In the recent years a number of foreign organizations are establishing their business in India. This is mainly due to the investor friendly atmosphere across the nation. This has allowed most foreign investors to invest in India or start business. The entire process has become easier and faster. Today, the Government of India promotes foreign investment in different business sectors. The FDI limit has also been increased by the government in many sectors such as insurance, multi-brand retail, among many more.
FDI Services Offered
The firm holds significant know-how in assisting many Foreign Companies to establish their business in India. Our clients started their organizations after obtaining help provided by our professionals. Right from the initial stage of filing application to the authorities to the final start up of their office in the country, our professionals have assisted and counselled them.
The Firm also helps clients in the following areas:
The clients feel comfortable dealing with the Firm. With highly experienced and dedicated professionals including a panel of proficient Labour law consultants, Company Secretaries, Chartered Accountants, and Tax experts. The firm is competent in offering effective services in this area.
Business Setting in India
Automatic Route
The Government of India is making an attempt to simplify the ceremonial bottle necks and bureaucratic delays. Hence, it has allowed establishment of business by Foreign Companies sans any permissions and approvals from the Government. The government is also ensuring rights to repatriate their profits as well as various other funds.
The Government of India also issues notifications from time to time in order to notify the sectors / activities about permission granted for 100% Foreign Direct Investment. The announcement is made as per the rules of FDI Policy of Government of India.
In the event a foreign organization wishes to establish a business in one of the notified sectors as specified by the Government of India, the venture may not require formal approval from the Reserve Bank of India or the Government of India.
Government Approval Route
The route must be adopted by the Foreign Companies for starting up a business in India for activities not covered under the automatic route. These applications are placed before the following departments for final approval:
These days, the number of sectors under the above stated category is being reduced by the Government of India. This is a dedicated attempt by the government to open up the Business to the world. Hence, the cases covered under approval route may go through a consideration stage for clearances. Thereafter, they will go through the final decisions with respect to the requisite permissions within a reasonable time.
Any Indian corporation that has received FDI from a Foreign Company (under Automatic or the Government approval route) must report to the Government in the prescribed manner.
Required Details:
The above mentioned details should be submitted within 30 days from the date of receipt of the foreign inward remittances.
Stated below are some of the well known business models that have been provided a green signal by the Government of India for the Foreign Organizations to establish their operations.
Branch Office Model
Under this model, any Foreign Company incorporated overseas and engaged in trading, manufacturing, etc. for at least of five years, is permitted to establish branch offices in India through a detailed approval from the Reserve Bank of India.
These Branch Offices are permitted to serve as the representative offices in India for the parent / group foreign companies. Usually, the branch office is offered permission to indulge in the same activities in India, in which the parent company is initially engaged in its home country.
According to the Rules, a branch office is barred from performing manufacturing or dispensational activities in India directly or indirectly. Profits earned through branch offices are liberally repatriable from India. However, these are subject to payment of applicable taxes.
In order to establish a branch office in India, the parent foreign company should have a profit making financial record. This should exist for at least 5 years, in its parent country. The Foreign company should also have a total paid up capital of about USD 1, 00,000. This is necessary for establishing a branch office. Starting from the date of paper filing to getting permission for clearance, the process takes about 10 days to complete.
Liaison / Representative Office Model
According to the Rules, a Liaison office (Representative office) can take up only liaison activities in India for the parent Company. This indicates that it can act as an intermediary between the Parent Company in foreign countries abroad as well as the parties/customers in India.
These offices are not allowed to conduct business in India. This means that they are not permitted to earn profits or make income in India. The role of these offices is limited to:
The firm has helped clients from different countries to set-up liaison/representative offices in India. It is compulsory for a Foreign Company to invest a minimum paid up capital of 50,000 USD to start up a liaison office in India.
Project Office Model
The Reserve Bank of India is authorized to permit the requisite agreement to Foreign Companies so that they can establish their project offices in India, if the aspiring foreign company:
The project should also be funded by foreign inward remittance. The entity should also get a term loan from the bank in India or Public Financial Institution for the project.
The Firm has facilitated many Foreign Companies to establish project offices in India to execute high value infrastructure projects across the country.
Foreign Institutional Investor (FII)
These days, the Government of India has started the capital market for Foreign Institutional Investors (FII) to a certain extent. According to the Rules, the following can file an application for FII status in India:-
The regulatory body ‘Securities Exchange Board of India (SEBI)’ that regulates the Capital markets in India are authorized to act as the centre for the registration and acknowledgment of Foreign Institutional Investors.
The Reserve Bank of India (RBI) has legalized the above said SEBI registered FIIs to invest in Indian capital markets. This can be done under the Portfolio Investment Scheme (PIS).
The associates of the firm have assisted a number of foreign fund managing organizations to get registered as a Foreign Institutional Investor (FII) across India.
Law Intellect is a Delhi based full service law firm engaged in providing legal services to our corporate, Institutional, Individual and other clients.
Copyright © Law Intellect India Designed & Developed by Smanik Design . All rights reserved