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Entry Strategies Ior Foreign Investors

A Ioreign company planning to set up business operations in India has the Iollowing options:
1) As an Indian Company
A Ioreign company can commence operations in India by incorporating a company under the
Companies Act, 1956 through
O oint Ventures; or
O holly Owned Subsidiaries
Foreign equity in such Indian companies can be up to 100 depending on the requirements oI
the investor, subject to equity caps in respect oI the area oI activities under the Foreign Direct
Investment (FDI) policy. Details oI the FDI policy, sectoral equity caps & procedures can be
obtained Irom Department oI Industrial Policy & Promotion, Government oI India
(http://www.dipp.nic.in ).
oint Venture ith An Indian Partner
Foreign Companies can set up their operations in India by Iorging strategic alliances with Indian
partners.
oint Venture may entail the Iollowing advantages Ior a Ioreign investor:
O Established distribution/ marketing set up oI the Indian partner
O Available Iinancial resource oI the Indian partners
O Established contacts oI the Indian partners which help smoothen the process oI setting up
oI operations
holly Owned Subsidiary Company
Foreign companies can also to set up wholly owned subsidiary in sectors where 100 Ioreign
direct investment is permitted under the FDI policy.
Incorporation oI Company
For registration and incorporation, an application has to be Iiled with Registrar oI Companies
(ROC). Once a company has been duly registered and incorporated as an Indian company, it is
subject to Indian laws and regulations as applicable to other domestic Indian companies.

For Iurther inIormation, contact:
Department oI Company AIIairs under Ministry oI Finance: http://dca.nic.in

2) As a Foreign Company
Foreign Companies can set up their operations in India through
O iaison OIIice/Representative OIIice
O Project OIIice
O ranch OIIice
Such oIIices can undertake any permitted activities. Companies have to register themselves with
Registrar oI Companies (ROC) within 30 days oI setting up a place oI business in India.
iaison oIIice/ Representative oIIice
iaison oIIice acts as a channel oI communication between the principal place oI business or
head oIIice and entities in India. iaison oIIice cannot undertake any commercial activity
directly or indirectly and cannot, thereIore, earn any income in India. Its role is limited to
collecting inIormation about possible market opportunities and providing inIormation about the
company and its products to prospective Indian customers. It can promote export/import Irom/to
India and also Iacilitate technical/Iinancial collaboration between parent company and companies
in India.
The approval Ior establishing a liaison oIIice in India is granted by the Reserve ank oI India
(RI).
Project OIIice
Foreign Companies planning to execute speciIic projects in India can set up temporary
project/site oIIices in India. RI has now granted general permission to Ioreign entities to
establish Project OIIices subject to speciIied conditions. Such oIIices cannot undertake or carry
on any activity other than the activity relating and incidental to execution oI the project. Project
OIIices may remit outside India the surplus oI the project on its completion, general permission
Ior which has been granted by the RI.
ranch OIIice
Foreign companies engaged in manuIacturing and trading activities abroad are allowed to set up
ranch OIIices in India Ior the Iollowing purposes:
O Export/Import oI goods
O Rendering proIessional or consultancy services
O Carrying out research work, in which the parent company is engaged.
O Promoting technical or Iinancial collaborations between Indian companies and parent or
overseas group company.
O Representing the parent company in India and acting as buying/selling agents in India.
O Rendering services in InIormation Technology and development oI soItware in India.
O Rendering technical support to the products supplied by the parent/ group companies.
O Foreign Airline/shipping Company.
A branch oIIice is not allowed to carry out manuIacturing activities on its own but is permitted to
subcontract these to an Indian manuIacturer. ranch OIIices established with the approval oI
RI, may remit outside India proIit oI the branch, net oI applicable Indian taxes and subject to
RI guidelines Permission Ior setting up branch oIIices is granted by the Reserve ank oI India
(RI).

ranch OIIice on "Stand Alone asis"
Such ranch OIIices would be isolated and restricted to the Special Economic zone (SEZ) alone
and no business activity/transaction will be allowed outside the SEZs in India, which include
branches/subsidiaries oI its parent oIIice in India. No approval shall be necessary Irom RI Ior a
company to establish a branch/unit in SEZs to undertake manuIacturing and service activities
subject to speciIied conditions.
Application Ior setting up iaison OIIice/ Project OIIice/ ranch OIIice may be submitted in
Iorm FNC 1 (available at RI website at www.rbi.org.in)