Indian market is an ideal destination for foreign investors looking to promote and expand their businesses. Foreign Direct Investment (“FDI”) into the country has seen continuous surge and inflows of funds into India. However, there are many risks associated for a business when venturing into a new country with complex tax and regulatory regimes. This makes it imperative to understand Indian tax and regulatory laws before committing funds for business operations in India. Based upon nature of business operations, certain government approvals may be required before starting operations. Business entry mode and strategy always plays an important role in achieving the strategic objective.
Foreign Entities may commence business operations in India via following structures:
A foreign company, setting up an eligible business activity, may incorporate a wholly owned subsidiary (“WOS”) in India. This is a preferred business vehicle in case you wish to have limited liability and maximum control over the business operations. WOS may 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. To obtain a detailedlistof permissible activities under Indian foreign exchange regulations including the foreign direct investment policy guidelines, please do contact us at [email protected]. We assist in incorporating a WOS 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 JV with an Indian partner provides following advantages to a foreign investor:
Limited Liability Partnership (“LLP”) is a body corporate having limited liability and is a legal entity separate from that of its partners. LLP shall have perpetual succession. It‟s like a hybrid structure 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 certain taxadvantages over a company and is comparatively easier to manage with less compliance levels as compared to a company form of organization. To obtain a detailed list of permissible activities under Indian foreign exchange regulations including the foreign direct investment policy guidelines, please do contact us at [email protected]. We assist in incorporating a LLP in India.
Setting up a liaison (“LO”) or representative office is a common practice for foreign companies seeking to enter the Indian market. Operation of such offices is primarily limited to collecting information about the possible market and to provide 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 tomaintain itself. We assist in setting up liaison office of Foreign Entities in India.
As a Branch Office (“BO”) in India, foreign companies can wider range of activities than those permissible under Liaison Office structure. However, BO is not allowed to carry out manufacturing activities. To obtain a detailed list of permissible activities, please do contact us at [email protected]. We assist 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”). Subject to applicable conditions, the PO may be set-up with or without prior approval from the Reserve Bank of India. These offices can only undertake an activity related and incidental to execution of the specified project. To obtain a detailed list of permissible activities, please do contact us at [email protected]. We help in setting up a Project Office of Foreign Entities in India.