A Body Corporate Incorporated Outside India (Including A Firm Or Other Association Of Individuals), Desirous Of Opening A Branch Office (BO) In India Have To Obtain Permission From The Reserve Bank Under Provisions Of FEMA 1999. The Applications Will Be Considered By Reserve Bank Under Two Routes:
1. 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.
2. 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.
A. For Branch Office — A Profit Making Track Record During The Immediately Preceding Five Financial Years In The Home Country.
B. For Liaison Office — A Profit Making Track Record During The Immediately Preceding Three Financial Years In The Home Country.
I.E [Total Of Paid-Up Capital And Free Reserves, Less Intangible Assets As Per The Latest Audited Balance Sheet Or Account Statement Certified By A Certified Public Accountant Or Any Registered Accounts Practitioner By Whatever Name].
A. For Branch Office — Not Less Than USD 100,000 Or Its Equivalent.
B. For Liaison Office — Not Less Than USD 50,000 Or Its Equivalent.
1-Reserve Bank Has Given General Permission To Foreign Companies For Establishing Branch/Unit In Special Economic Zones (SEZs) To Undertake Manufacturing And Service Activities. The General Permission Is Subject To The Following Conditions:
2-In The Event Of Winding-Up Of Business And For Remittance Of Winding-Up Proceeds, The Branch Shall Approach An AD Category – I Bank With The Documents As Mentioned Under “Closure Of Liaison / Branch Office” Except The Copy Of The Letter Granting Approval By The Reserve Bank.
Foreign Banks Do Not Require Separate Approval Under FEMA, For Opening Branch Office In India. Such Banks Are, However, Required To Obtain Necessary Approval Under The Provisions Of The Banking Regulation Act, 1949, From Department Of Banking Operations & Development, Reserve Bank.
1. Retail Trading Activities Of Any Nature Is Not Allowed For A Branch Office In India.
2. A Branch Office Is Not Allowed To Carry Out Manufacturing Or Processing Activities In India, Directly Or Indirectly.
3.Profits Earned By The Branch Offices Are Freely Remittable From India, Subject To Payment Of Applicable Taxes.
Application For Undertaking Additional Activities Or Additional Branch / Liaison Offices
Requests For Undertaking Activities In Addition To What Has Been Permitted Initially By The Reserve Bank May Be Submitted Through The Designated AD Category -I Bank To The Chief General Manager-In-Charge, Reserve Bank Of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai, Justifying The Need With Comments Of The Designated AD Category – I Bank. Requests For Establishing Additional BO / LOs May Be Submitted Through Fresh FNC Form (Annex 1), Duly Signed By The Authorized Signatory Of The Foreign Entity In The Home Country To The Reserve Bank Of India As Explained Above. However, The Documents Mentioned In Form FNC Need Not Be Resubmitted, If There Are No Changes To The Documents Already Submitted Earlier.
1. If The Number Of Offices Exceeds 4 (I.E. One BO / LO In Each Zone Viz; East, West, North And South), The Applicant Has To Justify The Need For Additional Office/S.
2. The Applicant May Identify One Of Its Offices In India As The Nodal Office, Which Will Coordinate The Activities Of All Offices In India .
We’ve Prepared The Ideal Package Of Services For The Company Type Listed Above To Help You Start Your Business In India. In Order To Make The Process Go As Smoothly As Possible, We’ve Prepared A Limited List Of Necessary Documents We’ll Need So That We Can Prepare All The Rest For You. If You Have Any Questions About These Please Don’t Hesitate To Ask.
1. Foreign Company Registration Certificate & Articles Of Incorporation
2. Documents Required For Foreigner Registration
Items Client Provide
Items We Prepare
A. 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 Form FNC Along With The Documents Mentioned Therein To Foreign Investment Division, Foreign Exchange Department, Reserve Bank Of India, Central Office, Mumbai Through An Authorised Dealer Bank. This Form Is Available At Www.Rbi.Org.In
B. The Applications From Such Entities In Form FNC Will Be Considered By The Reserve Bank 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 Organisations / Government Bodies / Departments Are Considered By The Reserve Bank In Consultation With The Ministry Of Finance, Government Of India.
