Lok Sabha Question No. 9 (STARRED), answered on 2023-12-04
Subject: Operation of Foreign Companies
Ministry: CORPORATE AFFAIRS
Asked by: Gaddam Ranjith Reddy, Kanimozhi Karunanidhi

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS LOK SABHA

## STARRED QUESTION NO. *9

ANSWERED ON MONDAY, 04 TH  DECEMBER 2023 AGRAHAYANA 13, 1945 (SAKA)

## OPERATION OF FOREIGN COMPANIES

QUESTION

- *9.  DR. G. RANJITH REDDY: SHRIMATI KANIMOZHI KARUNANIDHI:
- (a) the reaction of Government on the number of foreign businesses leaving the country surpassing the new entrants since 2018;
- (b) whether 102 foreign firms started operations as compared to 111 foreign companies that ceased their operations in 2018;
- (c)  whether  64  foreign  firms  started  operations  as  compared  to  78  foreign companies that ceased their operations in 2022;
- (d) whether between 2018 and 2023 (till March) 469 foreign companies started operations as compared to 559 leaving the country;
- (e) whether it means that country is not providing the business atmosphere in spite of investors reluctant to go to China, particularly after pandemic; and
- (f) the remedial measures that the Government is planning to take to address this serious problem?

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

## ANSWER

The Minister of Finance & Corporate Affairs.

( वित्त और कारपोरेट मामलो के मंत्री )

(SMT. NIRMALA SITHARAMAN)

(

श्रीमती निममला सीतारामि )

(a) to (f): A statement is laid on the Table of the House.

STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. *9 FOR ANSWER ON 04.12.2023.

## ANSWER

(a) to (d):   Foreign companies (incorporated outside India) may establish a place of business in India viz. branch office, project office, liaison office/representative office etc. for specific purposes after complying with the requirements  of the RBI regulations  and other sectoral requirements, wherever applicable. Within 30 days of establishment of such office, they seek registration  from  the  Registrar  of  Companies  (Delhi  and  Haryana)  by  filing necessary documents under Section 380 of the Companies Act, 2013. The figures given in part (b) to (d) of the question pertain to foreign companies, who have opened or closed their place of business in India under Section 380 of the Companies Act, 2013 from 2018 to 2023 (till January). However, Foreign companies can invest in India not only by way of opening place of business in India  but  also  through  Indian  subsidiaries,  which  are  Indian  companies  but subsidiary of foreign holding companies.  During the period FY 2018-19 to FY 2022-23  (up  to  November),  7946  foreign  companies  have  registered  their Indian subsidiary company. It is also observed from the data available on the website of DPIIT that overall foreign direct investment in India has increased from USD 62001 million in FY 2018-19 to USD 71,355 million (Provisional figure) in FY 2022-23. (e) and (f):  For a company starting operations through Indian subsidiaries or establishing or closing place of business are matters of commercial business decision. These depend on a host of factors such as viability of operations, sectoral strategy, global priorities, market size, capital and resource allocation within the company as well as the decision of a particular business entity whether to operate in different geographical areas or not. The increase in the foreign direct investment indicates the confidence of the foreign investors in the business atmosphere of the country.

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