FAQS

Last updated: April 15, 2021

Solutions to your immediate queries relating to business and investment activities in India. For more information, please visit the Ministry of Commerce and Industry and Federation of Indian Exports Organisation.

Foreign companies who plan to set up business in India can choose to start:

  • A liaison/representative office
  • Project Office
  • Branch Office
  • 100 per cent wholly-owned subsidiary
  • Joint venture company

For more information see Entry Strategies For Foreign Investors and Reserve Bank Of India

Yes, a foreign company incorporated under the Companies Act, 2013 is treated on par with any domestic Indian company, within the scope of approval and subject to all Indian laws.

A Foreign company can invest in India through the following routes:

  • Automatic Route – FDI in sector/activities to the extent permitted under automatic route does not require prior approval either by the Government of India or the RBI. RBI to be informed within 30 days of inward remittances or issue of shares to Non Residents. RBI has prescribed a new form, Form FC-GPR (instead of earlier FC-RBI) for reporting shares issued to the Foreign Investors by an Indian company.
  • Government Route – The Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the Government of India for investors to facilitate Foreign Direct Investment. This portal is being administered by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry. This portal will continue to facilitate the single window clearance of applications that are through the approval route. Upon receipt of the FDI application, the concerned Administrative Ministry/Department shall process the application as per the Standard Operation Procedure (SOP).
  • Automatic Approval through the Reserve Bank of India is available for all items/activities except a few as given in the Press Note No.2 (2000 series) dated 11.2.2000. The sector-specific guidelines in this regard are given in Annexure IV of the Manual on Industrial Policy and Procedures in India.

For more information see the Department for Promotion of Industry and Internal Trade

For complete information on sectors for Foreign Direct Investment see Foreign Direct Investment.

The Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the Government of India for investors to facilitate Foreign Direct Investment (FDI). This portal, which is being administered by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, will continue to facilitate the single window clearance of applications through the approval route. Upon receipt of the FDI application, the concerned Administrative Ministry/Department shall process the application as per the Standard Operation Procedure (SOP). For more information see Foreign Investment Facilitation Portal.

The Government attaches importance to investments by NRIs and Overseas Corporate Bodies (OCBs) i.e. corporate bodies in which NRIs hold at least 60 per cent of the equity. The government has provided a liberalised policy framework for approval of NRI investments through both the Automatic and the Government route. NRI/OCBs are permitted to invest up to 100 per cent equity in the Real Estate and Civil Aviation Sectors. Automatic Approval is given by the RBI to all NRI/OCB proposals with their investment up to 100 per cent for all items/activities except a few exceptions mentioned in Press Note 2 (2000 seriesread with sector-specific guidelines. Government approval is given for all proposals not qualifying for Automatic Approval.

All profits, dividends, royalty, knowhow payments approved by the Government/RBI can be repatriated. Some sectors like NRI Investment in real estate may attract a lock-in period.

The issue of shares to the foreign collaborator is governed by the guidelines issued by RBI /SEBI and Companies Act.

Approval is granted by two routes: 

  1. Automatic approval by Reserve Bank of India (RBI)
  • Available for any proposal with lumpsum payment not exceeding US$2 million, and royalty of up to 5 per cent on domestic sales and 8 per cent on exports. This is applicable to technical collaborations with technology transfer. There is no limit on the duration of royalty payment by a WOS to its offshore parents.
  • Payment of royalty up to 2 per cent of exports and 1 per cent for domestic sales on the use of trademarks and brand name of the foreign collaborator without technology transfer
  1. Government approval in all other cases

Yes, it is possible to use foreign brand names/trademarks in India. However, payment of lump sum fee is not permissible, only running royalty payment is permissible as per the prescribed rate.

Changes in FDI policies are announced in the form of Press Notes by the Department for Promotion of Industry and Internal Trade (DPIIT). Soon after releasing the Press Notes to the media, it is also uploaded on the Departmental website.

Please refer to the website of the Bureau of Indian Standards.

  • FIIs can invest in the financial markets in pension funds, mutual funds, investment trusts, and asset management companies or their power of attorney holders.
  • Investments through Stock Exchanges
  • Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India through the Portfolio Investment Scheme (PIS). Under this scheme, FIIs/NRIs/PIOs can acquire shares/debentures of Indian companies through any stock exchange in India
  • Investment in Euro Issues/Mutual Funds Floated Overseas
  • Foreign investors can invest in Euro issues (ADRs/GDRs/FCCBs) of Indian companies and in India-specific funds floated abroad.
  • Broking Business: Foreign brokers upon registration with the SEBI is allowed to route the business of their registered FII clients through the members of any stock exchange. Guidelines for the same have been issued by SEBI.
  • Asset Management Companies / Merchant Banking
  • Foreign participation (full/part) in Asset Management Companies and Merchant Banking companies is permitted.
  • Most of the funds have been invested in debt markets by foreign portfolio investors (FPIs).

More – SEBI (Foreign Institutional Investors) RegulationsInvestment in Indian Companies by FIIs/NRIs/PIOs

  • In the New Industrial Policy, all industrial undertakings are exempt from licensing except for some products and those reserved for the small scale sector.
  • The project should not be located within 25 km of a city with a population of more than one million.
  • The Government has substantially liberalised the procedures for obtaining an Industrial Licence. An IL is approved by the Government. The application form IL-FC should be filed with the SIA. Approvals normally granted within 6-8 weeks.
  • An industrial undertaking exempted from licensing needs only to file information in the Industrial Entrepreneurs Memorandum (IEM) with the SIA secretariat for industrial assistance (SIA), which will issue an acknowledgment. No further approvals are required.
  • Secretariat for Industrial Assistance (SIA) in the Department for Promotion of Industry and Internal Trade (DPIIT) provides a single-window service for entrepreneurial assistance, investor facilitation, and monitoring implementation of the projects.
  • Entrepreneurs are required to obtain statutory clearances relating to pollution control and environmental management as necessary for setting up an industrial project for 31 categories of industries as amended from time to time, issued by the Ministry of Environment & Forests under The Environment (Protection) Act, 1986. Details can be obtained from the Ministry of Environment and Forests.
  • The Federation of Indian Export Organisations, known popularly as “FIEO”, is the apex body of Indian export promotion organisations. It was set up jointly by the Ministry of Commerce, Government of India, and private trade and industry in the year 1965.
  • FIEO is thus a partner of the Government of India in promoting India’s exports.
  • For complete information on Indian exporters see The Federation of Indian Export Organisations, Export Promotion Councils, Department of Commerce. 

In order to register a company in India, foreign nationals are required to submit a copy of their passport along with address proof (Driver’s License, Bank Statement, etc.). The copy of the original documents should be notarized by a Notary in the home country or by the Indian Embassy in the respective country where the foreign Director belongs.

In case a corporate entity is aiming to become a shareholder in an Indian Company then the foreign company’s board should pass a resolution and authorise the investment in the Indian Company. The Board Resolution decided upon mutually among the Directors should be attached with a notarized copy of the incorporation certificate of the foreign company.

The presence of any of the foreign Directors is not mandatorily required at the time of incorporation in India. Thus, foreign nationals have the flexibility of establishing and operating a business in India without even traveling to India. For more information see the Ministry of Corporate Affairs.

Any foreign company can establish its place of business in India by filing eForm FC-1 (Information to be filed by a foreign company).

Note: The e-Form needs to be digitally signed by an authorized representative of the foreign company. There is no need to apply and obtain DIN for Directors of a foreign company. However, it is mandatory to register the DSC of the authorized representative of the foreign company via associate DSC service available at the MCA portal.

For more information see Company Incorporation.