How to Open an Office in India
Created by J.P. Morgan Treasury Services
If you are starting a small establishment in India …
For companies that are looking to establish a business presence in India, without incorporating a subsidiary, there are three ways to do it:
- Liaison Office or Representative Office
- Branch Office
- Project Office
What are the differences and who approves the setup?
A Liaison Office (also known as Representative Office) can act as a channel of communication between the 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. To set up a Liaison Office, you need to approach Foreign Exchange Department of the Reserve Bank of India (RBI) for approval.
Branch Offices are permitted to represent the parent/group companies and undertake the following activities in India:
- Exporting/importing goods
- Providing professional or consultancy services
- Performing research in areas the parent company is engaged
- Promoting technical or financial collaborations between Indian companies and parent or overseas group companies
- Acting as a buying/selling agent in India on behalf of the parent company
- Rendering services in information technology and software development in India
- Rendering technical support to the products supplied by parent/group companies
- Providing foreign airline/shipping services
To set up a Branch Office, you need to approach Foreign Exchange Department of the Reserve Bank of India for approval.
A Project Office is opened for a specific project secured in India.
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 at least one of the following criteria is met:
- The project is funded directly by inward remittance from abroad
- The project is funded by a bilateral or multilateral International Financing Agency
- The project has been cleared by an appropriate authority
- A company or entity in India awarding the contract has been granted a term loan by a public financial institution or a bank in India for the project
If you meet the above criteria, you can approach your bank to open an account.
What can you do?
You can contact your local attorney or consultant to help you seek approvals with RBI. Your attorney or consultant can provide you with a better understanding of the relevant regulations for setting up a Liaison, Branch or Project office.
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