Foreign companies may set up business in India any kind of one of the following manners while retaining its status for a foreign company:
Liaison Offices – A foreign company can open a liaison office in India to pay attention to its Indian operations, to promote its business interests, to spread awareness of the company’s products as well as to explore further chances. Liaison offices are not allowed to embark on any business or earn any income in India and all sorts of expenses are in order to become borne by remittances from abroad.
Project Offices – The project office is the ideal method for companies to establish a venture presence in India, if the object is to have a presence for modest period of season. It is essentially a branch office fitted with the limited purpose for executing a specific project. Foreign companies engaged in turnkey construction or installation normally set-up 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 extra of:
oRepresenting the parent company or other foreign companies Online LLP Incorporation in India a variety of matters in India, like acting as buying and selling agents.
oConducting research, in which the parent company is engaged, provided outcomes of this research are made available to Indian companies
oUndertaking export and import trading situations.
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 significantly as 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 an Indian Company with an 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, generally if 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, that 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 automatic route, if the circumstances specified therein are complied with or obtain an approval from the FIPB.
Foreign companies intending to set up any kind of office mentioned above activities on the part of the parent company or foreign trading companies in India for promotion of exports from India should obtain a prior approval from the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of such cases, permission is granted initially for finding a period of 3 years, subject to the condition that expenses of such office in order to met exclusively out of inward remittances; such offices are not permitted produce any income in Of india.