How to Utilize a Business Setup Advisory in India?

Soumyashree Meesaraganda , Nischala Maruvada

December 14, 2023

How to Utilize a Business Setup Advisory in India?

The Indian economy is growing rapidly and steadily and is slowly gaining potential as a global market for investment by overseas businesses. In its attempts to attract such businesses to invest in India, the government has made efforts to ease restrictions placed on foreign direct investments (FDI). India offers several advantages to businesses to set up their operations in India, such as economic stability, a plethora of workforce, technological and digital progress, low operational costs, and other such benefits. Further, the adoption of digitization in business setups is decreasing the duration of the process drastically. However, the complexity of the Indian legal and administrative system sometimes discourages businesses from expanding their operations to India. These challenges can be easily overcome by engaging experienced business setup consultants to ensure compliance and ease of conducting business.
Business setup consultants with their in-depth experience can guide businesses during the setup process and offer step-by-step solutions for the proper execution of objectives, giving them the competitive edge required to succeed. Business setup services offer the following advantages that any foreign business must utilize for successfully starting their venture in India:
  1. Legal and regulatory compliance: Business set-up consultants provide a complete package of services which not only include legal advisory services but also include conducting regulatory compliances for setting up and registering an entity in India along with completion of all required legal paperwork.
  2. Business structure advisory: The main consideration while starting any business is to finalize a business structure for the entity. Business setup consultants can provide in-depth knowledge of the options available as each structure poses different legal and regulatory compliances. Depending upon the nature of the business, a foreign investor may either proceed as a foreign company or may set up an Indian entity. Businesses may choose among the options listed below for operating in India:

As a Foreign Company:
Liaison office: A liaison office serves as a medium of communication between the principal place of business or its head office and entities in India. Such offices collect information about possible market opportunities and provide information about the company and its products to prospective Indian customers. Liaison offices are allowed to undertake activities such as representing the parent company in India, promoting export/ import in India, etc. However, they are not allowed to undertake any business or earn income, amongst other prohibitions.
Branch office: A foreign entity incorporated outside India and involved in manufacturing and trading activities may set up a branch office in India. Through their branch office, they may undertake activities such as export/ import, representing the parent company in India, etc. However, they are not allowed to carry out manufacturing or processing activities.
Project office: A project office allows a foreign company to have a presence in India for the sole purpose of executing a project in India. Such offices can only undertake or carry on activities that relate to and are incidental to the execution of their project.

As an Indian Company:

  1. Wholly owned subsidiary (WOS): A foreign company can commence operations in India by incorporating a private limited company through a WOS, whereby, among the two directors required to register a WOS, one of them shall be an Indian resident. Such WOS may be set up in sectors where 100% FDI is permitted under the automatic route, i.e., where investment by a person resident outside India does not require the prior approval of the Reserve Bank of India or the Central Government. Incorporation of a WOS is disallowed in sectors where FDI is prohibited, such as the lottery business, gambling, etc.
  2. Joint venture: Foreign entities may establish joint ventures by forging strategic alliances with Indian partners. Accordingly, established contacts with the Indian partners help smoothen the process of setting up operations.

End-to-end setup services: Business setup consultants provide comprehensive support to foreign entities for launching their businesses in India. They provide a one-stop solution for foreign business owners seeking to establish operations in India by offering assistance in the setup processes from the inception till the time such business commences. This allows management to focus their time on the profitability of their venture.

Cost efficiency: Business setup consultants offer a cluster of services such as legal and regulatory assistance under one roof circumventing the hassle of oscillating between different consultants for various services. Further, owing to their vast experience they can reduce costs by endeavoring to avoid unwarranted expenses such as failure of business model, inadequate market research, compliance penalties, etc.

Due Diligence and Market Research: Business setup consultants conduct thorough market research and extensive due diligence to recommend a suitable business model to foreign businesses helping the entity kickstart their project in India.

Expert Professional Services: Business setup consultants are knowledgeable and experienced professionals with having vast understanding of the market, economy, legal and regulatory framework, etc. surrounding unveiling a venture in India.

 


Ahlawat & Associates (A&A) is one of the leading business setup consultants in India and has successfully assisted multiple clients in doing business in India. A&A offers a bouquet of advisory services from inception to ensure that clients are successful in their endeavor of setting up business in India.

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