A liaison office is the most basic form of business presence that a foreign company can have in India. Permission to open a liaison office in India is granted by RBI, the apex exchange control authority. Liaison offices are normally established by foreign companies to promote their business interests by spreading awareness of their product(s) and exploring opportunities for business and investment in India. Foreign insurance companies have a general permission to establish a liaison office in India provided they have obtained permission from the Insurance Regulatory Development Authority of India and they comply with certain prescribed conditions.
Scope of activities
- Represent the parent/group companies in India
- Promote exports and imports from/to India
- Promote technical /financial collaborations between parent/group companies and companies in India
- Act as a communication channel between parent/group companies and companies in India. Typically, a liaison office is not permitted to
- Earn any income
- Undertake any industrial, trading or commercial activity
- Enter into any agreement on behalf of the head office
- Charge any fee or commission or otherwise earn any income, in respect of liaison activities carried on in India
In case a foreign company wishes to establish a business presence in India for the limited purpose of executing a project, it may establish a project office for its Indian operations. The objective behind establishment of a project office is to enable a foreign company to establish a temporary base in India for executing specific projects/contracts.
- The project is funded directly by inward remittance from abroad
- The project is funded by a bilateral or multilateral international Financing Agency
- The project has been cleared by an appropriate authority
- A company or entity in India awarding the contract has been granted term loan by a public financial institution or a bank in India for the project
In all other cases, prior approval of the RBI is required to establish a project office in India.
Scope of activities
Branch offices are permitted to undertake only those activities, as approved by RBI, that typically enable them to:
- Undertake the export and import of goods.
- Render professional or consultancy services.
- Carry out research work in which the parent company is engaged.
- Promote technical and financial collaborations between Indian companies and parent/overseas group companies.
- Represent the parent company in India and act as buying and selling agents.
- Render services in information technology and development of software in India.
- Render technical support to the products supplied by the parent/group companies.
- Operate as a foreign airline/shipping company.