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A foreign company can start its business operations in India by incorporating a company under the Companies Act, 2013 through either a Joint Venture (JV) or forming a Wholly Owned Subsidiary (WOS). Foreign equity in such Indian companies can be up to 100%, subject to Sectoral equity caps under the FDI policy. The Sectoral caps as per the FDI policy are as follows:

Sector FDI Limit Entry Route & Remarks
Agriculture & Animal Husbandry
• Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions
• Development and Production of seeds and planting material
• Animal Husbandry(including breeding of dogs), Pisciculture, Aquaculture
• Services related to agro and allied sectors
100% Automatic
Plantation Sector
• Tea sector including tea plantations
• Coffee plantations
• Rubber plantations
• Cardamom plantations
• Palm oil tree plantations
• Olive oil tree plantations
100% Automatic
Mining
Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores
100% Automatic
Mining (Coal & Lignite) 100% Automatic
Mining
Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities
100% Government
Petroleum & Natural Gas
Exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products and natural gas, marketing of natural gas and petroleum products etc
100% Automatic
Petroleum & Natural Gas
Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.
49% Automatic
Defence Manufacturing 100% Automatic up to 49%
Above 49% under Government route in cases resulting in access to modern technology in the country
Broadcasting
• Teleports(setting up of up-linking HUBs/Teleports)
• Direct to Home (DTH)
• Cable Networks (Multi System operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability
• Mobile TV
• Head end-in-the Sky Broadcasting Service(HITS)
100% Automatic
Broadcasting
Cable Networks (Other MSOs not undertaking up gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs))
100% Automatic
Broadcasting Content Services
• Terrestrial Broadcasting FM(FM Radio)
• Up-linking of ‘News & Current Affairs’ TV Channels
49% Government
Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels 100% Automatic
Print Media
• Publishing of newspaper and periodicals dealing with news and current affairs
• Publication of Indian editions of foreign magazines dealing with news and current affairs
26% Government
Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. 100% Government
Publication of facsimile edition of foreign newspapers 100% Government
Civil Aviation – Airports
Green Field Projects & Existing Projects
100% Automatic
Civil Aviation – Air Transport Services
• Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline
• Regional Air Transport Service
100% Automatic up to 49%
Above 49% under Government route
100% Automatic for NRIs
Civil Aviation
• Non-Scheduled Air Transport Service
• Helicopter services/seaplane services requiring DGCA approval
• Ground Handling Services subject to sectoral regulations and security clearance
• Maintenance and Repair organizations; flying training institutes; and technical training institutions
100% Automatic
Construction Development: Townships, Housing, Built-up Infrastructure 100% Automatic
Industrial Parks 100% Automatic
Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO 100% Government
Private Security Agencies 74% Automatic up to 49%
Above 49% & up to 74% under Government route
Telecom Services 100% Automatic up to 49%
Above 49% under Government route
Cash & Carry Wholesale Trading 100% Automatic
E-commerce activities (e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.) 100% Automatic
Single Brand retail trading
Local sourcing norms will be relaxed up to three years and a relaxed sourcing regime for another five years for entities undertaking Single Brand Retail Trading of products having ‘state-of-art’ and ‘cutting edge’ technology.
100% Automatic up to 49%
Above 49% under Government route
Multi Brand Retail Trading 51% Government
Duty Free Shops 100% Automatic
Railway Infrastructure
Construction, operation and maintenance of the following
• Suburban corridor projects through PPP
• High speed train projects
• Dedicated freight lines
• Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities
• Railway Electrification
• Signaling systems
• Freight terminals
• Passenger terminals
• Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line
• Mass Rapid Transport Systems.
100% Automatic
Asset Reconstruction Companies 100% Automatic
Banking- Private Sector 74% Automatic up to 49%
Above 49% & up to 74% under Government route
Banking- Public Sector 20% Government
Credit Information Companies (CIC) 100% Automatic
Infrastructure Company in the Securities Market 49% Automatic
Insurance
• Insurance Company
• Insurance Brokers
• Third Party Administrators
• Surveyors and Loss Assessors
• Other Insurance Intermediaries
49% Automatic
Pension Sector 49% Automatic
Power Exchanges 49% Automatic
White Label ATM Operations 100% Automatic
Non-Banking Finance Companies (NBFC) 100% Automatic
Pharmaceuticals(Green Field) 100% Automatic
Pharmaceuticals(Brown Field) 100% Automatic up to 74%
Above 74% under
Government route
Food products manufactured or produced in India
Trading, including through e-commerce, in respect of food products manufactured or produced in India.
100% Government

Prohibited Sectors
FDI is prohibited in the following sectors

  • Lottery Business including Government/private lottery, online lotteries, etc.
  • Gambling and Betting including casinos etc.
  • Chit funds
  • Nidhi company
  • Trading in Transferable Development Rights (TDRs)
  • Real Estate Business or Construction of Farm Houses (Real estate business does not include development of townships, construction of residential /commercial premises, roads or bridges )
  • Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
  • Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)

We J&P, as a team of professionals provide all sorts of assistance and consultancy in taking the approvals of the regulator, wherever required, in an efficient manner.

