Liaison office operates as a channel of communication between the principal place of business or head office and entities in India. Liaison office cannot assume any commercial activity directly or indirectly and cannot, therefore, earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. Its role is therefore restricted to collecting information about possible market opportunities and providing information about the company and its products to potential Indian customers. It can encourage export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India.
A Liaison Office can undertake the following activities in India:
- Representing in India the parent company/group companies.
- Promoting export / import from / to India.
- Promoting technical/financial collaborations between parent/group companies and companies in India.
- Acting as a communication channel between the parent company and Indian companies.