Business Setup India
Business Setup in Mumbai
India stands as one of the fastest-growing economies in the world, offering a thriving market, a large pool of skilled professionals, diverse customer segments, and an improving ease of doing business. These factors make India an attractive destination for foreign direct investment (FDI), driving significant inflows annually.
Foreign companies are a major source of FDI, often establishing their operations in India to tap into this dynamic market. Recognizing the pivotal role of FDI in accelerating India’s journey toward becoming a developed nation, the Indian government has significantly eased restrictions and simplified processes. This proactive approach encourages more foreign investments, strengthening the economy and promoting sustainable growth.
Establishing an Indian Entity
Establishing an Indian Entity
- Joint Venture Company
A joint venture company allows foreign entities to partner with an Indian business to undertake a commercial enterprise together while maintaining their separate identities. This structure is ideal for activities such as manufacturing, marketing, and sales in the Indian market on behalf of the foreign entity.
- Wholly-Owned Subsidiary
A wholly-owned subsidiary is a company in which 100% equity shares are owned by a parent company. This structure is permitted in sectors that allow 100% Foreign Direct Investment (FDI) under the FDI policy established by the Department for Promotion of Industry and Internal Trade (DPIIT). Depending on the sector and applicable equity caps, such subsidiaries can be set up under the automatic route, without requiring prior government approval.
- Limited Liability Partnership (LLP)
Foreign investors can also establish their business in India through a Limited Liability Partnership (LLP), which combines the benefits of a corporate structure with the flexibility of a partnership. The FDI policy now allows foreign entities to invest in LLPs, making it a viable option for establishing business operations in India.
Registration of Indian Subsidiary Company
Advantages of Opening an Indian Subsidiary in India by Foreign Promoters
Incorporating an Indian subsidiary in India is a popular and advantageous option for foreign promoters to start a business in India. The process of setting up an Indian subsidiary is straightforward, and foreign promoters do not need to visit India for incorporation. A foreign company can hold 100% of the shares in an Indian subsidiary, subject to FDI regulations. Many sectors fall under the 100% FDI limit, making it a viable option for foreign businesses looking to expand operations in India.
Advantages of Establishing an Indian Entity
Advantages of Establishing an Indian Subsidiary by Foreign Promoters
Foreign promoters benefit from the streamlined process of incorporating an Indian subsidiary, which enables them to establish a business presence in India efficiently. The Reserve Bank of India (RBI) has granted general permission for foreign companies to establish project offices in India under certain conditions:
- Securing a contract with an Indian company to execute a project.
- Project funding through inward remittance from abroad.
- Financing from a bilateral or multilateral international agency.
- Clearance of the project by an appropriate authority.
- The Indian entity awarding the contract has obtained a term loan from a public financial institution or bank for the project.
Requirements to Establish an Indian Subsidiary
- A minimum of two directors is required, with at least one being a resident of India.
- At least two shareholders are necessary.
- Foreign promoters can own 100% of the shares in the Indian subsidiary.
- There is no minimum capital requirement to incorporate a company.
- A registered office address must be provided as the company’s official address.
Document Requirements for Setting Up an Indian Subsidiary by Foreign Promoters
For Indian Nationals
- PAN Card
- Aadhaar Card
- Passport-sized photograph (JPEG format)
- Identity Proof (Copy of either Voter ID, Passport, or Driver’s License)
- Address Proof (Copy of either Bank Statement, Telephone/Mobile Bill, or Electricity Bill)
For Foreign Nationals
- Passport Copy
- Address Proof (Copy of either Bank Statement, Telephone/Mobile Bill, or Electricity Bill)
- If the shareholder is a foreign company:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Certificate of Incorporation of the foreign company
- Board Resolution to appoint an authorized representative and nominee for the Indian subsidiary
Note: All documents, including MOA, AOA, Certificate of Incorporation, Board Resolutions, Passport Copies, and Address Proof, must be in English and duly apostilled and notarized in the home country.
At Gyani Advisory, we offer comprehensive, end-to-end services to help foreign promoters establish Indian subsidiary companies. Our team provides personalized consultations to address client queries and ensures a seamless company formation process. With a commitment to professionalism, ethical standards, and transparency, we deliver quality services with integrity and respect for your time. Contact us for expert assistance in setting up your Indian subsidiary.
Establishing a Foreign Company in India
To establish a foreign company in India through a Liaison Office, Project Office, or Branch Office, prior approval is required from the Reserve Bank of India (RBI) and/or the government. Only corporate entities incorporated outside India are eligible to set up these offices.
Liaison Office
A liaison office, also known as a representative office, acts as a communication bridge between the foreign entity and its Indian counterparts. Its purpose is to gather information about market opportunities and promote the parent company’s business without engaging in any income-generating activities.
Permitted Activities for a Liaison Office:
- Representing the parent company or group companies in India.
- Promoting technical or financial collaborations between the parent company/group companies and Indian entities.
- Collecting market intelligence and sharing it with the parent company.
- Providing information about the parent company’s products and services to prospective customers or vendors in India.
Prohibited Activities for a Liaison Office:
- Generating income or undertaking commercial, trading, or industrial activities.
- Signing contracts or agreements on behalf of the parent company.
- Lending, borrowing, or charging fees or commissions.
Branch Office
A branch office enables a foreign company to carry out specific business activities in India, such as importing/exporting goods, providing consultancy services, or facilitating technical collaborations.
Permitted Activities for a Branch Office:
- Import/export of goods and merchandise.
- Promoting technical or financial collaborations between Indian companies and the parent entity.
- Providing consultancy, advisory, and professional services.
- Supporting software development and IT services.
- Acting as an authorized buying/selling agent for the parent company.
- Offering technical support for products from the parent or group companies.
Restrictions on Manufacturing:
A branch office cannot directly engage in manufacturing activities but can subcontract such activities to Indian manufacturers. Profits generated by the branch can be repatriated abroad, subject to RBI approval and Indian tax compliance.
Project Office
A project office is a temporary establishment set up to execute a specific project in India. It is akin to a branch office with a focused purpose.
Conditions for Establishing a Project Office:
- A contract has been secured from an Indian company.
- The project is funded through inward remittances or by international financing agencies.
- Approval has been granted by the relevant authority.
- The Indian company awarding the contract has obtained a term loan from a public financial institution or bank.
Restrictions:
Project offices must strictly limit their activities to those necessary for executing the specified project.
Our Services
Our team of experts can assist with the entire process of establishing a foreign company in India, including:
Business entry advisory and guidance on selecting the appropriate business structure.Obtaining licenses, registrations, PAN, and TAN.
- Preparation and filing of incorporation documents.
- Legalization and attestation of documents.
- Filing applications with the RBI through Authorized Dealer banks.
- Verification of KYC documents from the parent company’s banker.
- Registration of foreign company offices with the ROC.
- Drafting charter documents like the Memorandum and Articles of Association.
- Assistance with intellectual property registrations (trademarks, patents, etc.).
- Providing secretarial, administrative, and post-incorporation services, including accounting, bookkeeping, payroll, auditing, taxation, and more.
- Ensuring RBI and other statutory compliances.