Foreign Investment can be made in India through the following options:

AS AN INDIAN COMPANY
A foreign entity can start its business operations in India by incorporating a Indian company under the Companies Act, 2013 either through a Joint Venture (JV) or forming a Wholly Owned Subsidiary (WOS). Foreign equity in such Indian companies can be up to 100%, subject to sectoral equity caps under the FDI policy.

1. Joint Venture with an Indian partner:
Foreign companies can set up their operations in India by entering into strategic partnership with Indian entities and forming a Joint Venture (JV).

2. Wholly Owned Subsidiaries:
Foreign companies can also set up their operations in India by forming a Wholly Owned Subsidiary in sectors, where 100% foreign direct investment is permitted under the FDI policy. An application has to be filed with the registrar of Companies (ROC) for registration and incorporation of the Company in India.

As a Foreign Company

Foreign entities can also set up their operations in India through Liaison Office, Project Office or a Branch Office.

1. LIAISON OFFICE
Foreign companies are allowed to open liaison offices in India, subject to obtaining specific approval from the RBI, to undertake liaison activities on their behalf. Liaison office acts as a channel of communication between the principal places of business and entities in India.
Permitted activities for a liaison office in India of a person resident outside India:

  • Representing the parent company / group companies in India.
  • Promoting export / import from / to India.
  • Promoting technical/ financial collaborations between parent / group companies and companies in India.
  • Acting as a communication channel between the parent company and Indian companies.

2. BRANCH OFFICE
Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Office in India.
Permitted activities for a branch office in India of a person resident outside India:

  • Export/import of goods.
  • Rendering professional or consultancy services.
  • Carrying out research work in which the parent company is engaged.
  • Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
  • Representing the parent company in India and acting as buying/ selling agent in India.
  • Rendering services in Information Technology and development of software in India.
  • Rendering technical support to the products supplied by parent/group companies.

3. PROJECT OFFICE 
Foreign companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish project offices, subject to specified conditions.
J&P’s Professional Services include:

•Registration of Branch or Liaison office: •Approval of Reserve Bank of India is required •Registration with the ROC •Registration of Project office: •Registration with ROC (RBI registration is not required for project office)

The Companies Act, 2013 does not bar a foreign national to be appointed as a Director in an Indian Company. A foreign national shall be having equal responsibilities and powers as an Indian national and he shall be held accountable on same grounds as an Indian national.
Following are the criteria that are to be fulfilled by a foreign national to become a Director of a Company under the Act:

  • A foreign national shall be allotted with a Director Identification Number (DIN) before appointed as a director;
  • The foreign national to be appointed as a Director shall furnish his DIN and shall declare that he is not disqualified from becoming a Director under this Act; and
  • The foreign national appointed as a Director shall not act as a Director unless he gives his written consent to act as director in Form DIR-2. Such consent has to be filed with the Registrar within 30 days of his appointment.

A foreign national shall need to have DSC for making an application for allotment of DIN.

J&P’s Professional Services include:

  • Assistance in obtaining DSC for foreign national.
  • Assistance in obtaining DIN for foreign national.
  • Assistance in documentation for appointment of foreign national as Director in Indian Company.

Every entity which proposes to carry on business in India is required to open a bank account for carrying on the financial transactions for day to day business.

Nowadays, the compliances for opening of bank account have been made stricter.

J&P’s team provides efficient services for making application for opening of bank account. We assist the client in preparing all associated documents and making all correspondences of all sorts.

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Jain & Partners is an ace IPR & Corporate law Consultancy firm having immense experience since year 2001 in the area of IPR laws. It provides services to domestic companies or individuals for their overseas investment and also to foreign companies or individuals for their investment in India in all respects that includes Corporate Law, Intellectual Property Law, Foreign Exchange Management Law, Import Export Law and Taxation Law etc.