Direct Sales

A foreign company can sell directly to the customer without establishing a local entity. The shipment of products is done directly by the foreign company to the customer. It is essential to ensure that no partnership is formed with the end-customer. However, experts observe that it is best to collaborate with a local agent having ready access to potential customer networks and who will represent the foreign company in India.

Advantages:

• No separate legal entity is required.
• Less ongoing administration such as statutory filings.
• Set-up costs are restricted to the costs of negotiating and concluding a contract with a customer.
• Contracting a local agent on a sales commission basis can give you immediate access to a potential customer base and facilitate sales.

Disadvantages:

• This is not a long-term solution as customers might eventually look for a more stable source for the product than importing directly from abroad.
• If you choose not to work with an agent, building a potential customer base is very difficult.
• When you do contract an agent, you remain dependent on the network of that agent and never learn the true potential of your products.

Who chooses this option?
This option may be best when the Indian market is absolutely new to a foreign company and has no customers currently. To find the first customers it is best to collaborate with an agent. Such an agent is not involved in product pricing decisions, movement of goods, or invoicing. Product pricing and shipment are done directly by the foreign company. This option can be the most cost efficient when you want to build a base of a few customers first without really investing much in the market.

Distributor/Reseller

A foreign company can sell in India through a distributor/reseller. Such partners have ready access to potential customer networks and will buy foreign products and resell them in the Indian market for a margin. Read more here.

Business Incubator

Incubation is an increasingly popular concept in India and a preferred choice for foreign companies who would otherwise opt for a direct sales approach and/or working with distribution partners. Business Incubation is when an already established Indian company hosts the salesperson of the foreign company under them without any administrative burden of establishing a legal entity for the foreign company. Read more here.

Foreign Corporation Representation:

When in doubt, it is best to test the market. If direct sales or sales via a distributor(s) are not successful or if these options are not in the expansion strategy of a foreign company, but a market analysis clearly states that there is sufficient potential in the market, the question remains which entry strategy to choose. Some companies decide to form a ‘foreign corporation representation office’ be it in the form of a Liaison Office, Branch Office, or Project Office. This allows the foreign company to enter India without incorporating a legal entity and has its own advantages and disadvantages. However, in most cases, foreign companies prefer establishing a local Indian entity with a Private Limited company instead of choosing an option of a foreign corporation representation office.

Liaison Office (LO)

An LO acts as a representative of the parent foreign company in India. An LO is not permitted to undertake any commercial/trading/industrial activity—directly or indirectly—and must sustain itself from inward remittances received from its parent foreign company. Read more here.

Branch Office (BO)

A BO can represent the foreign parent company in India and act as its buying or selling agent in India. It cannot carry out any retail, manufacturing, or processing activities. A BO is permitted to remit surplus revenues to its foreign parent company, subject to taxes applicable. Read more here.

Project Office (PO)

A PO is an extension of any foreign company in India that plans to execute ‘projects’ with Indian companies. A PO cannot undertake any activity other than the activity related and incidental to execution of the project. It is permitted to operate a bank account in India and may remit surplus revenue from the project to the foreign parent company, subject to applicable taxes. Read more here.

Indian Subsidiary Set-up

A foreign company should ideally have tested the Indian market, conducted an in-depth analysis, and be confident in its market potential before it plans on establishing an Indian company. When a foreign company is ready to set up its own entity in India, there are some options for incorporated entities. These are all governed by the provisions of the Companies Act, 2013/Limited Liability Partnership Act, 2008. Read more here.

Private Limited (Pvt. Ltd.)

A Private Limited is a voluntary association of at least two and not more than 200 members. The right to transfer shares is limited to members and it is not allowed to invite the general public to subscribe to shares. The company is permitted to perform all business functions according to the ‘objective’ of the company stated in its Memorandum of Association. Read more here.

Public Limited (Ltd.)

A Public Limited company is a voluntary association with a separate legal existence where the liability of members is limited. A minimum of seven members is required with no limit on maximum members and the company may invite the general public to subscribe to its securities. It may also list its shares on a recognized stock exchange by way of an Initial Public Offering (IPO). Every listed company shall maintain a public shareholding of at least 25%. Read more here.

