Business Setup In India
A Foreign Company planning to set up business operation in India has the options to establish its both direct as well as indirect presence in India.
Mode of Direct Presence – As an Incorporated Entity:
A Foreign Company establishes its direct presence in India by incorporating an Indian company under the Companies Act, 1956 which can be either of the following-
- Joint Venture Company; or
- Wholly Owned Subsidiary Company of a parent foreign company
The foreign equity participation in such Indian companies can be up to 100% in terms of both shareholding percentage and foreign capital investment; depending on the equity caps and sectoral limits as prescribed under the FDI Policy on the business activity to be carried out by such company in India and depending upon the requirements of the investor.
Mode of Indirect Presence – As an Unincorporated Entity:
A Foreign Company makes its indirect presence in India by establishing either of the following office(s):
- Liaison Office;
- Project Office;
- Branch Office.
Liaison Office: The basic role of liaison office is to promote the business of the foreign company in India and is allowed to carry on limited operations only. Setting up of a Liaison Office requires prior approval of the Reserve Bank of India. The applications from such entities in Form FNC will be considered by Reserve Bank under two routes: Reserve Bank Route — Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route. Government Route — Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non – Government Organizations / Non – Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India. A Liaison Office is not allowed to carry out any business activity and therefore would not be expected to earn any taxable profits. Thus, the activities of a foreign company through its liaison office in India does not become taxable in India, provided crucial board decisions are not made in India. However, if in contravention of approvals and rules, the taxable profits are earned by the liaison office, the rate of tax would be 40% (plus Surcharge and Education Cess) i.e. rate applicable to a foreign company. Project Office: Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and The project is funded directly by inward remittance from abroad; or The project is funded by a bilateral or multilateral International Financing Agency;
FOREIGN PORTFOLIO INVESTORS(FPI)
If you are Foreign National(Individual or corporate) and want to invest in India, CIG Group India provides you great chance to invest in the ever buzzing financial markets of India. We offer investment advisory services on foreign direct investment in the Indian capital markets and other services to foreign investors (FPI) with primary objective of superior returns, risk minimization and portfolio diversification. With a team of highly qualified professionals and dedicated Research team, CIG Group India provides a client-centric approach to offer customized solutions to non-resident Indians, and foreigners willing to fulfill their dreams in India. In order to increase overseas capital inflows and reduce the current account deficit, India has liberalized foreign investment in stock markets and has simplified foreign portfolio investment (FPI) norms for qualified foreign investors by putting in place an easier registration process and operating framework with an aim to attract inflows. On January 1, 2012, SEBI issued notification stating that QFI will now be allowed to invest in the equity shares of Indian companies. Subsequently further notification were issued by SEBI on 7 January 2014 and 28th March 2014 whereby from 1st June 2014 the status of QFI will be termed as Foreign Portfolio Investor (FPI). Why should you choose CIG Group India? Well, the answer is very simple. It is because of tailor-made approach to maximize returns and minimize volatility of our client portfolios under varying market conditions using discipline, careful execution, and purposeful choices based on strong fundamentals and thorough research. We offer personalized services, such as:
- One-to-one communication between client and relationship managers
- Services desk for personalized assistance to Foreign Portfolio Investors (FPI) currently known as Qualified foreign investors (QFIs) clients
- Tie ups with DDP (Designated Depository Participants) to open your account at the earliest.
- Ensure confidentiality of client profile and selection of an investment strategy
- Effective investment advice and Research reports for clients
- Structuring a diversified investment portfolio.