Setting up Business in India

Setting up business in India is now very easy and is developing rapidly. Indian Government is offering many facilities to multi-national companies in every sphere of business. Indian market is very attractive because it’s growing population is largely untapped.

Provisions of doing Business in India

Foreign investors can operate business in India in the following manners:

Wholly owned Subsidiary Company

In India, a foreign company can be incorporated as a wholly owned subsidiary company. Under the provisions of the Companies Act 1956 a foreign company is only allowed to incorporate as a private limited company within the purview of the Companies Act 1956.

Branch Office

Foreign company manufacturing and trading in goods and providing services in India can open a branch office for the purpose of:

Exporting and importing goods
Providing professional and consultancy services
To do research on product/service in which the principal company is involved
Creating technical and financial collaboration between Indian and Foreign Companies
To represent the foreign company in India
Engaged in Information technology in India
Developing software in India
Providing technical support for the products supplied by the principal company
Foreign Airline/Shipping Company

Generally, RBI is giving permission to the foreign companies to open a branch office in India when they are engaged with any of the above activities.

Project Office

If foreign companies wish to carry on a business for a limited period of time they may open a project office. A project office is a place of business to carry out the business of a foreign company in India excluding a Liaison Office. A Site office is an office which is built at the site of the project. It is generally considered as a sub-office of a project office.

Liaison Office

A Liaison office is a go-between Indian consumers and the Foreign Company. A liaison office cannot act as a commercial enterprise or engage itself in any profit making activity.

A liaison office is permitted to carry out the following activities:

Representing in India the foreign company
Promoting export/import
Promoting collaboration between the foreign company and the Indian Company

Joint Venture

In India, for joint ventures it is better to set up a private company as it is exempt from some very strict compliance as compared to a public limited company.

Companies may be established in the following ways:

Setting up a company in collaboration with an Indian partner
Setting up a company in collaboration with a publicly listed company