ENTRY STRATEGIES FOR FOREIGN INVESTORS
STARTING OPERATIONS IN INDIA
A foreign company planning to set up business operations in India has the following options
AS AN INDIAN COMPANY
A foreign company can commence operations in India by incorporating a company under the Companies Act,1956 through
• JOINT VENTURES; or
• WHOLLY OWNED SUBSIDIARIES
1. JOINT VENTURE WITH AN INDIAN PARTNER
Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners.
Joint Venture may entail the following advantages for a foreign investor:
• Established distribution/ marketing set up of the Indian partner
• Available financial resource of the Indian partners
• Established contacts of the Indian partners which help smoothen the process of setting up of operations
2. WHOLLY OWNED SUBSIDIARY COMPANY
Foreign companies can also to set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.
.
AS A FOREIGN COMPANY
Foreign Companies can set up their operations in India through.
• LIAISON OFFICE/REPRESENTATIVE OFFICE
• PROJECT OFFICE
• BRANCH OFFICE
Such offices can undertake any permitted activities. Companies have to register themselves with Registrar of Companies (ROC) within 30 days of setting up a place of business in India.
1. LIAISON OFFICE/REPRESENTATIVE OFFICE
Liaison office acts as a channel of communication between the principal place of business or head office and entities in India. Liaison office can not undertake any commercial activity directly or indirectly and can not, therefore, earn any income in India.
Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers. It can promote export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India.
Approval for establishing a liaison office in India is granted by Reserve Bank of India (RBI).
2. PROJECT OFFICE
Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions.
Such offices can not undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.
3. BRANCH OFFICE
Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:
1. Export/Import of goods
2. Rendering professional or consultancy services
3. Carrying out research work, in which the parent company is engaged.
4. Promoting technical or financial collaborations between Indian companies and arent or overseas group company.
5. Representing the parent company in India and acting as buying/selling agents in India.
6. Rendering services in Information Technology and development of software in India.
7. Rendering technical support to the products supplied by the parent/ group companies.
8. Foreign airline/shipping company.
A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).
STARTING OPERATIONS IN INDIA
A foreign company planning to set up business operations in India has the following options
AS AN INDIAN COMPANY
A foreign company can commence operations in India by incorporating a company under the Companies Act,1956 through
• JOINT VENTURES; or
• WHOLLY OWNED SUBSIDIARIES
1. JOINT VENTURE WITH AN INDIAN PARTNER
Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners.
Joint Venture may entail the following advantages for a foreign investor:
• Established distribution/ marketing set up of the Indian partner
• Available financial resource of the Indian partners
• Established contacts of the Indian partners which help smoothen the process of setting up of operations
2. WHOLLY OWNED SUBSIDIARY COMPANY
Foreign companies can also to set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.
.
AS A FOREIGN COMPANY
Foreign Companies can set up their operations in India through.
• LIAISON OFFICE/REPRESENTATIVE OFFICE
• PROJECT OFFICE
• BRANCH OFFICE
Such offices can undertake any permitted activities. Companies have to register themselves with Registrar of Companies (ROC) within 30 days of setting up a place of business in India.
1. LIAISON OFFICE/REPRESENTATIVE OFFICE
Liaison office acts as a channel of communication between the principal place of business or head office and entities in India. Liaison office can not undertake any commercial activity directly or indirectly and can not, therefore, earn any income in India.
Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers. It can promote export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India.
Approval for establishing a liaison office in India is granted by Reserve Bank of India (RBI).
2. PROJECT OFFICE
Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions.
Such offices can not undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.
3. BRANCH OFFICE
Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:
1. Export/Import of goods
2. Rendering professional or consultancy services
3. Carrying out research work, in which the parent company is engaged.
4. Promoting technical or financial collaborations between Indian companies and arent or overseas group company.
5. Representing the parent company in India and acting as buying/selling agents in India.
6. Rendering services in Information Technology and development of software in India.
7. Rendering technical support to the products supplied by the parent/ group companies.
8. Foreign airline/shipping company.
A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).