Foreign Collaboration & Investments in India 1st June, 2006
There are quite a few foreign companies who want to first study the Indian markets and
obtain relevant information before they expand their operations in India. Some foreign
companies establish a liaison office as an intermediate step before entering into a Joint
Venture (JV) or setting up a Wholly Owned Subsidiary (WOS). The establishment of liaison
offices is governed by the Reserve Bank of India (RBI). By its very nature, a liaison office in
India can act only as a communicative channel for the parent company to supply
information on the Indian market and customers, and cannot carry on any business
activities in India. As a result, the liaison office cannot generate any revenue in India and
all the expenses of running and maintenance of the Indian office are required to be met out
of the foreign exchange remitted from abroad.



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