Setting Up Branch, Liaison & Project Offices in India: RBI and FEMA Guidelines for Foreign Companies
Expanding your business presence in India without incorporating a new company? Opening a Branch Office (BO), Liaison Office (LO), or Project Office (PO) could be the ideal route. These structures allow foreign companies to operate in India under specific RBI and FEMA rules, offering limited but strategic access to India’s growing market.
At Jain Prachi & Company, we specialize in regulatory setup, RBI approvals, and ongoing compliance for foreign entities seeking a cost-effective and compliant Indian presence.
Who Can Open a Branch, Liaison, or Project Office in India?
Foreign companies incorporated outside India and engaged in profitable business operations for at least 5 years are eligible to establish these offices, subject to prior approval from the Reserve Bank of India (RBI) and adherence to Foreign Exchange Management Act (FEMA) guidelines.
Types of Offices and Their Permissible Activities
- Branch Office (BO)
Permitted Activities:
- Export/import of goods
- Consultancy services
- Research in areas where the parent company is engaged
- Providing professional or technical services
- Acting as a buying/selling agent
Cannot carry out retail trading or manufacturing activities independently in India.
- Liaison Office (LO)
Permitted Activities:
- Representing parent company in India
- Promoting export/import from/to India
- Promoting technical and financial collaborations
- Acting as a communication channel
No commercial or revenue-generating activities are allowed.
- Project Office (PO)
Purpose:
A temporary office established for executing a specific project in India funded by inward remittance or an Indian contract.
Ideal for foreign construction, engineering, or infrastructure companies executing Indian projects.
Approval Process for Setting Up
Route:
- Automatic Route: For companies from countries not sharing land borders with India and not involved in sectors requiring government approval.
- Government Route: For companies from China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, and Afghanistan, or operating in regulated sectors.
Steps for Establishment:
- Application in Form FNC to RBI via AD Bank (Authorized Dealer Category-I Bank)
- Submission of:
- Certificate of Incorporation & MOA
- Audited financials of parent company (last 5 years)
- Details of proposed activities
- Board resolution and power of attorney
- RBI scrutinizes and grants approval (usually within 4–6 weeks)
Post-Approval Compliances
Once approved, the entity must:
- Obtain PAN and TAN
- Register with RoC (Form FC-1)
- Open a Bank Account in India
- File Annual Activity Certificate (AAC) with RBI
- Maintain FEMA and Income Tax compliances
Taxation of BO, LO, and PO
- Branch Office and Project Office: Taxed as foreign companies (approx. 40% corporate tax + surcharge + cess).
- Liaison Office: Not taxable as it cannot generate income.
Taxation depends on the nature of income, PE (Permanent Establishment) status, and DTAA benefits.
How Jain Prachi & Company Assists
We offer comprehensive services including:
- Assessment of best structure (BO/LO/PO) based on your business goals
- End-to-end RBI application filing and liaison
- Legal documentation and liaison with AD Banks
- Post-setup FEMA, RoC, and tax compliance
- Advisory on tax optimization and profit repatriation
Why Global Companies Trust Jain Prachi & Company
- RBI-compliant office setup for over 100+ international clients
- In-depth understanding of cross-border regulatory frameworks
- Transparent pricing and timely execution
- Specialized support for clients from the US, UK, Singapore, and Europe
Ready to Set Up Your India Office? Let’s Talk.
Establish your presence in India without the complexities of full incorporation. Get expert guidance on setting up your Branch, Liaison, or Project Office with Jain Prachi & Company.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
Book your consultation and start your India entry journey today.
FAQs – Branch, Liaison, and Project Offices in India
Q: How long can a Liaison Office operate in India?
Initially for 3 years, extendable with RBI approval.
Q: Can a Project Office be converted into a Branch Office?
No, they serve different purposes. A new RBI application is needed for structure change.
Q: Do I need to file income tax returns for a Liaison Office?
Generally, no tax return is required unless it earns any income (which it shouldn’t by law).
