India is one of the fastest growing economies in the world with healthy resources and a large market base. In the past few years, there is a great boost in foreign direct investment in India (FDI) because of the changed regulatory environment in the past few years. Therefore, it is very easy for foreign nationals to start a business in India.
Sometimes people get often confused in “Indian Company” and “Foreign Company”. If a foreign national incorporates a company in India then it is an Indian Company. But when a foreign company set up a branch office in India then it is known as Foreign Company.
Private Limited Company is considered to be the most ideal form of business for NRIs, foreign nationals and for foreign entities who want to set up business in India.
According to FEMA guidelines, Foreign Direct Investment (FDI) is not allowed in other types of businesses like Proprietorship, Partnership Firm and One Person Company. Though investment in LLP’s is allowed, but it requires prior approval of the RBI.
Subject to FDI norms, the shares of an Indian Company can be held by a NRI, Foreign National or Foreign Company. Therefore, Incorporation of a Private Limited Company is recommended for foreign nationals as it is the fastest and easiest way to enter into the Indian Market.
What is the process to be followed for a foreign company to establish their business in India?
For a foreign company to register in India, they need to follow certain norms and guidelines specified in the Company’s Act of 2013. A company of foreign nature can enter the Indian market and can commence its business operations by adopting the following methods.
As an Indian company:
- Wholly Owned Subsidiary
- Joint Venture
As a foreign company:
- Setting up of a Liaison Office
- Setting up a Project office or Representative office
- To open a branch office of the foreign company
Are there any restrictions for NRIs to set up a business in India?
Currently, there are no restrictions either for foreigners or NRI’s to start a business in India. With Foreign Direct Investment (FDI) gaining popularity and getting a much-needed boost from the Government many MRI’s are keenly looking forward to invest in India. Earlier NRI’s were not allowed to start or incorporate a business in India without the permission from the Reserve Bank of India (RBI). With the withdrawal of Foreign Exchange Regulation Act (FERA), such restrictions have been lifted.
Cost for company registration in India
Company formation services in India are inexpensive. The company formation process can be completed within few weeks. The incorporation process can be easy with the help of tax advisors in India. It would cost you some pennies but the whole process will be easy for you.
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