Foreign Company - Entry Strategy In India
To set up business operations in India, a foreign company has following options:
- As an Indian Company (‘IC’)i.e. as incorporated entity under the Indian Co Act.
- As a Foreign Company (‘FC’) i.e. as an unincorporated entity
1. As an Indian Company (‘IC’)i.e. as incorporated entity under the Indian Co Act
- (a) Through Joint Venture (JV) with some Indian partner or
In JV there will be a joint ownership in the company by the JV partners. This option is chosen where the foreign company wishes to take local experiences of the Indian partner, as a capital sharing, where the size of capital involvement is large, or there may be a case that FDI policy (‘Foreign Direct Investment’) of India does not allow 100% foreign equity in the chosen sector.
- (b) Wholly Owned Subsidiary (WOS)
WOS is chosen when foreign company does not want any outside person interference in the company ownership, policies and decisions. Also this format can be chosen when 100% FDI is allowed as per the Govt FDI policy.
Incorporated entities in India are governed by the provisions of the Companies Act, 1956. The authority that oversees companies and their compliances is the Registrar of Companies (“RoC”).
Further, the income tax rate applies @ 30% plus surcharge on profits of an Indian Company.
Important regulatory authorities for
investment in india
- Secretariat for Industrial Assistance (SIA)
- Foreign Investment Promotion Board (FIPB)
- The Foreign Investment Implementation Authority (FIIA)
- Reserve Bank of India (RBI)
- Registrar of Companies (RoC)