Plans to start your Branch Office in India? Learn what a typical Branch Office is allowed to do
Foreign companies setting up branch offices and liaison offices require prior approval of the Reserve Bank. In India, branch offices must be registered with the RoC of the respective Indian state. No approval of the Reserve Bank is required for foreign companies to establish branch offices/ units in SEZs to undertake manufacturing and service activities, subject to satisfaction of certain conditions.
A branch office may enter into contracts on behalf of the non-resident parent company and may generate income. However, the activities of a branch office is restricted to representing the parent company, exporting/ importing goods, rendering professional or Guide on Doing Business in India.
Following works can be carried by the branch office or Liaison office:
- Consultancy services,
- Carrying on research work in which the parent company is engaged,
- Promoting technical or financial collaborations between Indian companies and the parent or overseas group company,
- Representing the parent company in India and acting as buying/ selling agent in India,
- Rendering services in information technology and development of software in India,
- Rendering technical support to the products supplied by parent/group companies and foreign airlines/ shipping companies.
Following works cannot be carried by a branch office:
- Retail trading activities of any nature,
- Manufacturing or processing activities in India, whether directly or indirectly.
- The scope of the activities may be further curtailed by conditions in the approval granted by the Reserve Bank.
Following works can be carried out by a liaison office:
- Restricted to representing the parent company/group companies,
- Promoting export from/to India,
- Promoting technical/financial collaborations between parent/group companies and companies in India,
- Gathering information for the parent company and acting as a
- Communication-channel between the parent company and Indian companies.
The expenses of liaison offices are to be met entirely through inward remittances from the Head Office outside India. A project office is usually set up for execution of large projects such as major construction, civil engineering, and infrastructure projects.