B.S.SRIDHAR & Co.,,

CHARTERED ACCOUNTANTS CHENNAI

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ESTABLISHMENT OF BRACH OFFICE , REPRESENTATIVE OFFICE , LIAISON OFFICE IN CHENNAI , TAMILNADU , INDIA

 

1. How can foreign companies open Liaison/Project/Branch office in India?

 

Foreign company can set up Liaison/Branch Offices in India after obtaining approval from Reserve Bank of India. Reserve Bank of India has given general permission to foreign companies to establish Project Offices in India subject to certain conditions.

 

2. What are the activities that can be carried out by a Liaison Office in India ?

 

A Liaison office can carry on 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 abroad. 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.

 

3. What are the activities that can be carried out by a Branch office of a foreign Company in India?

 

Reserve Bank permits companies engaged in manufacturing and trading activities abroad to set up Branch Offices in India for the following purposes:

 

To represent the parent company/other foreign companies in various matters in India e.g.

acting as buying/selling agents in India

 

To conduct research work in the area in which the parent company is engaged

 

To undertake export and import activities and trading on wholesale basis

 

To promote possible technical and financial collaborations between the Indian companies

and overseas companies.

Rendering professional or consultancy services

 

Rendering services in Information technology and development of software in India

 

Rendering technical support to the products supplied by the parent/Group companies.

 

A branch office is not allowed to carry out manufacturing, processing activities directly/indirectly. A Branch Office is also not allowed to undertake Retail Trading activities of any nature in India. Branch Offices have to submit Activity Certificate from a Chartered Accountant on an annual basis to the Central Office of FED. For annual remittance of profit Branch Office may submit required documents to an authorised dealer.

 

Permission for setting up branch offices is granted by the Reserve Bank of India. 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.

 

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