India, being one of the rapidly growing economies in the world with plenty of business opportunities has attracted the interest of NRIs, Foreign Nationals and Foreign Companies for initiation of operation in the accelerating economy.
One of the most successful way of foreign investment in India is incorporation of an Indian Subsidiary. A Foreign National (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than entity incorporated in Pakistan or Bangladesh) can invest in India by acquiring shares of the company, subject to the FDI Policy of India. It is mandatory to have minimum of 1 Indian Director who is an Indian Resident for incorporation of an Indian Company.
Investment and acquisition of equity shares of a Company can be divided into two categories: Investment under Automatic route and Investment under Government Approval route. FDI of up to 100% is allowed under the automatic route in most sectors in India. Automatic route requires no prior approval for investment in equity shares of an Indian business. It only requires filing of prescribed documents with the Reserve Bank of India within 30 days of receipt of investment money in India and filing of particulars of allotment of shares to foreign investors with Ministry of Corporate Affairs within 30 days of allotment. Investment in industries where Automatic route is not available can be made under the Government Approved FDI method with the approval of Government.
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