India is one of the most ideal destinations for foreign investors looking to set-up their businesses in India. The country not only provides a conducive environment for business but also offers tremendous opportunities for the investors. There has been a continuous surge in foreign direct investment (“FDI”) in the country. However, there are many risks associated with venturing into a new geography with a complex accounting, tax and regulatory environment.
Therefore, for starting business operations in India, it is important to understand the process and the governing laws of the country. Depending on the nature of business, there are numbers of approvals a company requires from the government before starting operations. The mode of entry also plays an important role in achieving the strategic objective.
A foreign company, setting up an eligible business activity, may register a wholly owned subsidiary (“WOS”) in India. WOS is a preferred business vehicle for those who wish to have limited liability and prefer to keep total control over the business. A WOS can be set-up as a private limited or a public limited company. Most Small and Medium Enterprise prefer to set up as a Private Limited Company which is a closely held company. We help in opening and incorporating a company in India.
Joint Venture (JV) refers to the formation of a new company by 2 or more partners who join hands for a common objective. Joint Ventures can be of two types
Setting up of operations through a Joint Venture may provide the following advantages to a foreign investor:
Limited Liability Partnership (“LLP”) is a partnership having a separate legal entity and limited liability. It’s basically a hybrid of traditional partnership and a private limited company. With the intent and objective to promote LLPs as a structure for foreign investors, the Indian government has recently permitted FDI in LLPs in a calibrated manner. LLP enjoys tax advantages over a company and is comparatively easier to manage with less compliance levels as compared to a company form of organization. To view the comprehensive document on India Entry Strategy and Doing Business in India, please click here. For any further queries on entry strategy in India, you may write to us on info@aaptcorp.com and our subject matter expert will be happy to help.
As a Foreign Company
Setting up a liaison or representative office (“LO”) is a common practice for foreign companies seeking to enter the Indian market. The role of such offices is limited to collecting information about the possible market and to providing information about the company and its products to prospective Indian customers. It cannot undertake any commercial activities and must only use remittances received from its parent foreign company to maintain itself. We help in setting up liaison office of Foreign Entities in India.
As a Branch Office (“BO”) in India, foreign companies can conduct full-fledged business in India. BO can carry the same or substantially the same trading activities as carried out by their parent or group companies. However, BO is not allowed to directly carry out manufacturing activities though it is permitted to sub-contract these services to an Indian manufacturer. We help in opening a Branch Office of Foreign Entities in India.
Foreign Companies having obtained specific project contracts in India can set up temporary project office (“PO”). If certain conditions are satisfied, the PO can be even set-up without any prior approval from the RBI. These offices can only undertake an activity related and incidental to execution of the specified project. After the completion of the project, the surplus funds can be repatriated back to the parent company. We help in setting up a Project Office of Foreign Entities in India.
