Foreign Company Registration in India – Overview

When a company decides to enrol into a new market, the most feasible mode of entry is enclosed in the expansion strategy of the company. It enables the foreign entities to define their objectives, resources, and strategies policies accordingly.

Let us take a look at the several ways for foreign entities to enter into the Indian market in the form of Project office, Branch office, Private limited company, Joint Venture etc.

There are basically two ways to foreign company incorporation in India as follows-

[A] AS AN INDIAN COMPANY: The following options is available under this category-

Wholly Owned Company:
A company that is incorporated outside India, makes 100% FDI as per Indian FDI policy, the Indian company incorporated (Private Limited or Public Limited) is said to be a wholly owned subsidiary of that foreign company. Incorporation of a foreign subsidiary in India (wholly owned) is suitable for carrying out activities of production, marketing and selling in the Indian market on behalf of the foreign parent company and is more tax efficient compared to other options.

Joint Venture:
A Joint Venture is a type of partnership where two or more companies agree to invest in capital and/or goods, services for commercial purposes. In sectors where 100% FDI is not required in India, a Joint Venture is a good option as it offers low risk option for companies wanting to enter into the Indian market.

[B] AS A FOREIGN COMPANY: The following options is available under this category-

Branch Office:
The objective of the branch office is to serve as an extension to the head office of companies incorporated outside India and carries out the same business activity on behalf of the parent company. Suitable when the purpose is to render services or sell products manufactured by a foreign entity. It cannot undertake production activity.

Liaison Office:
Liaison Office is a representative body of the parent company and acts as a medium of communication between the foreign parent company and the Indian company. Suitable for promoting collaborations or to act as a communication channel between parent foreign company and company in India.

After CORONA foreign investors and companies are much interested to establish their branch office or subsidiary in India due to the Govt. liberalization for foreign company incorporation in India. In the below paragraph you will be guided about the Procedure for Foreign Company Registration in India.

The steps for foreign Business Registration in India based on the different types are given below:

WHOLLY OWNED SUBSIDIARY/ JOINT VENTURE

For incorporation of subsidiary of foreign company in India, the following requirements must be fulfilled.

• Acquire DIN of all Directors
• Acquire DSC for all Directors
• Application for Name Reservation and Approval
• Preparation of MOA and AOA
• Subscribe for memorandum by the Shareholders
• Provide all documents to ROC
• Issuance of Certificate of Incorporation
• Apply for PAN, TAN, PT, GST and Bank Account
• Furnish all documents for FDI Compliance after subscription of Share Capital

1. Branch Office

• Apply for Digital Signature Certificate
• FNC Application to be filed with RBI through Authorised Dealer Bank
• KYC Verification from Banker of Parent Company
• Approval of RBI for Branch Office registration in India
• Registration of Branch Office with ROC
• Registration under Shop and Establishment Act to be obtained
• Application for PAN, TAN, PT and Bank Account
• GST, IEC (import-export code)

2. Liaison Office

• Apply for Digital Signature Certificate
• FNC Application to be filed with RBI through Authorised Dealer Bank
• KYC details verification from Parent Company Banker
• Approval of RBI for Liaison Office registration in India
• Registration of Liaison Office with ROC
• Registration under Shop and Establishment Act to be obtained
• Application for PAN, TAN, PT and Bank Account
• IEC (import-export code)

Documents required for foreign company registration in India is as per the nature of incorporation as follows-

A. For Wholly Owned Subsidiary Company:

The following documents are required for wholly owned subsidiary company registration in India is as follows-

• 1. Address proof of the registered office
• 2. For Indian citizen
  • - PAN Card (mandatory)
  • - Address proof
  • - Photograph ID proof like Aadhar Card.
• 3. For foreign citizen
  • - Passport (mandatory)
  • - Address Proof
  • - Photograph ID Proof (any government license)

Documents submitted must be mandatorily certified by an Indian consulate.

B. B. Joint Venture

The following documents are required in case of Joint Venture establishment-

• Dispute resolution agreements
• Law Applicable
• Holding shares
• Transfer of shares
• Board of Directors Non-Compete
• Digital Signature (DSC)
• Confidentiality

C. Liaison Office

Certain criteria have been prescribed by RBI for setting up a Liaison office or Representative Office in India. Let’s have a glance at them-

• Compulsory to have a profit-making record in the immediate preceding 3 financial years in the home country along with a net value more than USD 50,000.
• In case the above condition is not satisfied by the subsidiary company, a letter of comfort has to be submitted by the parent company.
• Requirement for specific approval of RBI under FEMA 1999 and Insurance Regulatory and Development Authority (IRDA).
• The application for establishing the office has to be forwarded to RBI through a designated Authorised Dealer Category–I Bank.
• Unique Identification Number will then be issued by RBI.
• Latest Audited Balance Sheet has to be filed in the Country of Registration.

D. Project Office

In case a foreign company wants to set up an office and has secured a contract from any Indian company to execute a project in India, prior permission from RBI is not mandatory, provided it is-

• Funded straight by inward remittance from abroad or
• Funded by a bilateral or multilateral International Financing Organisation

Branch Office

By opening a branch office, a foreign company can conduct business activity in India with RBI Approval, provided-

• The company is engaged in manufacturing or trading activities
• The company made profits in the immediately preceding five financial years
• The net worth should not be less than USD 100,000 in its home country

FDI in India is currently not allowed in the below mentioned sectors:

• Lottery Business (Government /private lottery), online lotteries
• Gambling and Betting, Casinos
• Chit funds
• Nidhi Company
• • Dealing in Transferable Development Rights
• Real Estate Business
• Production of Cigars, cheroots and cigarettes, tobacco or of tobacco alternatives
• Business activities that are not permitted for private sector investment such as Atomic Energy
• Legal, accounting and architecture
• B2C e-commerce

Given below are the estimated costs for foreign company registration in India.

• Subsidiary Company: USD 15,355
• Liaison Company: USD 19,385
• Project Office: USD 19,555
• Branch of a foreign company: USD 19,555