Foreign company registration in India- A brief overview
Foreign company registration in India
Over the years, India has become one of the
hottest destinations of investment by the global companies and no wonders; it
has witnessed more and more foreign
company registration in India in recent years.
Investors’ confidence has
increased in India in recent years and there are lots of reasons for same as
mentioned below:
Some of the reasons for same are as under:
a) It is one of the fastest growing economies of
the world
b) India has vibrant democracy and world’s
largest democracy
c) It is second highest English speaking country
d) It has highest numbers of professionals like
doctors, engineers, technocrats etc.
e) It is number one in Information technology and
ancillary services
f) It has biggest middle class consumer base with
good purchasing power.
g) It has high skilled and cheap labor resulting
in low cost of production
h) Government of India has introduced many
schemes for attracting more and more foreign companies to set up business in
India and make investment in India.
All the aforesaid
reasons have resulted in influx of foreign investment in India.
There are many
options for foreign companies to set up business in India.
Various options for foreign company
registration in India
Following options are available for any foreign company for business set up in
India namely,
1)
As a subsidiary company
2)
As a Joint Venture
3)
As an LLP
4)
As
a branch office
5)
As a Project office
6)
As a Liaison office
Each of the aforesaid entities have their own unique characteristics and selection of any one of the aforesaid entities depends upon various factors like nature of business of parent company, long term objectives and vision and purpose of the parent company.
In case a foreign company is not very sure about doing
business operations in India and only want to explore India on test check
basis, it may opt for liaison office registration. However, if the foreign
company has long term plans for doing business operations in India, it may opt
for wholly owned subsidiary company in India.
Each type of entities as mentioned above, have different tax
rates in India. Further, approvals for registration of aforesaid entities are
normally given by Reserve Bank of India and Registrar of Companies. Further, in
case of receipt of foreign direct investment in India from landlocked countries
with India or in case of investment in sectors which are not in automatic
route, prior approval is required from foreign investment facilitation portals.
Therefore, lot of procedures need to be fulfilled before
getting approval from respective authorities for registration. Further, RBI
also prescribes the permissible activities which may be undertaken by the
foreign companies in India and in case of any contravention, penalty may be
levied.
From taxation point of view, branch office and project
office have maximum tax rates applicable and subsidiary companies have lower
tax rates.
As far as regulatory compliances are concerned, each of the
aforesaid entities are subjected to lots of regulatory compliances in India.
Therefore, it is advisable to take assistance of professionals like chartered accountants, company secretaries and lawyers in India in order to have smooth and hassle free experience while opting for foreign company registration in India.
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