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Investment Types in India |
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Overseas companies which do not opt to set up a subsidiary or form a joint venture with an Indian partner can establish the Branch Office, Representative Office or Project Office etc.
- Branch office for the purpose of:
- representing the parent company or other foreign companies, like acting as buying/selling agents;
- conducting research, provided the results of the research are made available to Indian companies;
- undertaking export/import activities;
- providing technical and financial collaborations between Indian and foreign companies.
- Representative/liaison office which doesn’t directly engaged in commercial activities in India. Foreign companies usually open representative/ liaison offices but they are not allowed to carry on any business or earn any income in India and all expenses are to be borne by remittances from abroad.
- Project office to undertake projects in India awarded to the parent company. A project office is the ideal method to establish a business presence for a limited period of time.
- Distribution Arrangements: For companies who do not want to set up a subsidiary, joint venture or branch, it will be necessary to carefully choose and appoint an agent. It makes sense to select several regional agents.
India’s policy direction of foreign investment absorption
India's economic policies are designed to attract capital inflows into India on a sustained basis. Policy initiatives adopted in recent years include:
- Automatic approval for majority foreign equity participation up to 74% in certain key areas, and up to 51% or 50% in several others.
- Up to100% foreign equity permitted in many industries.
- Free repatriation of profits and capital investment.
- It is not necessary for foreign investors to have a local partner.
Excerpted from Investment in India - Developing a Market Entry Strategy, http://finance.indiamart.com
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