A foreign investor may set up its business in India either as an unincorporated or incorporated entity. Unincorporated entities may be in the form of a liaison office, branch office, or project office. This requires the prior approval of the Authorised Dealer bank (banks authorised to deal in foreign exchange) or the Reserve Bank of India (the central bank) in specific circumstances. Incorporated entities may be in the form of a private limited company, public limited company, or limited liability partnership.
Most foreign entities set up their Indian subsidiary as private limited companies. The Indian entity is either fully owned by the foreign investor or is a joint venture with a local partner, with the foreign investor bringing in technical know-how and the local partner bringing in the market access. The franchise option is also increasingly popular with many established foreign brands looking to tap India’s vast market opportunity.