JOINT VENTURE WITH AN INDIAN PARTNER
A very common method used by foreign companies
entering the Indian market is to work on a joint
venture with an Indian company. In the days of the
past, only selective foreign investment was invited.
There was also a cap on the percentage holding the
foreign company could have. In recent years, this has
been opened up substantially, and wholly owned foreign
subsidiaries are also being allowed liberally.
100% Wholly owned subsidiary
The Government has made it easier for foreign entities
to start wholly owned subsidiaries. All such cases
have to obtain prior approval of the FIPB.
Wholly owned subsidiaries as well as joint ventures
have to be registered with the Registrar of Companies
(ROC). They then become Indian companies and become
subject to Indian laws. They have to file all returns
to the ROC and to the Income Tax authorities as other
Indian companies do.
A 100% owned company, of course, has the advantage
that there is no adjustment to be made with another
company culture and style.
Appointing Agent or Distributor
A company interested in only a distribution
arrangement with a suitable Indian company can appoint
an Agent or a Distributor. The arrangements with the
Agent/Distributor can vary depending upon the
Maintenance and Support Arrangements
Some companies that sell high value items often find
it useful to appoint an Indian party who would be
responsible for service and maintenance of their
products sold into India.