C. The Following Additional Criteria Are Also Considered By The Reserve Bank While Sanctioning Liaison/Branch Offices Of Foreign Entities:
• Track Record
• Net Worth [Total Of Paid-Up Capital And Free Reserves, Less Intangible Assets As Per The Latest Audited Balance Sheet Or Account Statement Certified By A Certified Public Accountant Or Any Registered Accounts Practitioner By Whatever Name].
D. 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 Authorised 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) ( Www.Rbi.Org.In/Scripts/Fema.Aspx ). The BOs / LOs Shall Also Obtain Permanent Account Number (PAN) From The Income Tax Authorities On Setting Up The Offices In India.
E. Liaison/Branch Offices Have To File An Annual Activity Certificate (AACs) From The Auditors, As At End Of March 31, Along With The Audited Balance Sheet On Or Before September 30 Of That Year, Stating That The Liaison Office Has Undertaken Only Those Activities Permitted By Reserve Bank Of India. In Case The Annual Accounts Of The LO/ BO Are Finalized With Reference To A Date Other Than March 31, The AAC Along With The Audited Balance Sheet May Be Submitted Within Six Months From The Due Date Of The Balance Sheet.
A Liaison Office (Also Known As Representative Office) Can Undertake Only Liaison Activities, I.E. It Can Act As A Channel Of Communication Between Head Office Abroad And Parties In India. It Is Not Allowed To Undertake Any Business Activity In India And Cannot 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. The Role Of Such Offices Is, Therefore, Limited To Collecting Information About Possible Market Opportunities And Providing Information About The Company And Its Products To The Prospective Indian Customers. A Liaison Office Can Undertake The Following Activities In India:
I. Representing In India The Parent Company / Group Companies.
Ii. Promoting Export / Import From / To India.
Iii Promoting Technical/Financial Collaborations Between Parent/Group Companies And Companies In India.
Iv. Acting As A Communication Channel Between The Parent Company And Indian Companies.
Foreign Insurance Companies Can Establish Liaison Offices In India Only After Obtaining Approval From The InsuranceRegulatory And Development Authority (IRDA). Similarly, Foreign Banks Can Establish Liaison Offices In India Only After Obtaining Approval From The Department Of Banking Operations And Development (DBOD), Reserve Bank Of India.
Permission For Setting Up Branch Offices Is Granted By The Foreign Exchange Department, Reserve Bank Of India, Central Office, Mumbai. Reserve Bank Of India Considers The Track Record Of The Applicant Company, Existing Trade Relations With India, The Activity Of The Company Proposing To Set Up Office In India As Well As The Financial Position Of The Company While Scrutinising The Application. The Application In Form FNC Should Be Submitted To The Reserve Bank Through The Authorized Dealer Bank.
Companies Incorporated Outside India And Engaged In Manufacturing Or Trading Activities Are Allowed To Set Up Branch Offices In India With Specific Approval Of The Reserve Bank. Such Branch Offices Are Permitted To Represent The Parent / Group Companies And Undertake The Following Activities In India:
Normally, The Branch Office Should Be Engaged In The Activity In Which The Parent Company Is Engaged.
Note:
Branch Offices Are Permitted To Remit Outside India Profit Of The Branch Net Of Applicable Indian Taxes, On Production Of The Following Documents To The Satisfaction Of The Authorised Dealer Through Whom The Remittance Is Effected :
A. A Certified Copy Of The Audited Balance Sheet And Profit And Loss Account For The Relevant Year;
B. A Chartered Accountant’s Certificate Certifying –
I. The Manner Of Arriving At The Remittable Profit
Ii. That The Entire Remittable Profit Has Been Earned By Undertaking The Permitted Activities
Iii. That The Profit Does Not Include Any Profit On Revaluation Of The Assets Of The Branch.
