Doing business outside India and expanding internationally is an important part of the market growth strategy of a company. It is driven by the goal of a business to expand its business activities across national boundaries and improve its competitiveness. When you as a commercial enterprise want to start the business outside India, not only does that country's legal conditions become relevant, but also quite a few of the Indian laws and regulatory conditions need to be taken into consideration.
The fundamental aspect of any company is to do business abroad and to grow internationally. Global economic growth is, in fact, a defining point and a matrix which rate any business ' success. Incorporating the overseas business or relocating the current company is quite a daunting activity that requires a clever combination of careful management preparation, logistics support, financial flows, specific territories, tax benefits, marketing policy information, etc.
Incorporating or registering a business abroad is one of the vital ways of managing global business. Outside India, business setup is an excellent approach for any business firm to extend its presence worldwide by leveraging its resources, manpower, technology and knowledge. A country that not only consistently ranks in terms of business ease but also provides full tax advantages is the best place for residents around the world to start a business.
Economic reforms opened up important avenues in India for Indian entrepreneurs to promote global business. The most critical piece of legislation was the Foreign Exchange Management Act (FEMA), which altered the overall foreign exchange outlook, especially those relating to foreign investment.
Indian companies need to invest directly outside India by way of a capital contribution or subscription to a foreign entity's Memorandum of Association, meaning a long-term interest in the overseas entity. This includes forming an overseas Joint Venture (JV) or Wholly Owned Subsidiary (WOS). All applications for grant of approval for the establishment of joint ventures/ wholly owned subsidiaries shall be made and processed by RBI in accordance with guidelines.
Under the ODI Indian organizations, it is possible to invest directly outside India either by contributing to the funds or by subscribing to the foreign entity's Memorandum of Agreement, because this means long-term investment in the foreign entity. In other sentences, there are fewer choices accessible through a Joint Venture (JV) or a wholly owned subsidiary (WOS)A JV, which means a foreign business formed, registered or incorporated in a foreign company in accordance with the that country's rules and regulations and where an Indian organization has decided to make an investment. In a WOS scenario an Indian individual owns the entire capital.
Automatic Route
Under it's Automatic Route, an Indian Party does not require prior approval from the Reserve Bank of India for the establishment of a JV / WOS overseas (except for investments in the finance industry in which prior approval is needed from the regulatory authority involved, both in India and abroad).
Normal Route
Plans not covered by the Automatic Route conditions require the prior approval of the Reserve Bank of India(RBI) for which a particular application is needed to be submitted to the Overseas Investment Division within the Reserve Bank of India's Foreign Exchange Division, along with all the documentation specified herein.
Rajput Jain & Associates Charted Accountants offer all its foreign customers with a 'one stop solution' behind a single platform to make a smooth expansion of customer's business. The company has expert panels with several years of experience in a particular fields and provides tailor-made business training services.
We offer solution today for tomorrows success. A one stop shop for all FEMA/ RBI related issues that is Consultancy, Audit, Taxation, Due Diligence, execution of transactions.