For a foreign company, establishing a branch in India comes with many perks under Make In India, Invest India and other government initiatives. These schemes are designed to invite Foreign Direct Investment or FDI in India. Establishing a branch in India requires additional documentation for the companies who have headquarters in other nations. Using services of the M&A consulting firms in India are the best way to complete the documentation before opening the branch.
Please note that Reserve Bank of India holds power to allow or disallow any company to establish a branch in India. Thus it is essential to get the RBI’s permission first with proper documentation before you hunt for location and other options. The following points can help you in establishing a branch in India.
1. Eligibility criteria
You need to comply with the Companies Act 1956, Companies Act 2013 and the Foreign Exchange Management Act, 1999 (FEMA) to open an office in India. The eligibility criteria require the company to have a net worth of $100,000 or more along with financial track record for the last five years in the country where the business initially belongs to.
2. Application form
You can find the application form on RBI’s website on this link. In case your company is eligible for 100% FDI in India RBI processes it. In case it does not fall in that category you need approval from RBI as well as the Ministry of Finance. You can take help of the M&A consulting firms in India to complete the application process.
3. Documentation
You need the following documents:
o Attested business certificate or incorporation certificate or Articles of Memorandum.
o Balance sheet audited by a registered accounting firm.
o KYC documents.
o Details about the source of funding
o Address proof.
o Identity proof of the board members.
RBI may ask for additional documents as well.
4. Activities permitted at a Branch Office
The RBI has issued guidelines for every type of company concerning the branch offices. The branch offices cannot indulge in processes like manufacturing of the goods. Some of the permitted activities are:
- Trading in imports and exports.
- Acting as seller or buyer on behalf of the headquarters.
- Consultancy services.
- Research is already a part of the parent company.
- Technical support for the customers of the parent company in India.
The government of India has launched multiple programs to invite foreign direct investment. In many sectors 100% FDI is allowed which makes it easier for the companies to operate in India. However, there are specific rules and regulations which you need to follow to pursue a business in India. From documentation to hunting for the right location there are many aspects which should be taken into consideration. Reserve Bank of India modifies the guidelines for foreign entities to make the process easier for you. It is essential to stay alert about the new norms which you may need to follow to continue your business in India.
India is a massive market with much potential. With more than 1.3 billion people and trillions worth of GDP, India can become the biggest market for your product and services. Establishing a branch in India is essential to provide the required support to the customers in India which can further enhance the chances of flourishing in the country. It is the best practice to hire a good business consultancy services in India so that you can comply with the rules and regulations properly.
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