Entry Options to Invest in India/ Business Structures for Investment in India/ Opening Branch in India/ Forming a wholly owned subsidiary company in India.

Entry Options to Invest in India/ Business Structures for Investment in India/ Opening Branch in India/  Forming a wholly owned subsidiary company in India.

Indian economy is growing up at a very higher rate of 9.4%. This decade witnessed India as one of the most emerging economy in the world. India now becomes the most favorite place of foreign investors to invest their money and doing business. There is huge potential in India. But Investing is always subject to regulations and in India the business structure is also regulated by the Government. There are following entry options available to the foreign and Non Resident Investors:

You can set up business operations in India and has the following options:

Option 1: Establish as an Indian Company.

Under this route the following two ways are available:

·         Joint Venture

·         Wholly owned subsidiary

Option 2: As a Foreign Company.

Under this the following three options are available:

• Liaison Office/Representative Office (Limited Transactions permitted)
• Project Office (Only for Projects)
• Branch Office (Allowed for all transactions except few)

OPTION 1: AS AN INDIAN COMPANY

As foreign company can commence operations in India by incorporating a company under the Companies Act, 1956 through:

A. Joint Ventures; or

B. Wholly Owned Subsidiaries

Foreign equity in such Indian companies can be up to 100% depending on your requirements.

A.    Joint Venture with an Indian Partner

You can set up your 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 help smoothen the process of setting up of operations.

B. Wholly Owned Subsidiary Company

You can also set up wholly owned subsidiary. For registration and incorporation, set of applications have to be filed with Registrar of Companies (ROC). Once a company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies. We will provide you the documentations and requirements once we go ahead.

OPTION 2: AS A FOREIGN COMPANY

You can also set up your operations in India through:

•           A. Liaison Office/Representative Office

•           B. Project Office

•           C. Branch Office

Such offices can undertake any permitted activities. Your company will be registered with the Registrar of Companies (ROC) within 30 days of setting up a place of business in India.

A. 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. As a Liaison office you cannot undertake any commercial activity directly or indirectly and cannot, 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).

B. Project Office

If you are planning to execute specific projects in India, you 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 cannot 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.

C. Branch Office   

Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:

• Export & Import of goods
• Rendering professional or consultancy services
• Carrying out research work, in which the parent company is engaged.
• Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
• Representing the parent company in India and acting as buying/selling agents in India.
• Rendering services in Information Technology and development of software in India.
• Rendering technical support to the products supplied by the parent/ group companies.
• 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

Best Option to Choose

Forming wholly owned subsidiary company in India is advisable. This is the most suitable form for foreign companies to enter into Indian Market. The Indian company will be the wholly owned by your Parent Company. 99.99% shares of the company will be hold by the Parent Company and one nominal share will be allotted to any other person just to meet the minimum member requirement. The Company will have to appoint a representative who will hold the shares on behalf of the company.

TIME FRAME:

Wholly Owned Subsidiary

Time Frame

Normally it takes 25 to 30 working days in the incorporation of a wholly owned subsidiary company in India.

Liaison/ Project/ Branch Office

Time Frame

For Approval of RBI – Normally it takes 45 to 60 days from the date of submission of application to get the approval

For registration with ROC –   15 Working Days