A company can launch its business operations in several ways.

The company can get itself registered under the Indian Companies Act, 1956 through either a joint ventures or wholly owned subsidiaries. The advantage of this kind of setup is that foreign equity can be up to 100% dependent on the investor requirements. The percentage is subject to equity caps in respect of the area of activities under the Foreign Direct Investment (FDI) policy.

The two options available in this kind of setup are described below :

• Joint Venture with an Indian Partner
• Entrance in India by forging strategic alliances with Indian partners can impart the following advantages to a foreign investor :
  • Established distribution / marketing set up of the Indian partner
  • Financial resource of the Indian partners is available
  • Established contacts of the Indian partners for smoothening the process of setting up of operations
• Wholly Owned Subsidiary Company
  Establishing a wholly owned subsidiary in sectors is possible in cases where foreign direct investment is permitted to 100% under the FDI policy.

Another option available to companies for entering the Indian market is to set up their operations through establishing either liaison office / representative office, project office or branch office. These offices can be setup through registration with Registrar of Companies (ROC) within 30 days of setting up a place of business in India.

The details of these offices are mentioned below :

• Liaison office/ Representative office
  Liaison office is a communication channel between the head office of a company its entities in other countries.
• The approval of its establishment in India is granted by the Reserve Bank of India (RBI). Some of the important facts about this are as follows :
  • It cannot carry out any commercial activity directly or indirectly
  • Since it is barred of commercial activity, it is not liable to earn any income in India.
  • Its limited role is to collect information about possible market opportunities and provide information about the company to its potential customers in India
  • It is qualified for promotion of export/import from/to India
  • It can also facilitate technical / financial collaboration between two companies in India
  • Project Office
    To execute specific projects in India

Foreign Companies have an option of setting up temporary project / site offices in India. The general permission for this is granted by the RBI after taking care of the specified conditions. Following are the scope of activities of a project office :

• These cannot undertake any commercial activity other than execution of the project
• The surplus of the project executed can be remitted outside India, only after general permission granted by the Reserve Bank of India (RBI)
• Branch Office
  Foreign companies can embark their operations in India by setting up a branch office for purposes like :
  • Export / import of goods
  • Rendering professional or consultancy services
  • Carrying out research work, in which the parent company is engaged
  • Promoting technical or financial collaborations between Indian companies and parent or overseas group company
  • Representing the parent company in India and acting as buying / selling agents in India
  • Rendering services in information technology and development of software in India
  • Rendering technical support to the products supplied by the parent / group companies
  • Foreign airline/shipping company