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An Easy Guide on how US Companies can Enter Indian Markets

Wholly owned subsidiaries are fastest and cheapest entry strategy into India

Foreign Companies
Wholly owned subsidiary is the cheapest and fastest entry strategy into India. Wikimedia
  • It is fairly simple for foreign nationals to establish a company in India 
  • The entry strategy of wholly owned subsidiary or joint venture is the quickest and cheapest approach that foreign nations/ corporate entities can take
  • Here is a guide on how to go about and all that you will need to set up a company in India

August 30, 2017: India, one of the fastest growing economies in the world, attracts a number of business opportunities and investments from abroad. Each year, more Foreign Direct Investments have been flowing into India. With a population of over 1.2 billion, the labor, as well as market, is a great option for companies to expand.

It is often asked how a company based in the US or elsewhere can enter Indian markets and what should be the entry strategy. For example, we have seen our friends in USA asking: “How to register a USA company in India?” or “how to register a company in India from USA?”.

This article will tell you all that you should know to register your company in India.

There are two approaches for the entry into Indian market:

1. Register the company in India itself. This is by far the easiest and fastest entry strategy into India. Most foreign companies prefer to go with this approach. Up to 100% of foreign direct investment into a limited company and/ or private limited company does not require any permission from the central government. It is an automatic route. So clearly, the cheapest and fastest method for foreign nationals’ companies to enter India is to establish the company as either a joint venture or to incorporate it as wholly owned subsidiary.

What is a wholly owned subsidiary? It requires 100% of the shares of one company being owned by another company. For instance, if ABC company owns all the shares of XYZ company, then XYZ company becomes a wholly owned subsidiary of ABC company. To incorporate a wholly owned subsidiary, it is important that the full FDI is permitted inside the country, something that works only in automatic route mentioned above.

2. Establishing Branch/ Liaison Office. This method is not a frequently used entry strategy, mainly because the Project/ Liaison Office requires the approval of the RBI and/ or government, thus, increasing the cost and time invested as compared to the registration of the company in India itself. Important to note here is that a branch office or liaison office cannot be opened by a foreign national, restricting this option only to foreign companies.

What are the minimum requirements for starting a company in India? 

Minimum requirements for establishing a company in India are Two Directors, Two shareholders, and an Indian address. Minimum of two directors and two shareholders are required for starting a company in India. The directors should be persons whereas the shareholders can also be another corporate entity. It should also be ensured that any one of the directors should be both, an Indian national and an Indian resident.

The Indian address serves as the address to the registered office for the company. The legal jurisdiction will be applicable on the company of the city where the address is mentioned. India’s major metro cities like Mumbai, Bangalore, Delhi, Chennai are mostly opted by foreign companies to register their company offices.

Most foreign companies preferred the sort of legal entity structure wherein there are three directors. Out of these three, one is an Indian resident while the other two can be foreign nationals. This way, foreign nationals/ companies can own 100% shares as there are no minimum requirements for Indian residents’ shareholding.

What are the documents required for starting a company in India?

Foreign nationals serving as Directors of the company that is being established in India, have to submit copies of their passports and the address proof (such as Bank Statement, Driving license, etc.). The copy of these original documents has to be notarized by home country’s notary.

If a corporate company is becoming the shareholder, the Board Resolution that authorized the investment into the Indian company would also be needed. Additionally, the corporate entity’s certificate of incorporation is also required.

Fortunately, the presence of the foreign national in India is not required during this process, making it hassle-free.

What is the Incorporation Process? 

  • The two foreign nationals serving as Directors of the company must apply for Digital Signature Certificate (DSC). Also, all the directors of the company must apply for Director’s Identification Number (DIN).
  • In form INC-1, the application for the name of the company is required by the applicant.
  • When the Registar of Companies (ROC) has approved name of the company, the applicant is to file form INC-7 (Incorporation of Company), DIR-12 (The details of the appointed Directors), INC-22 (Change of address of the registered office).
  • Once the documents have been submitted, the ROC fees and stamp duty has to be paid online.
  • The ROC then verifies all the forms. For full satisfaction, it may ask to make some changes. Finally, the Certification of Incorporation is mailed.

The wholly owned subsidiary approach has been tried, tested and succeeded on numerous occasions.

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Apple Watch Series Dominate Indian Market

The Apple Watch Series 5 is powered by WatchOS 6 and comes with a new 'Always On' display feature

Apple Watch is available in a wider range of materials, including aluminium, stainless steel, ceramic and an all-new titanium variant. Pixabay

With a strong millennial base with rising disposable income, India now offers immense growth potential for the Smart Watch players which is currently dominated by the Apple Watch Series.

