How to Invest in India

How to Invest In India?
Investment in India is an opportunity- an opportunity to take strides in business and multiply the profits in geometric progressions. World has now recognize the potential of India and that is why streams of investment is flowing in India.How foreign investors can make entry? There are different entry options for foreign investors. Foreign company or a firm which is planning to invest in India has following options Under companies’ act 1956; foreign company can incorporate a company through:

• Joint Venture or
• Wholly owned Subsidiary.In such Indian companies, foreign equity can be up to 100% depending on the requirements of the investor. However this is subject to equity caps in respect of the sector/area of activities under the FDI policy.


Foreign companies can also make entry through
• Office/Representative Office
• Liaison Project Office
• Branch Office


The activities of such offices are subject to Foreign Exchange Management Regulations, 2000 (Establishment in India of branch or office of other place of business).

Incorporating the Company
Foreign company in order to register or incorporate a company has to file an application with the Registrar of Companies (ROC). After the registration is completed, such company is treated as an Indian company and is subject to Indian laws and regulations as applicable to other domestic Indian companies.Look for further information: http://dca.nic.in/

Liaison Office or Representative Office
Approval to set liaison office in India is given by Reserve Bank of India.The liaison office can collect information about possible market opportunities and furnish information about the company and its products to prospective Indian customers. The office can also help promote import and export from and to India. It can also assist technical and financial collaboration between the parent company and companies in India. A liaison office however is forbidden to undertake any commercial activity directly or indirectly and cannot, therefore, earn any income in India.


Project office
Foreign companies which are executing or planning to execute any project or projects in India can set up temporary project/site offices in India. The permission is granted by RBI. Foreign entities can establish their project office in India under specific conditions. Offices are however only allowed to carry on activity that is related to particular project. They are also allowed to remit the profit of the project on completion outside India.


Branch office
Foreign manufacturing and trading companies can set up Branch Offices in India for the following purposes:•

• For Exporting and importing of goods.


• To provide professional or consultancy services.


• To carry out research work in which the parent company is engaged.


• Can promote technical or financial collaboration between Indian companies and parent or overseas group company.


• Act as buying or selling agent for the parent company


• Providing service in the field of Information and technology, and developing software• Providing technical support to the products supplied by the parent/group companies.


• Foreign airline/shipping Company.

A branch office can be set up after receiving permission from RBI. These offices can’t engage themselves in manufacturing activity directly. However they can subcontract these to an Indian manufacturer. They are allowed to remit outside India the profit of the branch net of applicable Indian taxes and subject to RBI guidelines.Branch Office on Stand-Alone Basis in SEZThe activity of such branch offices is restricted to SEZ. They can undertake manufacturing and service activities, subject to specified conditions.No approval shall be necessary from the RBI for a company to establish a branch/unit in SEZs. These branch offices are however not allowed to take any business activity/transaction outside SEZ.To obtain such permission the company must submit form FNC 1 available at RBI website at http://www.rbi.org.in/.


Investment in a Firm by NRIs
Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) can invest by contributing to the capital of a firm or a proprietary concern in India on non-repatriation basis provided:The invested amount should be on the basis of inward remittance or out of specified account types (NRE/FCNR/NRO accounts) maintained with an Authorized Dealer (AD).The amount so invested in the firm should not be one engaged in any agricultural/plantation or real estate business.The invested amount is not eligible for repatriation outside India. NRIs/PIOs can invest in sole proprietorship concerns/partnership firms with repatriation benefits with the approval of Government/RBI.


Investment in a Firm or a Proprietary Concern by Other than NRIs
Only NRI/PIO are allowed to invest in India are allowed to invest through contribution to the capital of a firm or a proprietorship concern or any association of persons in India. Investors other than NRI may apply for such investment with RBI. The RBI may grant such permission to a person resident outside India to make such an investment subject to such terms and conditions as may be considered necessary.