ENTRY STRATEGY FOR COMPANIES INVESTING IN INDIA
Since the early '90s, India opened its door for Foreign Direct Investment (FDI), it has been one of the fastest-growing economies globally. The Department for Promotion of Industry and Internal Trade (DPIIT) operates under the Ministry of Commerce & Industry is responsible for Foreign Direct Investment Policy. The government of India has opened most of the sectors for 100% FDI under automatic route. However, in some of the crucial sectors, such as retail trade, certain restrictions and conditions for FDI remain applicable.
Foreign Exchange Management Act, 1999 (FEMA) further regulates Foreign Direct Investment and rules & regulations framed thereunder, along with the notifications & circulars issued by the Reserve Bank of India from time to time. The FEMA regulations prescribe the various modes of investments, including the manners for receiving funds, issue of shares/convertible debentures and preference shares, while reporting these investments to the Reserve Bank of India (RBI).
Entry options available to a foreign company to set up their business in India are:
- Liaison Office – For representing the parent company in India
- Branch Office – To undertake activities such as Export, Import, research consultancy etc.
- Project Office
- Indian Company – either Joint Venture or Wholly Owned subsidiary
- Limited Liability Partnership – FDI permitted under automatic route in LLPs operating in sectors/activities where 100% FDI is allowed through automatic route, and there is no FDI linked performance condition.
At Yogi & Partners, we help clients in strategizing the best form of legal entity to be adopted for their business and guide them through the process of:
- Pre-incorporation consultancy
- Obtaining Foreign Direct Investment Approval (if needed)
- Helping in deciding the best corporate structure to be adopted in India for a foreign corporation, ranging from establishing a Liaison Office, Branch Office, Joint Venture, Wholly Owned Subsidiary, Holding Companies and Acquisition of an existing company, based on the business requirements of the clients.
- Incorporation services and guidance on capital structuring
- Obtaining Permanent Account Number (PAN) for Income tax purposes, Tax deduction number (TAN), Goods and Services Tax (GST).
- Obtaining Importer and Exporter Code from the Director-General of Foreign Trade.
- Registration with Drug Controller General of India – CDSCO – for import of cosmetics.
- Obtaining Licenses and Registration from the Food Safety and Standards Authority of India.
- Obtaining registrations under various legislations related to employment and establishment, like under Shop & Establishment Act, Employee State Insurance, Provident Fund, license from Municipal Corporation, Registration under Legal Metrology Act etc.
- Assisting with and filing inward remittance of FDI and the relevant returns with the Reserve Bank of India and ensuring other legal Compliances.
- Advising on various provisions and procedures relating to imports and exports.
- Drafting employment and other commercial contracts.