Foreign investment routes available to Foreign companies:
India has created a comfortable climate for the foreigners to invest in India in the last 15 years. The routes available for foreign investment in India can be classified into two following broad categories:
The government has announced various sectors in which foreigners can invest 100% and they do not require a local partner and in certain sectors government has fixed a FDI cap. Most of the sectors in which 100% FDI is permitted, there is no requirement of Foreign Investment Promotion Board ( FIPB), which is called automatic route. The 2nd category in which FDI is not permitted 100%, a foreign investment requires FIPB approval. In cases where some Foreign company requires some alterations either in the FDI cap or in the investment conditions, they require to approach FIPB. The firm can assist foreign companies in getting FIPB approvals.
Types of Foreign Companies: India encourages foreign companies doing business in India either directly or through Joint ventures. Joint ventures are advised when the foreign company is in need of a local partner with certain local capabilities like marketing, technology or finance. In many cases joint ventures end up in litigations and hence joint venture should be avoided unless there is a real necessity. When foreign companies want to operate on their own with out a local partner they have the following options:
While opting for a 100% subsidiary company, the foreign company requires to register a separate company and it becomes an Indian Company owned by a foreign company. Even though there is requirement for an Resident director in India in this model but there is no need to have any local shareholder. The tax slabs applicable to all companies apply to 100% subsidiaries also.
The other models like branch office, Liasion office and project office does not require a local company registration. The registration is done with Reserve Bank only. The scope of operation of the above said three companies are regulated and limited. To open any of the above said models the parent company must have a track record of profit making for the past three years, in which country it is registered.
Identification of contractors, vendors and service providers: One of the major challenges faced by the Foreign companies in India are locating and finalising the reliable contractors, vendors and service providers. The firm assists them in the above said activities and work like a local partner to make the Indian venture process smooth.
Tax and customs matters:
The foreign investor while investing in India require to understand the taxation system in India including Direct tax, Indirect tax, Central Excise, Customs duty on imports, Value added tax etc., The firm has experts in all the above said fields and can advise the foreign companies on these matters also. The following are some important points in tax related matters:
The firm can also provide customised opinion and legal advise relating to tax services for the foreign investors prior to finalising their investment in India. We also help in handling any litigation relating to tax matters any where in India.
For all further details and enquirers you can contact ravi@lawsenate.com
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