| India
Entry Options for foreign Investors |
[These are excerpts from Manual on FDI released
Govt. of India]
A foreign company planning to set up
business operations in India has the following
options : |
| I
- AS AN INCORPORATED ENTITY |
By
incorporating a company under the Companies Act,1956
through
a) Joint Ventures; or
b) Wholly Owned Subsidiaries
Foreign equity in such Indian companies can be
up to 100% depending on the requirements of the
investor, subject to any equity caps prescribed
in respect of the area of activities under the
Foreign Direct Investment (FDI) policy.
For registration and incorporation, an application
has 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. For details please visit the website
of Ministry of Company Affairs at http://dca.nic.in
|
| II - AS AN UNINCORPORATED
ENTITY |
As a foreign
Company through
a) Liaison Office/Representative Office
b) Project Office
c) Branch Office Such offices can undertake activities
permitted under the Foreign Exchange Management
(Establishment in India of Branch Office of other
place of business) Regulations, 2000.
|
| LIAISON OFFICE/REPRESENTATIVE
OFFICE |
| The role of liaison
office 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. Liaison
office can not undertake any commercial activity
directly or indirectly and can not, therefore, earn
any income in India. Approval for establishing a
liaison office in India is granted by Reserve Bank
of India (RBI). |
| PROJECT OFFICE |
| Foreign Companies
planning to execute specific projects in India can
set up temporary project/site offices in India.
RBI has now granted general permission to foreign
entities to establish Project Offices subject to
specified conditions. Such offices can not 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. |
| BRANCH OFFICE |
Foreign companies
engaged in manufacturing and trading activities
abroad are allowed to set up Branch Offices in India
for the following purposes:
a) Export/Import of goods
b) Rendering professional or consultancy services
c) Carrying out research work, in which the parent
company is engaged.
d) Promoting technical or financial collaborations
between Indian companies and parent or overseas
group company.
e) Representing the parent company in India and
acting as buying / selling agents in India.
f) Rendering services in Information Technology
and development of software in India.
g) Rendering technical support to the products supplied
by the parent/ group companies.
h) Foreign airline/shipping company.
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). |
| BRANCH OFFICE ON
“STAND ALONE BASIS” IN SEZ |
| Such Branch Offices
would be isolated and restricted to Special Economic
Zone (SEZ) alone and no business activity/ transaction
will be allowed outside the SEZs in India, which
include branches/subsidiaries of its parent office
in India. No approval shall be necessary from RBI
for a company to establish a branch/unit in SEZs
to undertake manufacturing and service activities
subject to the following conditions: a) Such
units are functioning in those sectors where 100%
FDI is permitted,
b) Such units comply with part XI of the Company’s
Act (Section 592 to 602),
c) Such units function on a stand-alone basis,
d) In the event of winding up of business and
for remittance of winding-up proceeds, the branch
shall approach an authorized dealer in foreign
exchange with the documents required as per FEMA.
|
| Procedure for Liaison
office/Project office/Branch office |
| Application for
setting up Liaison Office/ Project Office/ Branch
Office may be submitted to Chief General Manager,
Exchange Control Department(Foreign Investment Division),
RBI Central Office, Mumbai-400001, in form FNC 1
(available at RBI website at www.rbi.org.in ) |
| INVESTMENT IN A FIRM
OR A PROPRIETARY CONCERN BY NRIS |
| A Non-Resident
Indian or a Person of Indian Origin resident outside
India may invest by way of contribution to the capital
of a firm or a proprietary concern in India on non-repatriation
basis provided,
a) Amount is invested by inward remittance or
out of NRE/ FCNR/NRO account maintained with Authorized
Dealer (Bank)
b) The firm or proprietary concern is not engaged
in any agricultural/plantation or real estate
business i.e. dealing in land and immovable property
with a view to earning profit or earning income
there from.
c) Amount invested shall not be eligible for repatriation
outside India.
NRIs/PIO may invest in sole proprietorship concerns/
partnership firms with repatriation benefits with
the approval of Department of Economic Affairs,
Government of India /RBI.
|
| INVESTMENT IN
A FIRM OR A PROPRIETARY CONCERN BY OTHER THAN NRIS |
| No person resident
outside India other than NRIs/PIO shall make any
investment by way of contribution to the capital
of a firm or a proprietorship concern or any association
of persons in India.
The RBI may, on an application made to it, permit
a person resident outside India to make such investment
subject to such terms and conditions as may be
considered necessary.
|
| Contact
us for a latest and more details
at info@excelict.com, |
| |
