A foreign company planning to set up business operations in India has the following TWO options:
1. AS AN INDIAN COMPANY
A foreign company can commence operations in India by incorporating a company under the Companies Act, 1956 through: a.
Joint Ventures; or
Wholly Owned Subsidiaries
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.
1. a) Joint Venture With An Indian Partner
Foreign Companies can set up their 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 which help smoothen the process of setting up of operations
1. b) Wholly Owned Subsidiary Company
Foreign companies can also set up wholly owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.
Incorporation of Company
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.
2. AS A FOREIGN COMPANY
Foreign Companies can set up their operations in India through: •
Liaison Office/Representative Office
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.
2. 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...
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