India is considered one of the most preferred destinations to set up and run a business due to various reasons which include its demographic profile, availability of skilled resources, technological developments, innovations and huge demand for all kinds of products and services. The recent growth of E-commerce and the Digital India initiative has further acted as a shot in the arm towards improving the business environment of the country. The government of India has also been making several efforts to improve the ease of doing business, relaxing entry norms, providing incentives, rolling out various schemes etc., to attract foreign investment in India.
There are various business forms through which foreign entities can establish a presence in India, the choice of which depends entirely on the end goals to be achieved.
1. Incorporating a new Indian Company
A foreign company can establish its presence in India by incorporating a new:-
A wholly-owned subsidiary is typically formed as a Private Limited Company. Incorporating a wholly owned subsidiary can result in ownership, control, business diversification and internalisation benefits.
A JV is an arrangement between a foreign entity and an Indian partner to have joint ownership and control over the management and affairs of a new JV company.
Overseas entities have to go through a sequence of activities before starting a new entity and also ensure regulatory compliances. The process starts with analyzing the proposed business activity from FEMA (Regulator’s) perspective if it falls under the automatic/approval route, the sectoral caps, deciding the right entity structure and incorporating the Company as per the provisions of Company Law. Once the Company is incorporated, the other mandatory registrations (PAN, TAN, GST), Employment and Establishment related registrations and reporting to the regulator have to be undertaken before commencing operations.
A liaison office is a representative office that acts as a channel for communication between a foreign parent company head office and parties in India. It is a modest structure with no separate legal standing of its own and is simply an extension of the overseas head office. To establish a liaison office in India, the non-resident entity must have a track record of profit-making in the immediately preceding three financial years in its home country and a net worth of at least USD50,000 or its equivalent. A liaison office can only undertake minimal business activities in India.
A branch office is an extension of the overseas head office with a right to generate income in Inia. It is a simple structure with no separate legal standing of its own. It typically engages in similar activity as that of its parent company. To establish a branch office in India, the non-resident entity must have a track record of profit-making during the immediately preceding five financial years in its home country and a net worth of at least USD100,000 or its equivalent. Branch offices are permitted to undertake a variety of activities in India. Profits earned by a branch office can be freely repatriated from India, subject to the payment of any applicable taxes and compliances under FEMA.
A project office is a place of business in India representing the interests of a foreign company executing a project in India. Non-resident companies can generally establish project offices in India, provided they have secured a contract from an Indian company to execute a project in India. The project must have secured the necessary regulatory clearances. The advantages of a project office include its co-terminus with the project being executed.
Liaison offices, Branch offices and Project offices in India must be registered with the Registrar of Companies before commencing operations.
Resident Indian Director/Resident Authorised Representative/Resident Designated Partner – The Indian laws mandate that every Company/Branch Office/LLP shall have at least one Director/Authorised Representative/Designated Partner resident in India for a total period of not less than one hundred and eighty-two days. As a support service, we can assign a qualified professional to meet this compliance requirement for your Indian entity and also to enhance your management team.
Nominee Shareholder Services – Incorporation of a Company in India requires a minimum of two shareholders. In case you are facing issues with nominating a shareholder to represent and protect your interest, we can provide a corporate or individual shareholder on your behalf.
Registered Office Services – At the time of Incorporating an entity, it is mandatory to provide an address In the city in which Registered Office is set up. It may be challenging to identify premises for the Registered house. We can offer the client the most economical option. SimplyBiz team has experience in providing business set-up services for entities from the USA, Singapore, Australia, Norway, Malaysia, Philippines, Japan and various other countries and we continue to provide ongoing support to them. Our team members have also been nominated as Directors on the Board of various companies. We have also assisted in setting up a Liaison office and Branch office in India. We have a dedicated team, consisting of professionals with immense experience and expertise to advise and implement business set-up in India. Post set up, we hand-hold companies and provide them end-to-end managed services support covering Compliances under various laws, Book Keeping, Accounting, Payroll and Tax services so that you can focus on your core business.Please reach us at firstname.lastname@example.org with your requirements and we shall be happy to help.