“Dragon and the Elephant” are the most hot economies of the world. Both India and China are taking strides in every sector of economy and growing with an average rate of more than 8.5% per annum. The rapid growth, is backed by Robust market economy Abdo Romeo infrastructure, Sound financial sector, Strong capital market listing, Rich manpower resource including scientists, engineers, technicians and managers, Rich base of mineral and agricultural resources, Strong consumer base and many more.
True, every country wants to board on the train with destination to India. Due to aforesaid factors and the rapid economic reforms that are being taken by the government has led the foreign investors to invest more and more in India. According to US Department of Commerce, “India has among the highest return on foreign investment” whereas FDI Confidence Index 2005 says “India is among the three most attractive FDI destinations of the world”.
Foreign company can incorporate a company through: Joint Venture or Wholly owned Subsidiary. These companies can also make entry through Office/Representative Office, Liaison Project Office and Branch Office. However the activities of such offices are subject to Foreign Exchange Management Regulations (FEMA) 2000.
The foreign company can open the Liaison Office or Representative Office after the approval of RBI (Reserve Bank of India) The office so established can be used to survey market and opportunities lying therein. The company is however restricted to participate in any commercial activities but it can
help promote import and export from and to India.
If the foreign company has undertaken any project/s in India, it can set up temporary project/site or offices for the same. The permission to establish project is granted by RBI. Offices are however only allowed to carry on activity that is related to particular project
If the foreign company investing in India is trading and manufacturing company, it can establish Branch Offices in India for the purposes of exporting and importing of goods, to provide professional or consultancy services, to carry out research work, promote technical or financial collaboration between Indian companies and parent or overseas group company, act as buying or selling agent for the parent company etc. A branch office can be set up after receiving permission from RBI.