ENTRY STRATEGY INTO INDIA

In September 2014, the government increased the foreign investment upper limit with an aim to promote India as an investment Destination and a global hub for providing unlimited business opportunities. The forms of doing business in India by the foreign entities are as follows:

Branch office

Foreign company having a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent can open Branch office in India to carry out any full fledge business operation in India.

Liaison Office

Liaison office is most basis form of business presence of Foreign Company in India. Basically Liaison office does not carry any full fledge business activity in India but only to act s channel of communication between its head office & Entities in India with whom foreign company want to do business.

Foreign Company having a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent can open Liaison office.

Project Office

A foreign Company want to execute any specific Project in India can do so by set up of project office in India. A foreign company may open project office/s in India provided it has secured from an Indian company, a contract to execute a project in India, and

  • The project is funded directly by inward remittance from abroad; or
  • The project is funded by a bilateral or multilateral International Financing Agency; or
  • The project has been cleared by an appropriate authority; or
  • A company or entity in India awarding the contract has been granted term loan by a Public Financial Institution or a bank in India for the Project.

After the completion of the project, the surplus funds can be repatriated back to the parent company.

Joint Venture

A Joint Venture may be defined as any arrangement whereby two or more parties co-operate in order to run a business or achieve a commercial objective. There are presently two options available for establishing a Joint Venture in India.

  • Contractual Joint Venture: – In Contractual Joint Venture there is co-operative agreement or strategic alliance to work together for a particular project or assignment. In Contractual Joint Venture the parties do not share ownership of the business entity but each party exercise some elements of control in joint venture
  • Equity Based Joint Venture:- In Equity Joint Venture a separate legal entity is formed and ownership of entity is shared by the all the joint venture parties. The form of business entity owned may very- company, limited liability partnership, trust, venture funds etc.

Wholly Owned Subsidiary

A Foreign company wants to start eligible business entity in India may register wholly owned subsidiary (WOS). WOS is best business vehicle available for those who do not want to share control over the business and wants to have limited liability.

Limited Liability Partnership

Limited Liability Partnership firm is new form of Partnership firm which have its own special feature i.e. Separate Legal entity,  Limited Liability, perpetual succession. After 2015 Government approved FDI in LLP is allowed in sectors activities where 100% FDI is allowed under the automatic route and there are no FDI-linked performance related conditions, subject to approval of government

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