India has always been one of the most attractive destinations for foreign companies to set up their subsidiaries in India. Like every other country, India too has its set of company laws, legal compliances and requisite paperwork for setting up foreign companies in India. In past few years, the Government of India has taken concrete steps to ease the doing business in India to keep the footprints of foreign companies in India. In fact, India has jumped 3 ranks higher on the globally acclaimed “Ease of Doing Business” rankings to increase the footprints of multinationals across India. A foreign company can set up business in India through multiple ways. Through this blog, we will learn about the important facets of setting up a foreign company in India. It can either enter the Indian market by registering completely as an Indian company or a foreign entity. There are three ways to enter both as an Indian company and foreign entity as mentioned below.

As an Indian Company-

• Limited Liability Company- This type of corporate entity is registered under the Companies Act, 2013 in India by MCA. It requires minimum two directors, two shareholders and 15 days to complete the registration. The LLC can carry out commercial activities on behalf of its parent company, generate revenue, and hire employees on the company’s role in India.

 

• Limited Liability partnership- An LLP is the easiest and fastest way to set up a foreign company in India. It is a legal entity which is discreet from its shareholders and members. Minimum two shareholders are required to set up a LLP in India. They can hold upto 99.9 percent of the company’s shares, hire employees, buy property and take legal actions against any issue. Such companies can also borrow funds.

 

• Joint venture with an Indian company as a partner- JV is a partnership between two or more companies who have mutually agreed to make joint investment into a common project. It is one of the most popular ways of setting up a company in India for sectors who don’t have 100% FDI.

As a foreign entity-

• Liaison Office- Referred as a Representative office, the Liaison office acts as a communication channel between the parent company and Indian entities. It can promote the parent company’s interest in India however cannot make any money in India. All the costs are borne by the internal funds. It usually takes 45 days to register a LO and get approved by RBI & MCA.

 

• Branch Office- A BO is an extension of foreign company in India. It can conduct research and commercial activities, provide consultancy support and services offered by parent company in India. Usually the registration is done by RBI & MCA in 45 days.

 

• Project Office- A project office is majorly set up to carry out a specific project or specific work co-funded by international financial institutions in India. The project needs approval by an Authorized Dealer Bank and doesn’t need any prior approval by RBI. The project office needs to be closed after the completion of project.

Infotax a leading online finance and tax consultancy company provides end to end guidance to carry out all legal paperwork and compliances related to multiple government departments in India.