Starting Business In India

Services for Non-Indian entities Foreign Enterprises Starting Business In India

  1.  Setting up of liaison office in India as representative/marketing office by taking approval from Reserve Bank of India, the apex bank in India.
  2.  Setting up of foreign branch office in India by taking approval from Reserve Bank of India
  3.  Registration of subsidiary company of foreign enterprise under the Companies Act, 1956
  4.  All compliances under related acts and regulations
  5.  Due diligence of Indian entities to ascertain their financial status and regulatory compliance
  6.  Foreign Investment Promotion Board related approvals

 

Liaison Office / Representative Office in India:-

A Liaison Office (also known as Representative Office) is set up primarily to explore and understand the business and investment climate. It is permitted to undertake the following activities only:

  1. Representing the parent Company in India
  2. Promoting export / import from / to India
  3. Promoting technical / financial collaborations between the parent company and companies in India
  4. Acting as a communication channel between the parent company and its present or prospective customers in   India

Liaison office is subjected to certain restrictions such as:

  1. The Liaison Office cannot carry any business activity or earn income in India.
  2. Its expenses must be met through inward remittances from parent office outside India.
  3. Though it is not subjected to taxation in India, liaison office is required to withhold taxes from certain payments.
  4. It cannot borrow, lend money, or accepts deposits.

Any foreign company intending to open a Liaison Office in India is required to obtain prior approval from the Reserve Bank of India, the apex bank in India. Approval is usually granted for one to three years and can be renewed on expiry thereof.

 

Branch Office of foreign company in India:

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

  1. Undertaking export or import of goods
  2. Rendering professional or consultancy services
  3. Carrying out research work, in which the parent company is engaged (provided that the results of the research work are made available to the Indian Companies)
  4. Promoting technical or financial collaborations between Indian companies and the parent 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/ overseas group companies
  8. Foreign airlines/shipping companies

Branch offices are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property.

Branch office is subjected to certain restrictions such as:

  1. Retail trading activities of any nature is not allowed in India.
  2. It is not permitted to carry out manufacturing activities in India either directly or indirectly.
  3. Partnership / Proprietary concerns set up abroad are not allowed to establish Branch Office in India

Branch offices are considered a part of the foreign company and are not treated as a separate legal entity. The foreign parent company is liable for the acts of the branch office.

Profits earned by the branch offices (net of applicable Indian income tax) are freely remittable from India.

Any foreign company intending to open a Branch Office in India is required to obtain prior approval from the Reserve Bank of India, the apex bank in India. Approval is usually granted for one to three years and can be renewed on expiry thereof.