India being one of the most prospective markets for foreign investments, it brings in dynamic business ideas and vast investment through NRIs, PIOs and Foreign entities.
Over the past several years, the policy and procedures regulating and governing the inflow of foreign investments into India have been progressively liberalized and simplified. The initiatives taken in this regard have resulted in significant inflows of foreign investment in almost all areas of the economy, except a select few, that continue to remain reserved for strategic reasons.
An NRI refers to Non Resident Indian, meaning a person who has gone out of India or who stays outside India, in either case for or on taking up employment outside India, or for carrying on outside India a business or vacation, or for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period. It basically refers to a person residing outside India who is a citizen of India or is a Person of Indian Origin (PIO).
There are various Investment options available to NRIs & PIOs for investing in India. They can go the Foreign Direct Investment (FDI) way, or register as a Foreign Institutional Investor (FII) under a portfolio, or register as Foreign Venture Capital Investor (FVCI) under the Venture Capital route or as a holder of American Global Depository Receipts (ADR) and Global Depository Receipts (GDR) under the ADR /GDR Scheme etc.
Letís take you through some of the viable ways for NRIs to enter the Indian business scenario.
Finding the right partner:
One of the well-known ways of doing business in India by NRIs/PIOs is by forming a partnership company. Partnership is a low risk approach, which helps enjoy steady returns with guarantee in your principal.
If you donít have a permanent address in India, it would be difficult for you to run a business all alone without a second supervision. Here lies the importance of forming partnerships. A partner must be selected based on track record, sense of integrity among other important aspects. It is better not to establish commercial relations with friends and relatives.
Open a Liaison Office:
If you are an NRI looking to start a business in India for long term steady returns to your investments, you can start a liaison office of a foreign company in India.
A liaison office in India can act only as a communicative