Entry Options for a Foreign Company in India
There are various options available to a foreign enterprise for setting up operations in India. A foreign company can enter into India through following vehicles;
To set-up these 3 types of offices in India The Foreign Company shall have minimum 4 years of existence in its home country
BMC’s expert team assists you in planning and choosing the most suitable option of investing and complying with all the legal requirements, right from bringing in money till repatriation of profit back to your home country.
Liaison Office’ means a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial /trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel.
By its very nature, a liaison office in India can act only as a communicative channel for the parent company to supply information on the Indian market and customers, and cannot carry on any business activities in India. As a result, the liaison office cannot generate any revenue in India and all the expenses of running and maintenance of the Indian office are required to be met out of the foreign exchange remitted from abroad.
Permitted activities for a Liaison Office in India
Representing in India the parent company/group companies.
Promoting export import from/to India.
Promoting technical/financial collaborations between parent/group companies and companies in India.
Acting as a communication channel between the parent company and Indian companies.
To promote its business interests, to spread awareness of the company's products and to explore further opportunities.
Any other activity with specific permission of the RBI.
Conditions Imposed While Granting Permission
The conditions precedents for setting a liaison office in India are as follows:
Liaison offices also have to file regular returns compromising of Annual Audited Accounts, an annual activity report on the activities of the office and some other documents with the RBI and Registrar of Companies (MCA).
Procedure to Set up a Liaison Office in India
The procedure for setting up of a liaison office by a foreign company in India involves following two stages:
Zero Tax Liability
Since a liaison office is not allowed to earn any income, there is no tax liability of a liaison office or its parent company for this representative office.
Maintenance of Bank Accounts
A liaison office in India is permitted to maintain and operate bank accounts in India but only with authorized dealers.