Business Setup in India

According to a recent report from the World Bank, the ease of doing business in India has improved quite a lot after a series of reforms. Things are much more comfortable for companies to pay taxes, get construction permits, and proceed with cross border transactions. As per the “Doing Business 2019” report, India features in the list of top 10 most improved economies. From automotive, infrastructure, chemical to pharmaceuticals, textiles and others with a population of 1.36 billion India can offer the most prominent market to perform business proceedings for foreign entities.

Foreign entities looking to set up Liaison Office or Branch Office in India need to apply through Form FNC along with the required documents to the General Manager of Foreign Exchange Department under the Central Office Cell of RBI. However, the application should be processed via an Authorised Dealer Bank.

A foreign company willing to set up a LO in India should have reported a net worth of minimum USD 100,000 or its equivalent as per their latest Audited Balance Sheet. In the case of the Liaison Office, the value should be a minimum of USD 50,000 or equivalent.

The answer is no! If a Liaison Office or a Branch Office needs to have more than one account, they need to get permission from the Reserve Bank of India through its AD Category I bank while maintaining the reason clearly.

While Liaison Offices can’t acquire property, Branch Offices and Project Offices can have a property for their own use. They can proceed with incidental or permitted activities but can’t offer rent or lease on their property.

A Liaison Office does not ensure or assure any income in India since they don’t have the permission to conduct commercial/ industrial or trading activity directly or indirectly. Hence, a company that only has a Liaison Office is not subjected to taxation in India.

Yes, Liaison Offices can upgrade as a Branch Office, all they need to do is re-designate the account as a Branch Office account.

If a foreign company establishes a direct business connection with the Liaison Office, then it can trigger permanent establishment status in India.

Yes, an AD bank can offer approval for the transfer of assets.

No, an Indian subsidiary company abroad can’t open a BO in India within the automatic route.

No, AD banks don’t need the UIN form RBI. They have the authority to offer UIN form for Project Office.