100%/51% SUBSIDIARY OR JOINT VENTURE COMPANY IN INDIA WITH INDIAN PARTNER:
Generally a Joint Venture (JV) is a way to enter the Indian market in sectors where in there is a legal requirement for a local partner or there is a % cap on foreign investments. But a foreign company with eligibility for a 100% subsidiary can also go through a Joint Venture (JV). A foreign company can set up their operations in India in any sector, except for a 100% ban on foreign investment like defence, agriculture etc., by a strategic alliance with an Indian partner company. As all the other companies, the Joint ventures are also formed under the Companies Act, 1956. A Joint Venture can exist in with a present Indian company or a new entity with an Indian partner(s). In any of the circumstances, the Indian company, existing or new, has to come forth the Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India, with the foreign partner company with a request intended for approving the planned foreign investment in the specific business and sector.
We Offer following Services:
Finding a Joint Venture partner company for an interested Indian company or finding a partner company for interested foreign company.
Managing finances, Tax and compliances management, repatriation of funds to the foreign entity, etc.
Support in acquiring office space, infrastructure, property for building a manufacturing unit, liaison with the government offices local, state and central if and as required, etc.
Advice on Foreign Exchange Law Matters, Corporate Structuring, Rules & Taxation
RULES TO SET-UP LIASON (REPRESENTATIVE) OFFICE, PROJECT OFFICE OR BRANCH OF FOREIGN COMPANY IN INDIA:
Apart from the conventional approaches like Joint Ventures and Wholly Owned Subsidiary, a foreign company has few other approaches where in there is not much of an investment but the presence in Indian market can be achieved by a Liaison office or a branch office or a project office.
Offices
Liaison
Branch
Project
RBI Denotation
‘Liaison Office’ means a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial /trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel.
If a foreign business desires to commence trading or business-related conduct in India exclusive of establishment of a company/ investing into an Indian business, the foreign company has an option to open a branch with respect to the approval from RBI.
‘Project Office’ means a place of business to represent the interests of the foreign company executing a project in India but excludes a Liaison Office.
Permitted Action
A representation of the parent company in Indian market.
Endorsement of import-export to and from India worldwide.
Endorse techno-financial partnership between foreign group and/or individual companies the companies in India.
As the name suggests, the office is for liaison channel between two or more parties.
Unlike Liaison office, branch office can carry out imports and exports to and from India to any other country with prior perception of legal authority.
Provide qualified and specific consultancy services.
Endorse techno-financial partnership between foreign group and/or individual companies the companies in India.
The branch can also represent itself as a buying and selling agent for its parent company.
IT and software development is also a part of provisions that a branch office can follow.
The branch office is allowed as technical support advisor of the products supplied by the parent company or a group of companies.
Can process operations as a foreign airline/shipping business.
A foreign company can start a project office in India for the period of the contractual project taken up by the Indian company. This does not require permission from the RBI for proceeding.
A project office has the authority and ability of operating a bank account in India for a period of its presence.
Incurred expenses can be satisfied only by inward remittance under the authorised contractor.
An outward remittance is permitted under special circumstances subject to prior approval and meets the obligation requirements.
Sanction/Incorporation
An official application on the respective form provided by RBI is to be submitted by the foreign company.
Processing: 3-4 weeks.
There is restriction of monetary earnings for a liaison office in India. All the expenses are to be incurred by the head office in the parent company in the parent country.
An official application on the respective form provided by RBI is to be submitted by the foreign company.
Processing: 4-5 weeks.
A registration at the RoC is required to be done by the foreign company.
Ones approved by RBI, the branch office can operate bank accounts for the purposes such as meeting expenses and repatriate profits incurred by the business in India after some compliance are met.
Unlike other two offices, a project office does not require the approval from RBI but needs to comply with some conditions.
The funding for project and project office is to be availed directly from inward remittance.
An international financing agency, bilateral or multilateral, is the fund house for the project.
The project is approved by relative authority.
The Indian counterpart to whom the project is allotted has acquired a term loan from by PFI or bank in India.
Anything not mentioned above is the case should be approved by RBI.
Taxation
No business transaction(s) and/or trading activities where in there is any income are not allowed. But the company is liable to file returns as per Income Tax Act u.s 139(1).
Income earned is taxable in India under the Income Tax Act 1961. The company needs to file in the taxes as complied to any Indian company just with some provisions applicable to a foreign entity.
Income earned is taxable in India under the Income Tax Act 1961. The company needs to file in the taxes as complied to any Indian company just with some provisions applicable to a foreign entity.
Exit Options
An application to the regional office of RBI, the office can be closed within 5-6 weeks, when submitted with all the requirements satisfied.
An application to the central office of RBI, the office can be closed within 6-8 weeks, when submitted with all the requirements satisfied.
If the project office is under RBI approval route, an application to the regional office of RBI, the office can be closed within 5-6 weeks, when submitted with all the requirements satisfied. If it is a general route project office then the office is to inform the dealer before closing.
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