For a foreign Investor in India it is very important to choose a right kind of business or corporate entity which best suits its purposes and takes care of liability issues and tax planning issues. Foreign Companies planning to do business in India should pay special attention to Entry Strategies in India for Foreign Investors and corporate structuring to save taxes to the best extent allowed by laws and international tax treaties.
It is also mandatory for foreign investors or foreign shareholders, both individuals and corporate shareholders, to seek Government Approvals for Investing in India In some special cases Foreign Investment Promotion Board, FIPB Approval for Foreign Investment in India is required. In other cases Reserve Bank of India, RBI Approvals for Foreign Investment in India is required. The sectors where RBI Approval for foreign investors is available under automatic route can be found at FDI in India Sector wise Guide.
There are various steps required to establish a business in India, before and after incorporation, as mentioned hereinafter. See also the Procedure for Formation of Company in India. See also USA Company forming a subsidiary in India.Private Limited Company is the most popular form of business entity among foreign investors, including USA investors, to form a subsidiary, a joint venture or 100% owned company in India. There is less risk of losing intellectual property to the competition because the parent can implement common data access and security protocols. Cost synergies are possible because a parent and its subsidiaries could use common financial systems, share administrative services and develop joint marketing programs.