Hiring an Indian Representative: What Are the Legal Steps for Foreign Companies?

We are a foreign company and want to appoint an Indian representative in India. We will be sending all the salaries from our company/country directly to his Indian bank account. Is there any complication in appointing an Indian employee by a foreign company in India? Although we are not thinking about opening a direct sales office.

Since this will be only one single employee to be recruited, does a foreign company need to be registered in India, or is it possible to hire someone as an offshore employee without having a physical office/presence in India?

You are a foreign company and want to do some business in India. You want to appoint some staff in India. The salary of staff will be paid in India in INR through a bank.

Registering Your Foreign Company in India

You need to first register your company in India with the ROC as a foreign company doing business in India within 30 days of setting up a place of business in India. The number of employees is not a criterion for this registration. The criterion is your business.

Compliance with Indian Labor Laws

You will have to follow the Indian labor laws as applicable.

Regards

Starting a Representative Office in India

You can start a representative office in India. Since there is no investment that you are making and only a desire to have a representative office, you do not have to obtain any clearance from the Foreign Investment Promotion Board (FIPB). You just have to register under the Shops and Establishments Act in the city where you plan to have the resident representative office.

The query is not about Foreign Investment and clearance from the Foreign Investment Promotion Board; it pertains to whether registering his company in India is necessary. I have provided him with the answer. In my opinion, it is the correct response.

Why Register a Company in India?

Why do you believe there is no requirement to register his company in India and that he only needs to register under S&E?

Dear Anonymous,

The querist is not asking about Foreign Investment and clearance from the Foreign Investment Promotion Board on Foreign Investment. He is asking whether he is required to register his company in India. I have given the answer to him. According to me, it is the right answer. Why do you feel there is no need to register his company in India and he just needs to register under S & E?

We are a multinational company headquartered in Singapore, and we have a representative office in India in Bangalore with just one employee and one secretary apart from one office peon. It's registered under the Shops and Establishment Act. Professional advice has been given to us by a Chartered Accountant firm stating that we only need to register under the S & E Act since it is a representative office. My advice is based on the professional guidance received by our company from an established CA firm in India. Hope this clarifies the reasons for my posting.

I am an HR professional, a Manpower consultant, and a Trainer with 32 years of managerial experience in the manufacturing industry. I am of the opinion that your employee may be asked to open a bank account with the Indian Bank overseas branch, and your company can transfer the salary into the bank. Later, he can transfer it to a branch in India. This will save time and money. I hope this suggestion will meet your needs. You may write or call me on my cell at [Phone Number Removed For Privacy Reasons].

Thanks,
Avinash Kanoray

A resident of India cannot have an overseas account under normal circumstances. A work permit for the foreign country is required to open an account there. The regulations have become stricter across governments worldwide, especially after the HSBC scandal. Even Non-Resident Indians (NRIs) are facing challenges with Indian banks abroad. They are requesting a significant amount of documentation such as proof of domicile, income, tax returns, etc. I am concerned that this might not be a viable solution.

Regards,
Avinash Kanoray