India Entry Strategies

For any business eyeing expansion into new territories, it’s essential to conduct thorough research and feasibility studies beforehand. Understanding the custom norms, tax incentives, government policies at both central and state levels, as well as any benefits offered in special economic zones, is crucial for accurately assessing the costs and viability of establishing a presence in a new geography. Additionally, gaining a deep insight into market trends is imperative before committing any investments towards such expansion efforts.

Embarking on a new business venture can be both thrilling and daunting. At Quartis Consulting LLP, we understand the importance of laying a solid foundation for your business from the outset. Our Market Search and Pre-Business Set-Up Advisory services are designed to guide you through the crucial initial stages of your entrepreneurial journey.

Over years of experience, we specialize in facilitating businesses looking to enter the Indian market. Our expertise ranges from advising on optimal tax structures and favorable locations for establishing operations to providing detailed reports on available incentives and government schemes across different states. We ensure that businesses are well-equipped with the necessary information to make informed decisions and navigate the complexities of expanding into new territories successfully.

A foreign Company can commence operations in India through the following routes:

(I) As Indian Company : 

  • Wholly Owned Subsidiary

A foreign company, setting up an eligible business activity, may register a wholly owned subsidiary (“WOS”) in India.  A WOS can be set-up as a private limited or a public limited company. 

  • Joint Venture

JV refers to coming together of two or more partners for forming a new company with common objectives. 

JVs can be of two types: 

  1. Unincorporated JV:  these are typically formed in consortiums when executing projects
  2. Incorporated Joint Venture: These are more common and as in the case of wholly owned subsidiary (WOS)
  • Limited Liability Partnership

Limited Liability Partnership (“LLP”) is a partnership having a separate legal entity and limited liability. With the intent and objective to promote LLPs as a structure for foreign investors, the Indian government has recently permitted FDI in LLPs. 

(II) As Foreign Company : 

  • Liaison Office in India

The role of such offices is limited to collecting information about the possible market and to providing information about the company and its products to prospective Indian customers. It cannot undertake any commercial activities and must only use remittances received from its parent foreign company to maintain itself.

  • Branch Office in India

Foreign companies can conduct full-fledged business in India. BO can carry the same or substantially the same trading activities as carried out by their parent or group companies. BO is not allowed to directly carry out manufacturing activities though it is permitted to sub-contract these services to an Indian manufacturer. 

  • Project Office in India

Foreign Companies having obtained specific project contracts in India can set up temporary project office (“PO”). These offices can only undertake an activity related and incidental to execution of the specified project. After the completion of the project, the surplus funds can be repatriated back to the parent company.

Why India to start a business?

As a fast-growing nation that also ranks as the world’s largest democracy, India is an intriguing market for overseas businesses and investors. In recent years, the country — which has a population of more than a billion — has seen a surge in economic growth and now ranks as the world’s fifth-largest economy by GDP. Indeed, India’s GDP growth is the highest in the world in the past decade, regularly achieving annual growth rates of between 6-7%.

Advantages

*Stable economy

India’s economic growth has been exceptional in recent years. Buoyed by a robust democracy, key structural reforms, private consumption, and a rise in government investment, India has achieved a high macroeconomic stability ranking (with a score of 90 out of 100 and ranked 41 out of 141 economies) in the World Economic Forum’s (WEF) Global Competitiveness Index.

*Business reforms

In a bid to attract foreign investment, the Indian government has eased foreign direct investment (FDI) restrictions, such as raising foreign equity caps for insurance and defense, leading to significant progress in terms of improving its overall business environment. As a result, the country has jumped 14 places to 63rd position on the World Bank’s Doing Business 2020 study. New business reforms have also earned India a place among the world’s top ten improvers for the third consecutive year according to the same study.

*Digital competitiveness

India has become a powerhouse in terms of technology innovation. High-tech companies in sectors such as telecommunications, information technology, pharmaceuticals, textiles, and engineering are equal in their sophistication and prominence to international counterparts. Indeed, India is now recognized as a major force in global technology innovation alongside the United States and China.

*Massive consumer market

India has a large and healthy middle class, making it an attractive consumer market. Indeed, India is the world’s largest market for manufactured goods and services, and ranks number 3 out of 141 economies for market size according to the WEF’s Global Competitiveness Index.

That market is only anticipated to grow. The WEF estimates that India’s total consumption expenditure will grow to $5.7-6 trillion by 2030.