are lured to set up company registration in India, resulting in a gigantic influx of FDI in the country every year.
One such source of FDI is foreign companies setting up their business in India. Contemplating this to be the fuel in the process of moving India into a more developed nation, the government of India has flexed the restrictions to a greater extent, thus, enabling the infusion of more foreign investments into the economy.
Establishing an Indian entity
To incorporate an Indian entity in form of a joint venture or a wholly-owned subsidiary, a company has to be incorporated under the Companies Act, 2013 or any other Act for the time being in force:
- Setting up a Joint venture with an Indian partner i.e., undertaking a commercial enterprise jointly by two or more parties with the view of carrying out a particular project, which otherwise retains their distinct identities.
Suitability: When the purpose is to carry out business activities of manufacturing, marketing, selling, etc. in the Indian market on behalf of a foreign entity.
- Forming a Wholly-Owned Subsidiary i.e., establishing a company whose common stock is 100% owned by a parent company, in sectors that permit 100% FDI through the FDI policy formulated by the Department for Promotion of Industry and Internal Trade (DPI). Subject to equity caps provided in the FDI policy concerning the various areas of activity and depending on the investor’s decision, 100% foreign equity in such Indian companies is permissible.
Apart from incorporating a company, one can also choose to incorporate a limited liability partnership to Company setup in India:
- A Limited Liability Partnership (LLP) is a form of business structure in India that integrates the benefits of a company with the advantages of organizational flexibility associated with a partnership. The FDI policy for LLPs has been notified lately making this a feasible entity form for foreign investors to establish their business operations in India.
Setting up a Foreign Company
Prior approval from RBI and/or government is required for Business setup in India by virtue of a Liaison Office / Project Office / Branch Office. Also, the condition to open a branch office/project office/liaison office is that only a body corporate incorporated outside India can incorporate any of these offices.
- A liaison office, also known as a representative office facilitates communication between headquarters or principal place of business in India and the offshore entities in India. Information is collected about business opportunities in the present market and the same is made available by the parent company and its products to prospective clients in the region.
Suitability: When the purpose is to form a communication channel between parent foreign companies and companies in India or to promote collaborations.
Following activities are allowed to liaison office in India:
- Representation of parent company/group companies in India;
- Promoting export from or import to India;
- Collection of information about possible market opportunities, source of supply, providing information about parent company and its products to the prospective Indian customers or vice versa to its vendor;
- Promotion of technical/financial collaborations between parent company/group companies in India or unable to act as a communication channel between parent company/group companies in India.
However, a liaison office is not permitted to earn any income; undertake any industrial, trading, or commercial activity; enter into any agreement on behalf of the head office; borrow or lend money for any commercial activity; or charge any fee or commission or otherwise on earning any income, in respect of liaison activities carried on in India.
- A branch office of a foreign company can carry out manufacturing and trading activities abroad and is established in the region/market of manufacture for the following purposes:
- Import/export of goods/merchandise of raw material and finished product;
- To bring about better technical/financial collaborations between Indian companies and the parent or overseas group company;
- Providing consultancy, advisory or professional services;
- Supplementing research work and experimentation, in which the parent company is engaged, making it more economical;
- Catering to software development and Information Technology services;
- Authorized buying / selling agents in India for the parent company; or
- Providing technical support to the products coming from the parent/group companies and troubleshooting any local issues.
Suitability: When the purpose is to render services or sell products manufactured by a foreign entity by establishing its presence in India.
Manufacturing activities have certain restrictions as a branch office is not permitted to carry out manufacturing activities by itself but is prescribed to sub-contract these to an Indian manufacturer. The profit of the branch may be remitted outside India for branch offices subject to approval from RBI. The remittance is net of applicable Indian taxes and subject to RBI guidelines.
- A project office of foreign companies can set up certain temporary offices/site offices; to execute specific projects in India that are linked to a one-off contract.
They can be termed as branch offices set up with the limited purpose of executing a specific project.
RBI has granted certain permissions to foreign companies for setting up of project offices, subject to certain conditions:
- RBI has granted general permission to foreign companies to establish project offices in India, provided they have secured a contract from an Indian company to execute a project in India, and
- The project is funded directly by inward remittance from abroad;
- The project is funded by a bilateral or multilateral International Financing Agency;
- The project has been cleared by an appropriate authority; or
- A company or entity in India awarding the contract has been granted a term loan by a public financial institution or a bank in India for the project.
However, these offices cannot deviate and take steps or perform activities other than those related to the project for the purpose of which such office was set up.
Our team of professionals can assist you in the following areas:
- Business entry advisory services
- Identifying the suitable form of business
- Acquisition of licenses and registration under various Acts
- Acquisition of permanent account number (PAN) / tax deduction or collection account number (TAN)
- Preparation & filing of incorporation documents
- Attestation of legalization of documents
- Filing of application with RBI through Authorized Dealer bank
- Verification of knowing your client (KYC) from the banker of the parent company
- Registration of project office of a foreign company with the ROC
- Drafting of charter documents (Memorandum of Association / Articles of Association)
- Assistance in trademark & other intellectual property registration
- Secretarial and administrative support
- Post incorporation services (Accounting, bookkeeping, payroll, auditing, taxation, etc.)
- Assistance in RBI compliances