The companies located around the globe are always on a lookout for an ideal place to expand their business and create a mark for themselves. Being the fifth largest economy in the world, India has emerged as a quintessential business center offering growth prospects, development, immense human potential as well as profits in the future. To begin these global expansion companies creates a fail-proof market entry strategy. Ideally, there are two ways in which foreign companies can enter Indian markets, i.e., opening a branch office /manufacturing plant set up in India and Company registration in India. Please read further to understand these two methods better.
Branch office /manufacturing plant set up in India.
Global companies involved in trading and manufacturing activities are allowed to set up a branch office as well as a manufacturing plant setup in India. However, the offices can be opened only for the limited purposes mentioned below:
• Consultancy services or Rendering professionals
• Providing technical support
• Foreign shipping or an airline company
• Promotion of financial, technical partnerships between parent/overseas group/ foreign companies with Indian Companies
• Offering Information Technology (IT) and software development services in India
• Export of Import of goods and services
• Research center of a parent company
• Representing the parent/global company in India acting as a selling or buying agent in India
Foreign companies can choose manufacturing plant set up in India as a compelling option, but they are not allowed to carry out the manufacturing activities in India. The global companies are supposed to give a subcontract to Indian Manufacturing companies to carry out manufacturing activities. The permission to set up a branch office or manufacturing units of companies located abroad are accorded by the Reserve Bank of India (RBI) on submission of ‘FNC’ form. A branch office located in India is subject to taxation in India.
Company registration in India
Joint ventures or a wholly owned subsidiary of a foreign company and Company registration in India are a few most reliable market entry strategy methods in India. Foreign direct investment (FDI) into any private company is an automatic way of entering the market; the permission of the central government is also not required. The global companies have to seek approval either from the government or/and RBI to register any Project Office, Liaison Office or a branch office. The cost of Company registration in India is relatively inexpensive and takes only a few weeks to finish which makes India a favorable market around the globe. There is a list of documents required for Company registration in India such as the following:
• No Object Certificate (NOC) from Board Resolution of the foreign company for integration of joint venture Company in India.
• Passports carrying the address proof (which includes a bank statement, driving license and other documents) of Directors of the company
• Memorandum and Articles of Association (Charter) of the Foreign Company
• Name, address and father’s name of proposed Equity Share Holders
• Name, address and father’s name of Directors of the Indian subsidiary
• Authorization to the attorney/representative vide Board Resolution
Important Note: All documents should be translated in English and duly notarized in the home country and certified by the Indian Consulate/Embassy in Foreign country.
References:
https://www.icec-council.org/wp-content/uploads/2015/12/POLICIES-PROCEDURES-TO-START-A-COMPANY-IN-INDIA.pdf
https://www.export.gov/article?id=India-establishing-an-office
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