Setting Up Business Entity in India by Foreign Entity

Any offshore entity which needs to set up a business unit in India shall have the following basic setup strategy as

1. Type of Business Structure i.,e Private/Public/OPC/LLP
2. State in which it has to set up the entity/plant/corporate office
3. FEMA/RBI/FDI guidelines, regulations on investment
4. Investment can be made under GoI (Government of India in regulations laid down by RBI, FEMA) under the following routes

A foreign investor has the following business structure to float an entity in India under either of

1. Foreign Company
2. Indian Company
3. Limited Liability Partnership

1. Annual Return on Foreign Liabilities and Assets
2. Annual Performance Report (APR)
3. External Commercial Borrowings
4. Single Master Form (w.e.f. 30.06.2018)
5. Advance Reporting Form (ARF)
6. Form FC-GPR
7. Form FC-TRS
8. Form ODI

• Annual Return on Foreign Liabilities and Assets

Annual return for Foreign Liabilities and assets i.e. FLA Return is required to be submitted mandatorily by all the India resident companies which have received FDI or made ODI in any of the previous year, including current year

If the Indian company does not have any outstanding investment in respect of FDI or ODI as at the end of the reporting year, the Company need not submit the FLA Return.

Similarly, if the Indian company has not received any fresh FDI or ODI in the latest year but the company has outstanding FDI and/or ODI, then that company is still required to submit the FLA Return every year by 15 July every year.

• Annual Performance Report (APR)

An Indian Party, Resident Individual which has made an Overseas Direct Investment (ODI) has to submit an Annual Performance Report (APR) in Form ODI Part II to the AD bank in respect of each Joint Venture, Wholly Owned Subsidiaries (WOS) outside India on or before 31st December every year.

• External Commercial Borrowings

Borrowers are required to report all ECB transactions to the RBI on a monthly basis through an AD Category – I Bank in the form of ‘ECB 2 Return’ on a monthly basis.

• Single Master Form (w.e.f. 30.06.2018)

Under the head Single Master form FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP, DI, DRR, InVi are to be filled and submitted

• Advance Reporting Form (ARF)

An Indian company receiving investment from outside India for issue of shares or other eligible securities under the FDI Scheme has to report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank through its AD Category I bank within 30 days from the date of issue of shares.

• Form FC-GPR

It is a form issued by RBI under Foreign Exchange Management Act,1999. When the company receives the foreign investment and against such investment the company allots shares to such foreign investor then it is the duty of the company to file details of such allotment of shares with The RBI within 30 days and for that company has to use the form FC-GPR (Foreign Currency- Gross Provisional Return) for submitting details with RBI. (Read More about Form FC-GPR)

• Form FC-TRS

The literal full form of Form FC-TRS is Foreign Currency Transfer. It is a form used by shareholder resident outside India resident Indian or vice versa when they transfer their shares. The form FC-TRS along with the Form FC-GPR will be submitted to its authorised dealer bank, who will submit the same to the RBI. (Read More about Form FC-TRS)

• Form ODI

An Indian Party and a Resident Individual making an overseas investment is required to submit form ODI. When they receive share certificates or any other documentary evidence of investment in the foreign JV / WOS as evidence of investment and submit the same to the designated AD within 30 days.