FDI in Private Limited Company
Foreign Direct Investment (FDI) into an Indian Private Limited Company or Limited Company is allowed
upto 100% in most sectors. Only a very few sectors require prior Central Government approval for
investment by
foreign company or foreign national. The following sectors require Government Approval for investment by
Foreign Company or Foreign National:
- Petroleum sector (except for private sector oil refining), Natural gas / LNG pipelines.
- Investing in companies in Infrastructure
- Defence and strategic industries
- Atomic minerals
- Print Media
- Broadcasting
- Postal Services
- Courier Services
- Establishment and operation of Satellite
- Development of Integrated township
- Tea Sector
- Asset Reconstruction Companies
Overview Of India Entry Strategies for Foreign Companies
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Incorporation of a Private Limited Company or Limited Company
Incorporation of a private limited company is the easiest and fastest type of India entry strategy
for foreign nationals and foreign companies. Foreign direct investment of upto 100% into a private
limited company or limited company is under the automatic route, wherein no Central Government
permission is required. Hence, incorporation of a private limited company as a wholly owned
subsidiary of a foreign company or joint venture is the cheapest, easiest and fastest entry strategy
for foreign companies and foreign nationals into India.
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Incorporation of a Limited Liability Partnership
Incorporation of
a Limited Liability Partnership (LLP) is also an India entry strategy for foreign nationals or
foreign citizens as 100% FDI in LLP is now allowed. An LLP, however, cannot have shareholders and
must be represented by Partners – thereby making it an ideal choice for investment vehicles and
professional firms.
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Through Proprietorship Firms or Partnership Firms
Proprietorship firms or Partnership firms are the most basic types of business entities mostly used
by very small businesses or unorganised players. Foreign investment into a proprietorship firm or
partnership firm requires prior RBI approval. Hence, proprietorship firms or partnership firms are
not suitable for a foreign company or foreign national investment into India.
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Registration of Branch Office, Liaison Office or Project Office
Registration of Branch Office, Liaison Office or Project Office requires RBI and/or Government
approval. Therefore, the cost and time taken for registration of branch office, liaison office or
project office for a foreign company is higher than the cost and time associated with incorporation
of a private limited company. Further, foreign nationals cannot open branch office, liaison office
or project office. Hence, this option is limited to being an India entry strategy only for foreign
companies.
Document Required for Indian Subsidiary