At The Time Of Winding Up Of Branch/Liaison Offices, The Company Has To Approach The Designated AD Category – I Bank With The Following Documents:
A) Copy Of The Reserve Bank’s Permission/ Approval From The Sectoral Regulator(S) For Establishing The BO / LO.
B) Auditor’s Certificate – I) Indicating The Manner In Which The Remittable Amount Has Been Arrived At And Supported By A Statement Of Assets And Liabilities Of The Applicant, And Indicating The Manner Of Disposal Of Assets;
Ii) Confirming That All Liabilities In India Including Arrears Of Gratuity And Other Benefits To Employees, Etc., Of The Office Have Been Either Fully Met Or Adequately Provided For; And
Iii) Confirming That No Income Accruing From Sources Outside India (Including Proceeds Of Exports) Has Remained Un-Repatriated To India.
C) No-Objection / Tax Clearance Certificate From Income-Tax Authority For The Remittance/S.
D) Confirmation From The Applicant/Parent Company That No Legal Proceedings In Any Court In India Are Pending And There Is No Legal Impediment To The Remittance.
E) A Report From The Registrar Of Companies Regarding Compliance With The Provisions Of The Companies Act, 1956, In Case Of Winding Up Of The Office In India.
F) Any Other Document/S, Specified By The Reserve Bank While Granting Approval.
The Reserve Bank Has Granted General Permission To Foreign Companies To Establish Project Offices In India, Provided They Have Secured A Contract From An Indian Company To Execute A Project In India, And
However, If The Above Criteria Are Not Met Or If The Parent Entity Is Established In Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran Or China, Such Applications Have To Be Forwarded To The Foreign Exchange Department, Reserve Bank Of India, Central Office, Mumbai For Approval.
AD Category – I Banks Can Open Non-Interest Bearing Foreign Currency Account For Project Offices In India Subject To The Following:
The General Conditions Applicable To Liaison/Branch/Project Office Of Foreign Entities In India Are As Under;
(I) Without Prior Permission Of The Reserve Bank, No Person Being A Citizen Of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran Or China Can Establish In India, A Branch Or A Liaison Office Or A Project Office Or Any Other Place Of Business.
(Ii) Partnership / Proprietary Concerns Set Up Abroad Are Not Allowed To Establish Branch /Liaison/Project Offices In India.
(Iii) Entities From Nepal Are Allowed To Establish Only Liaison Offices In India.
(Iv) Branch/Project Offices Of A Foreign Entity, Excluding A Liaison Office Are Permitted To Acquire Property For Their Own Use And To Carry Out Permitted/Incidental Activities But Not For Leasing Or Renting Out The Property. However, Entities From Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan Or China Are Not Allowed To Acquire Immovable Property In India Even For A Branch Office. These Entities Are Allowed To Lease Such Property For A Period Not Exceeding Five Years.
(V) Branch / Liaison / Project Offices Are Allowed To Open Non-Interest Bearing INR Current Accounts In India.
(Vi) Transfer Of Assets Of Liaison / Branch Office To Subsidiaries Or Other LO / BO Or Any Other Entity Is Permitted Only With The Specific Approval Of The Central Office Of The Foreign Exchange Department, Reserve Bank Of India.
(Viii) Authorised Dealers Can Allow Term Deposit Account For A Period Not Exceeding 6 Months In Favor Of A Branch/Office Of A Person Resident Outside India Provided The Bank Is Satisfied That The Term Deposit Is Out Of Temporary Surplus Funds And The Branch / Office Furnishes An Undertaking That The Maturity Proceeds Of The Term Deposit Will Be Utilised For Their Business In India Within 3 Months Of Maturity. However, Such Facility May Not Be Extended To Shipping/Airline Companies.
(Ix) Permission To Establish Offices, In India By Foreign Non-Government Organisations/Non-Profit Organisations/Foreign Government Bodies/Departments, By Whatever Name Called, Are Under The Government Route As Specified In A. P. (DIR Series) Circular No. 23 Dated December 30, 2009. Such Entities Are Required To Apply To The Reserve Bank For Prior Permission To Establish An Office In India, Whether Project Office Or Otherwise.
