From conducting market research to importing and exporting goods,
foreign companies can operate through their offices in India. Depending
on the operational requirements, the companies can set up three types
of offices in the country. If the aim is to conduct market research,
collect information and carry out promotional activities, a company
should open a liaison or a representative office. A company can import
or export goods through a branch office, or if it needs to undertake a
specific project, it has to set up a project office. Liaison or branch
offices can be set up only after due permission from the Reserve Bank of
India (RBI), the country's apex bank. If the foreign companies follow
certain conditions, no permission from the RBI is required for setting
up a project office. There are some country-specific requirements,
information about which I will provide later in this guide.
Liaison, branch and project offices
The RBI has laid down some specific conditions which a liaison, branch or project office has to follow to operate in India.
1) Liaison office:
Liaison office mainly works as a communication channel between the parent company and the Indian companies. The liaison office can represent the parent company for promoting export or import from/to India. It can also conduct research and collect information on the market potential for the parent company's product or service. It can also explore opportunities to get into partnerships with Indian companies on financial and technical exchange. However, it cannot undertake any business activity. Even the expenses for the leased office have to be met by the parent company through foreign exchange. The liaison office cannot import and export goods and sell the company's products or services.
2) Branch office
A branch office can do all the things allowed for a liaison office. Besides, it can import and export goods from/to India. It can provide consultancy or technical assistance on use of their product or service in India. It can also act as buying or selling agent in India. However, it cannot carry out production or processing of products. A foreign company can buy property for setting up a branch office, but it cannot give on lease or rent out this property to any other entity or individual. The property has to be used by the branch office only.
3) Project office: For opening up a project office, a foreign company needs to obtain a contract from an India company to carry out a specific project in India. Through this contract, the foreign company can provide its services. However, the company, setting up the project office, needs to get registered with the Registrar of Companies (ROC) and comply with some conditions as prescribed under the Companies Act, 1956. As soon as the project is completed, the office has to be closed. Extensions can be sought on the basis of certain conditions.
Important things to know
· Companies from China, Pakistan, India, Sri Lanka, Afghanistan, Bangladesh and Iran cannot buy properties for a branch office. These companies can take a property on lease, that too not for more than five years.
· Companies from Nepal can open only liaison office in India.
· Foreign insurance companies have to obtain additional permission from the Insurance Regulatory and Development Authority in India to set up a liaison office.
· Special economic zones (SEZs) have been set up in several parts of India. A company's branch office can be granted permission to carry out manufacturing or production in sectors where 100% Foreign Direct Investment is allowed.
Source
Liaison, branch and project offices
The RBI has laid down some specific conditions which a liaison, branch or project office has to follow to operate in India.
1) Liaison office:
Liaison office mainly works as a communication channel between the parent company and the Indian companies. The liaison office can represent the parent company for promoting export or import from/to India. It can also conduct research and collect information on the market potential for the parent company's product or service. It can also explore opportunities to get into partnerships with Indian companies on financial and technical exchange. However, it cannot undertake any business activity. Even the expenses for the leased office have to be met by the parent company through foreign exchange. The liaison office cannot import and export goods and sell the company's products or services.
2) Branch office
A branch office can do all the things allowed for a liaison office. Besides, it can import and export goods from/to India. It can provide consultancy or technical assistance on use of their product or service in India. It can also act as buying or selling agent in India. However, it cannot carry out production or processing of products. A foreign company can buy property for setting up a branch office, but it cannot give on lease or rent out this property to any other entity or individual. The property has to be used by the branch office only.
3) Project office: For opening up a project office, a foreign company needs to obtain a contract from an India company to carry out a specific project in India. Through this contract, the foreign company can provide its services. However, the company, setting up the project office, needs to get registered with the Registrar of Companies (ROC) and comply with some conditions as prescribed under the Companies Act, 1956. As soon as the project is completed, the office has to be closed. Extensions can be sought on the basis of certain conditions.
Important things to know
· Companies from China, Pakistan, India, Sri Lanka, Afghanistan, Bangladesh and Iran cannot buy properties for a branch office. These companies can take a property on lease, that too not for more than five years.
· Companies from Nepal can open only liaison office in India.
· Foreign insurance companies have to obtain additional permission from the Insurance Regulatory and Development Authority in India to set up a liaison office.
· Special economic zones (SEZs) have been set up in several parts of India. A company's branch office can be granted permission to carry out manufacturing or production in sectors where 100% Foreign Direct Investment is allowed.
Source
