Options for Setting Up an Office in India

A foreign company planning to set up business operations in India has the following options for entry:

AS AN INDIAN COMPANY:

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

1. Joint Ventures: Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners. The advantages here are more in business terms i.e established setup and local contacts etc.. Foreign equity in such Indian companies can be up to 100% depending on the requirements of the investor, subject to equity caps in respect of the area of activities under the Foreign Direct Investment (FDI) policy.
2.  Wholly Owned Subsidiaries: Foreign companies can also set up wholly owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.

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.

AS A FOREIGN COMPANY:

Foreign Companies can set up their operations in India through:

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 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.
2. Project Office: Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. Reserve bank of 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
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:
   • 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 etc.

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).

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. Approval for establishing a liaison office in India is granted by Reserve Bank of India (RBI)

While all the above options exist for any global firm eying Indian market, there is a need for deeper understanding to assess the relevance.

BANK ACCOUNT OPENING: There are a large number of national and global banks to choose from for opening a bank account which is a fairly simple process.

GOING CONCERN: India limited companies are required by law to place on public record their statutory annual accounts, which must often be audited. These must comply with a range of detailed disclosure requirements set out in the Indian Companies Act.

There is a large number of firms/CA in India, who can assist ONE to register or setup a LEGAL ENTITY in India. At Expand in India, as part of our motto to assist global firms Expand in India, we too assist them to setup legal business entity in India in a form which is best suited to their business objective.

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