China to India: questions Chinese companies ask

Joint ventures with Indian majority control are common, partly because approval is more readily granted. Holding through Hong Kong, Singapore or another country does not avoid Press Note 3 where the beneficial owner is Chinese.

Approval comes before incorporation, and Chinese outbound filings (NDRC, MOFCOM, SAFE) run in parallel. India is 2.5 hours behind China.

The Apostille Convention does not apply between China and India, so documents go through a Chinese notary, the foreign affairs office and the Indian embassy or consulate. Certified English translations are needed.

Chinese directors need security clearance, so an Indian resident director is usually appointed first.

The three-step legalisation chain and translation add cost compared with apostille countries.

Press Note 3 approval often takes several months; legalisation adds three to six weeks.

No money can be remitted until approval is granted, and the Chinese side needs its own approvals and SAFE registration first.

Approval letters can carry conditions on shareholding and pricing that apply to later transactions.

The India–China treaty, amended in 2018, applies 10% to dividends, interest, royalties and technical fees; a 183-day test applies to service PEs.

Payments to China draw extra questions from banks and tax officers; keep agreements and evidence of services ready.

Components and machinery from China are typical; transfer prices should match customs values.

Track days spent in India by Chinese engineers on installation work.

NDRC, MOFCOM and SAFE outbound filings, with China taxing the parent at 25% with credit for Indian tax.

Track the conditions in the approval letter alongside the usual Indian dates.

Chinese-owned factories draw closer inspection of wage, PF and contract-labour records.

There is no social security agreement, so Chinese staff fall under international worker provident fund rules.

Chinese nationals face additional visa security review; business visas do not permit installation work.

Exporting personal data from China needs a security assessment, standard contract or certification.

Mainland Chinese judgments need a fresh suit in India; awards from China, Hong Kong and Macao are enforceable under India's 2012 notification.

There is no trade agreement; Chinese goods face standard tariffs and trade remedies.

Capability centres with Chinese ownership need the same approval as any other investment.

A land-border buyer also needs approval, and the Chinese parent updates its outbound filings on disposal.