International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
• Location specific advantages are important at the time of selecting right
destination:
1. Availability of low cost labour force.
2. Natural resources available in abundance and do not deplete.
3. The cost incurred in research and development can be recovered at the
earliest by identifying a suitable location.
4. The cost of transportation and logistics is low in the specific as well as
neighboring countries.
STRATEGIES FOR FOREIGN INVESTORS TO INVEST IN INDIA
There are several strategies by which foreign enterprises could be
lured to set up Indian operations. Broadly, entry strategies for such
organistions may be classified into two major types:-
1. A foreign investor may directly set up its operations in India through a
branch office, a representative office, a liaison office or a project
office to carry out business.
2. It may do so through and Indian arm i.e. through a subsidiary
company set up in India under Indian laws.
3. It may invest in business units in SEZs and EOUs.
Generally, the second option of setting up operations through an
Indian arm is advisable, especially if the investment is large. A foreign
company is one which has been incorporated outside India and conducts
business in India. These companies are required to comply with the
provisions foreign companies can set up their operations in Indian by
opening liaison offices, project offices and branch offices. Such companies
have to register themselves with the Registrar of Companies in New Delhi,
within 30 days of setting up business in India.
Liaison Office/Representative Office
A foreign company can set up a liaison or representative office in India to
test the Indian market. Once it is convinced about the potential of the Indian
market, it can then bring in greater investment. There are, however, certain
limitations regarding the type of work which can be done through a liaison
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