P A R Y & Co
P A R Y & CO

Foreign entities to establish in India

India is one of the favourable destinations among the foreign nationals, NRI’s and MNCs for the purpose of investment. A foreign company can set up their business ventures in India by incorporating a company under the Companies Act, 1956 through:

  • Joint Ventures; or
  • Wholly Owned Subsidiaries (WOS)

Percentage of holding in the Indian company will depend on the requirements of the investor, subject to equity caps as directed by the Foreign Direct Investment (FDI) policy of India.

In brief as per FDI policy of India, there is no requirement of obtaining any prior approval from Indian Government for the purpose of Foreign Direct investment (FDI) in activities covered under “Automatic route”, wherein FDI up to 100% is allowed, but FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. 

Further, a foreign company who is planning to set up business operations in India has also got the following options besides incorporating a company as mentioned above:
As an office of a foreign entity through:

  • Liaison Office / Representative Office
  • Project Office
  • Branch Office

Such offices can undertake activities permitted* under the Foreign Exchange Management (Establishment in India of Branch Office or other place of business) Regulations, 2000.

Some of the silent features of investment in India are as follows:

  • All foreign investments are freely repatriable except for the cases where NRIs choose to invest specifically under non-repatriable schemes. Dividends declared on foreign investments can be remitted freely through an Authorised Dealer.
  • As per the regulations/guidelines issued by the Reserve Bank of India/Government of India, investment can be made in unlisted shares of Indian companies.
  • NRIs/PIOs (but not foreigners) are allowed to set up partnership/ proprietorship concerns in India. Even for NRIs/PIOs investment is allowed only on non-repatriation basis.
  • A person resident outside India can freely transfer share/convertible debenture by way of sale to a person resident in India

P A R Y & Co. is providing services to its overseas clients from the last 15 years and assist foreign companies in setting up its operations in India. We at P A R Y believe that one needs to do a careful tax planning before opening a subsidiary, branch, joint venture, project office or liaison office in India. Our C&C Division offers its professional services in incorporating of a company or setting up of an office in India. We offer the following services to our clients:

  • Liaison with Foreign Investment Promotion Board (FIPB)
  • Assist in setting up of Liaison/Project/ Branch office of Foreign company
  • Assist in taking all other approvals for smooth establishment and operation of foreign entity in India.