Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.
Procedure for opening Liaison /Branch office in India
With effect from February 1, 2010, foreign companies/entities desirous of setting up of Liaison Office/Branch Office (LO/BO) are required to submit their application in the prescribed form along with the documents mentioned therein to the Reserve Bank of India, Central Office, Mumbai through an authorized dealer bank.
The applications are considered by the Reserve Bank on case to case basis under two routes:
- Reserve Bank Route - Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.
- Government Route - Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non - Government Organizations / Non - Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.
In addition to the above, certain other criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities such as:
RBI typically grants such permission within a time frame of 2 – 4 weeks. Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by the Authorized Dealer in whose jurisdiction the office is set up. The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN). The BOs/LOs shall also obtain Permanent Account Number (PAN) from the Income Tax Authorities on setting up the offices in India. Liaison/Branch offices also need to file an Annual Activity Certificate (AACs) from the Auditors as prescribed under the RBI Guidelines
How we may help you?
We have a team of qualified and experienced professionals who can assist you in the following services with respect to setting up business in India:
- Structuring your investment in India and suggesting the best possible mode
- Obtaining permission from RBI/FIPB
- Incorporating company
- Drafting legal agreements such as Joint Venture Agreement, Technology/Foreign Collaboration Agreements, Share Purchase Agreement, etc.
- Obtaining PAN/TAN
- Filing of Annual Activity Certificates
- Regulatory Compliances, etc.