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Business Setup

A foreign entity can have a business setup in India either as an Indian company or as a foreign company with a place of business in India.

Foreign company registration in India as an Indian company:

  1. Wholly Owned Subsidiary (100% foreign ownership) or Joint Venture (JV) with an Indian entity.
  2. Registration as a Private Limited Company is the most popular choice.
Other Entry Options:
  • Mergers & Acquisitions (M&As):
    • Provides market entry with experienced local partners, established brands, and resources.
    • Offers scalability and economies of scale.
  • Regulatory Requirements:
    • Acquisitions: Must meet minimum floor price guidelines based on fair share value.
    • Mergers: Must comply with FEMA (Cross Border Merger) Regulations 2018 and gain approval from NCLT and other authorities.

These options enable efficient market entry but require adherence to regulatory procedures.

Foreign entity business setup in India with an office:

  1. Liaison Office (LO):
    • Acts as a communication link between the foreign parent and Indian parties.
    • No legal standing; cannot earn income.
    • Requires a minimum net worth of $50,000 and profits in the last 3 years.
    • Simple compliance but limited scope of work.
  2. Branch Office (BO):
    • Extension of the parent company with the ability to conduct business and earn income.
    • Requires a minimum net worth of $100,000 and profits in the last 5 years
  3. Project Office (PO):
    • Established for executing specific projects based on contracts from Indian companies.
    • Funded via foreign remittances or international/Indian financial institutions.
    • RBI approval needed if funding conditions are not met.