The India market for wearable devices grew 30.9 per cent sequentially in the second quarter of 2019 — reaching an all-time high of 30 lakh shipments in a single quarter, according to the IDC. Smart Watches saw a healthy 99.6 per cent (Year-on-Year) and 42.9 per cent (QoQ) growth in the second quarter.

Fossil made a return after struggling with stock issues and became the leading wearable watch brand with 34 per cent category share, the IDC said.

However, continuing its lead over its competitors, Apple Watch Series 5 remained the first choice for Watch lovers in the country.

According to Sanjay Gupta (India Head), Vice President and India Country Manager, NXP Semiconductors, “technological advancements combined with machine learning abilities, embedded Artificial Intelligence technology along with IoT can unlock a whole new world of opportunities for the Smart Watch market in 2020”.

Let us see top 5 smartwatches that Indians loved the most in 2019.

Apple Watch Series 5: The Apple Watch Series 5 is powered by WatchOS 6 and comes with a new ‘Always On’ display feature. The latest smartwatch from Apple features top-of-the-line ECG and fall detection features, among other health benefits.

For added personal safety while travelling, users with cellular models of Apple Watch Series 5 can now complete international calls to emergency services, regardless of where the device was originally purchased or if the cellular plan has been activated.

New location features, from a built-in compass to current elevation, help users better navigate their day. Apple Watch Series 5 is available in a wider range of materials, including aluminium, stainless steel, ceramic and an all-new titanium variant.

The Smart Watch is available at starting price of Rs 40,900 in India.

Samsung Galaxy Watch 4G: Galaxy Watch 4G is Samsung’s first smartwatch to launch with e-SIM support.

WIth LTE connectivity, one can use the watch without a smartphone. The Watch Active 4G lets users respond to text messages, use GPS mapping, stream music and more without a smartphone.

With a strong millennial base with rising disposable income, India now offers immense growth potential for the Smart Watch players which is currently dominated by the Apple Watch Series. Pixabay

Customers can register for an e-SIM with Airtel or Reliance Jio. The device also features 21 new indoor exercises from a selection of 39 activities.

Additionally, the smartwatch is designed to help users track food and water intake as well. It also comes with sleep and stress tracking features.

The device features two dials, 42mm and 46mm dial at Rs 28,490 and Rs 30,990, respectively.

Huawei Watch GT 2: Huawei Watch GT 2 is the successor of the Huawei Watch GT that the company launched earlier this year. The Watch is powered by a Kirin A1 SoC which has been launched exclusively for wearable devices.

The 46mm variant of Huawei GT 2 packs in a 455mAh battery while the smaller 42mm variant houses a 215mAh battery.

The company claims 14-day battery life for the 46mm variant while the 42mm has a claimed battery life of seven days.

It has 15 sports tracking functionality which includes eight outdoor sports such as running, walking, climbing, hiking trail running, cycling, open water, triathlon and seven indoor sports. The Huawei Watch GT 2 is available at a starting price of Rs 14,990.

Fossil Gen 5: Powered by Wear OS, Fossil has introduced the Gen 5 Smartwatch in the growing India wearable market for Rs 22,995 that promises extended battery mode and has a swim proof speaker.

It sports a chunky 1.28-inch AMOLED screen with a pixel density of 328ppi (pixel per inch) and three pushers on the right side and the middle of which is a rotatable crown.

Fossil Gen 5 comes with a Heart Rate monitor, accelerometer, gyroscope, altimeter and ambient light sensor.

Gen 5 will come with a series of auto-installed apps, music-streaming service Spotify, peace of mind and safety app, Noonlight and Nike Run Club.

Amazfit GTR: The smartwatch is equipped with 24-day battery life, 1.39-inch AMOLED display, Corning Gorilla 3 tempered glass with anti-fingerprint coating. GTR (47.2 mm standard edition) comes in titanium, stainless steel and aluminium alloy models and is available for Rs 10,999.

It features characteristics like ‘BioTracker PPG’ optical heart rate sensor, six-axis acceleration sensor, three-axis Geomagnetic sensor, Pressure sensor, Ambient Light sensor, 50 meters water-resistant, app notifications and incoming calls, others.

However, continuing its lead over its competitors, Apple Watch Series 5 remained the first choice for Watch lovers in the country. Pixabay

The smartwatch comes with 12 different sports modes, including several variations of running, cycling, swimming, mountaineering, trail running and workout.

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Once the activity is finished, the smartwatch displays all the data collected like distance, pace, bpm range, laps, time per lap and much more. (IANS)