How can a foreign company set up a liaison office In India

Updated: Aug 20

A foreign entity can establish a liaison office in India if it has a profit-making track record

during the immediately preceding three financial years in its home country and net worth of not less than USD 50,000 or its equivalent as per the latest audited balance sheet.

The parent company is required to obtain permission for establishing liaison office in India from the Reserve Bank of India (RBI). The application to seek approval from Reserve bank of India (RBI) should be submitted though an Authorised Dealer Category-I bank. The approval for establishment is granted for an initial period of 3 years.

It is required to have the same name as that of its parent company and is not considered as an entity separate from the parent company. Apart from registering itself with the Reserve Bank of India (RBI), it is also required to be registered with the Ministry of Corporate Affairs (MCA). Yes, a liaison office established in India is required to file Annual Activity Certificate with the Reserve Bank of India.


Activities that can be carried out by a liaison office

A liaison office can undertake the following activities:

Act as a channel of communication between the parent company and the parties in India Collecting information Informing parent company about opportunities in the Indian market

Providing information about the company and its products to the prospective Indian customers

A liaison office cannot carry out the following activities:

Undertake any business activity in India Earn any income in India.

Understanding establishment of Branch Office

A branch office can be established in India subject to approval from the Reserve Bank of India (RBI). The parent company is required to obtain permission for establishing branch office in India from the Reserve Bank of India (RBI). Apart from registering itself with the Reserve Bank of India the branch office to be established in India shall also required to be registered with the Ministry of Corporate Affairs (MCA). The application to seek approval for establishment of branch office in India from Reserve bank of India (RBI) should be submitted through an Authorised Dealer Category-I bank.

If it is not opened within six months from the date of approval letter, the approval for establishing the office in India shall be cancelled unless a permission is obtained from the concerned Authorised Dealer Category-I bank for extension of time for setting up the office by a further period of six months. If any further extension of time is required for opening the branch office, prior approval of the Reserve Bank of India (RBI) should be obtained in respect of the same.


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