The way for foreign establishments to come in India and do business was never so easy but thanks to the new lofty policies introduced by the government, the foreign investment has again gained pace. A foreign company can do business in India in the following ways:
1. Enter as an Indian company – an overseas firm can start working by registering under private or public limited company under Company’s Act, 2013 in either of the ways described below:
2. As a JV – They can form a JV or Joint Venture with an Indian firm in the partnership in the ratio of 51:49 where the maximum ratio is held by an Indian firm or an Indian partner.
3. Wholly owned subsidiary (WOS) – This mode is open in the areas where 100-percent FDI has been allowed by the government. In this mode the foreign company can hold 100 percent ownership with them.
In order for companies to register, an application needs to filed with ROC or Registrar of Companies. Once a foreign company completes the due diligence and registers itself with ROC, it becomes subject to all the laws that are applicable to any Indian company. For example, labour law, PF, ESI, tax etc., all have to be as per defined Indian standards.
1. As a foreign company – They can also set up their base in India by either of the following ways:
2. Liaison office – Also known as representative office, they act as connecting link between the head office and its entities in India. They cannot indulge in any commercial activity, their role is to study the market in India and disseminate the information to the parent company. It can only can export or import from or to India and also helps in aiding the technical partnership between the parent company and companies of India.
3. Branch offices –This way is the best for those foreign companies who are in the business of manufacturing and trading. It serves the following purpose:
- Export and import of goods
- Carry research work
- Consultancy services
- Rendering technical support to the products supplied by the parent/group companies.
- Promoting technical collaboration between the parent company and other companies in India
- Rendering IT services in India