Liaison / Branch / Project Office in India

Foreign companies setting up a presence in India without a full subsidiary — through a Liaison Office (LO), Branch Office (BO), or Project Office (PO) — are governed by Regulation 4 of the Foreign Exchange Management (Establishment in India of a Branch Office, Liaison Office or Project Office) Regulations, 2016, and must apply to the Reserve Bank of India via Form FNC through an Authorised Dealer (AD) Category-I bank.

A Liaison Office, restricted to representing the parent's interests and undertaking liaison/communication activities only (no commercial or revenue-generating activity is permitted), requires the foreign parent to demonstrate a minimum net worth of USD 50,000, with a profit-making track record for the preceding three financial years in its home country. A Branch Office, permitted a wider range of commercial activities on the parent's behalf, requires a higher minimum net worth of USD 100,000 and a five-year profitability track record. A Project Office may be set up under the automatic route where the foreign company has secured a contract from an Indian entity to execute a specific project, and the project is funded by inward remittance from abroad or is funded/secured by a multilateral/bilateral international financing agency or a term loan from a public financial institution or bank in India.

Every LO/BO/PO must additionally register with the Registrar of Companies under Section 380 of the Companies Act, 2013, filing Form FC-1 within 30 days of establishing its place of business, and must file an Annual Activity Certificate (AAC) with the AD bank and tax authorities on or before 30 September each year confirming activities stayed within the RBI-approved scope.

Our engagement covers structure selection (LO vs BO vs PO) against the applicable net-worth and profitability thresholds, Form FNC filing, ROC Form FC-1 registration, and the annual AAC compliance cycle.

Liaison, branch and project office advisory covers the establishment and the regulation of the foreign company's non-subsidiary presence in India under the Foreign Exchange Management Act 1999 and the RBI's Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations 2016. The liaison office (LO) may only carry liaison activities — the promotion of the parent's business, the market research, the communication — with no commercial activity; the branch office (BO) may carry the parent's permitted activities with the approval route the regulations prescribe; and the project office (PO) is the temporary office for the execution of a specific project. Each is regulated, time-bound and non-tax-resident for most purposes.

The non-subsidiary presence is the lightest way for a foreign company to establish a foothold in India — the LO and the BO under the 2016 Regulations, each with the permitted activities, the approval, and the annual activity certificate. The choice between the LO, the BO, the project office and the subsidiary is the entry-mode decision, and the LO or the BO suits the company that wants the presence without the full subsidiary. The compliance is the approval conditions: the annual reporting, the activity certificate from the chartered accountant, the permissible activities respected.

The cost of a non-compliant office is the regulatory action: the office whose activities crossed the permitted scope, whose annual reporting lapsed, whose approval conditions were breached — each a default under the FEMA that the RBI can act on, with the office at risk.

This service is for foreign companies establishing or operating an LO, BO or project office in India. We determine the applicable route under the 2016 Regulations, prepare and file the application with the RBI or the AD bank, establish the office with the registrations — the PAN, the tax, the bank account — manage the annual activity certificate and the reporting, and keep the office's activities within the permitted scope.