Foreign Exchange Management Act, RBI & Foreign Collaboration Compliance
In India, business ventures, investments, office set of foreign companies is regulated by Indian Central Bank ( Reserve Bank of India (RBI)). RBI accords various approvals and permissions in accordance with the Foreign Exchange Management Act (FEMA). We have expertise in obtaining various approvals/clearances for foreign companies venturing India.
We provide advisory and compliance services encompassing the entire gamut of foreign exchange law as detailed below
- Residential status
- Investment in Business in India directly and by floating offshore companies
- Setting up a branch/liaison/project office in India under Automatic or Approval Route
- Portfolio investments in India
- Banking and remittances
- Direct investment outside India
- Setting up a branch outside India
India ’s economic policies are designed to attract significant capital inflows into India on a sustained basis and to encourage technology collaborations between Indian concerns and foreign entities.
Policy initiatives introduced in last two decades have resulted in inflows of foreign investment in diverse Business Sectors of India.
We provide services to the prospective foreign investors in order to facilitate their investments into India.
Providing consultancy services for the regulatory compliances required as per the various provisions applicable under the Foreign Exchange Management Act, the applicable notifications and circulars of the Reserve Bank of India and other relevant laws in force at the time investment is intended.Provide easy clearance service for the formation of companies in India
Documentation and Registrations required under the Companies Act with the Registrar of Companies and other applicable corporate laws Preparing business plans focused on the strategy and implementation plans for exploring business opportunities in India Advice on whether the business opportunities are potentially financially viable.
Entry Options for Foreign Investors
A foreign company that is planning to set up business operations in India has the following options:
- Branch Office
- Liaison / Representative Office
- Project Office
- By Forming a Company in India
Government of India has allowed foreign companies that are engaged in manufacturing and trading activities abroad to set up Branch Offices in India for certain specified purposes:
- To conduct research work in those areas where the parent company is engaged.
- To undertake export and import trading activities etc.
- To promote all possible technical and financial collaborations between the Indian and overseas companies.
- Rendering professional or consultancy services.
- Rendering services in IT and development of software the country.
- Rendering all sort of technical supports to the products supplied by the parent/ Group companies. Foreign airlines or shipping companies.
To enter the Indian market, the foreign companies set up a Liaison/ Representative office in India. This office is not allowed to undertake any business activity in the country or earn any income. In fact the role of Liaison/ Representative office is limited to collecting information about the market opportunities and about the prospects of its company’s products.
Any person residing outside India is permitted by the Reserve Bank of India (RBI) to establish a Liaison office in the country and may carry out the following activities:May represent in India the parent company or group companies.
May conduct research work in those areas in which the parent company or the group companies are engaged. May promote export and/or from/ to India.
May promote technical or financial collaborations between the parent or group companies in the country.
May act as a communication channel between the parent company and the Indian companies. Such offices are permitted only for 3 years initially but it may be extended from time to time.
Those foreign companies that are planning to execute specific projects in India are permitted by RBI to set up temporary project/ site offices in the country. Such approval is generally accorded in respect of approved by appropriate authorities or whether the project is financed by the Indian bank/ Financial Institution or else from a multilateral/ bilateral international financial institution.
By site office it means a sub-office of the project office that is established at the site where the project is being implemented and works have to be carried out. It does not include a Liaison office. No person resident outside India shall, without prior approval of the Reserve Bank, establish in India a branch or a Liaison office or a project office or any other place of business by whatever name called.
- By Forming a Company in India through
- Joint Venture (JV), or A Wholly Owned Subsidiary
- Foreign equity in such Indian companies can be up to 100% depending on the requirements of the investor, subject to equity caps in respect of the area of activities under the Foreign Direct Investment (FDI) policy.
- India welcomes Foreign Direct Investment (FDI) in almost all industries. Foreign investors can now freely hold majority of stake in most of the sectors, be it manufacturing, telecom, software, services sector, trading, export-import, etc.
- Companies that are incorporated or are registered in India are governed by the Companies Act 1956.
- Companies now can raise funds from overseas securities markets and can enjoy considerable freedom to invest abroad for expanding their global operations.
- Foreign investors can remit earnings from their Indian operations
- Foreign trade is by large free from regulations, and tariff levels have come down steeply in the last couple of years.
Exit Option for Foreign Investors
In view of various amendments under Foreign Exchange & Management Act and Reserve Bank of INDIA regulations, exit route for the foreign Investor is become quite easy to attain the objective of free flow of foreign exchange.
FDI& ECB Advisory Service
Advice on various foreign exchange matters under the Act including in connection with that stemming from inbound investment into India in the form of form of Foreign Direct Investment (FDI) or External commercial borrowing (ECB) outbound investment outside India
Obtaining various approvals under the said Act from the Reserve Bank of India (RBI) and providing assistance in complying with requirement prescribed by the RBI
Other Offerings for FEMA Compliance
- Availing of External Commercial borrowings
- Valuation of shares for transfer of shares from resident to non resident and vice versa
- Assistance and guidance on remittance of funds from India
- Advisory relating to current and capital account transaction
- Compounding under FEMA
- Advisory in relation to Export and Import regulations under FEMA
- Advisory in relation to acquisition of immovable property in India and vice versa
- Advisory in relation to guarantee provisions under FEMA
- Guidance on remittance of funds outside India
- Due Diligence under FEMA : A Complete health check of compliance of Foreign Exchange Regulations in India