Limited Liability Partnership (LLP)

This type of company combines flexibility of a partnership and the advantages of limited liability at a low compliance cost. It is considered a separate legal entity, with the liability of partners limited to the contribution being made by them towards the capital of the LLP. It is governed by the Limited Liability Partnership Act, of 2008. Read more here.

Merger & Acquisition (M&A)

A ‘merger’ is a combination of two or more entities into one to form a new company while an acquisition (or takeover) is the purchase of one company by another with no new company formed. UNCTAD’s ‘World Investment Report 2017’ shows India as one of the most favored FDI destinations due to its attractiveness among multinationals for cross-border mergers and acquisitions. Read more here.

Joint Venture (JV)

Foreign Companies can set up their operations in India by forming a strategic alliance with one or more partner. A JV is a stand-alone enterprise owned by two or more people or companies and participants continue to exist as separate firms. Read more here.

Finance & Operations :

Difference between Authorized and Paid up Capital

Companies issue their shares to raise capital for various purposes such as to fund their expansion, paying off debts, etc. Irrespective of the size of a company or the type of business, every company needs to classify its share capital under various categories in the financial statement.
The capital structure of a company is broadly classified into two categories – authorized share capital and paid-up share capital. Let us understand the meaning of these two terms and how they are different from each other. Read more here.

Importing

The first import into India is usually a bit confusing no matter what industry you are in.  It is not complicated, but requires certain registrations and processes – these will vary from industry to industry – and it can be a tough experience getting familiar with Indian commercial laws to export to India. Read more here.

Provisional Duty Bond & Special Valuation Branch (SVB)

• Payment behavior and common payment practices :
  
• Aftersales in India :
  After-sales service in India is the sales argument par excellence – especially with regard to expensive, high-quality products from abroad. The biggest challenge for both, exporters of products (in need of service) to India and companies producing in India, is to offer comprehensive on-site customer service – that is, an After Sales Service in India. Read more here.
• Selling online :
  E-commerce is booming in India and is an excellent way to reach customers disbursed across such a vast country. Foreign companies are increasingly showing interest to sell online in India in order to increase market penetration and tap the huge opportunity of online sales. However, there are some legal restrictions for foreign companies to sell online in India. There are two models for selling online within Indian law. Read more here.
  

What is a Provisional Duty Bond and what is Special Valuation Branch (SVB)?

Provisional Duty (PD) Bonds and the Special Valuation Branch (SVB) are interrelated. As per the Customs (Provisional Duty Assessment) Regulations of 2011, a Customs Officer will make an estimate of duty to be levied on a shipment for one of two reasons. Read more here.

Government Initiatives for Economic Development

Prime Minister Narendra Modi swept to power in May 2014 and quickly launched a comprehensive set of initiatives to improve the socio-economic condition of the country.
The implementation of these initiatives has been impressive when considering the impact on economic growth and ease of doing business. Foreign Direct Investment (FDI) in the country is at its highest ever as the government aims to replace red tape with red carpet for foreign investors.
From cleaning India to making India a preferred manufacturing destination, and from skilling youth to helping start-up enterprises, this chapter gives an overview of the major government initiatives that affect business and investment.

We need the list of all the initiatives and links to the websites …

Handling Bureaucracy

Handling bureaucracy in India “can be one of the most frustrating experiences for any Indian, let alone a foreign investor”. Our foreign market entry experts give simple and clear answers to the most asked questions by managers of international companies who want to do business in India. We look at how to ensure your company formation is as smooth as possible, what type of Business Registration services different products and industries require, what incentives are offered to foreign companies, and common payment behaviors in India. We know how all these things work because we support clients with all aspects of doing business in India.

1. BIS Registration of product in India
2. Risks of a Permanent Establishment
3. Documents needed to incorporate a subsidiary
4. Reporting requirements for foreign companies

Hiring and Managing People:

India has the youngest and most mobile population in the world, and there are numerous job seekers entering the market every day. Thorough preparation in terms of defining job roles and hierarchical structure, use of assessment tools such as psychometric tests and case studies, investing in HR functions because of huge cultural diversity, constant communication, and a smooth onboarding process that would require sitting with the employees and institutionalizing policies and procedures are amongst the key trends that will drive the hiring process in India.