Tuesday, October 4, 2011

Foreign Direct Investment (FDI) in India



Foreign Direct Investment (FDI) in India is governed by the FDI Policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA), 1999.

FDI Policy is formulated by the Government of India. FEMA Regulations prescribe the mode of investments i.e. manner of receipt of funds, issue of shares / convertible debentures and preference shares and reporting of the investments to the Reserve Bank.

A foreign company planning to set up business operations in India may:


·         Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary.
·         Incorporate an Limited Liability Partnership In India and investment is subject  to Foreign Investment Promotion Board  (FIPB)
·         Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company.  Such company can undertake only those activities permitted under the Foreign Exchange Management


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