A project office is nothing but a place of business established with the intention of representing a foreign entity to execute a project in India. Companies are allowed to form project offices either on a temporary basis or permanent. Businesses need to register the office from RBI and RoC before they start their actual operations. Companies need to fulfill certain conditions for the registrations. An application through the category 1 AD Bank along with the documents related to project agreement is required.
Foreign Companies face certain issues while incorporating a Subsidiary Company or Private Limited Company in India. The issues are-
To curb these issues and make the entry and exit process easier for the Foreign Companies, RBI has permitted the Foreign Companies to set up a Project Office in India. Given that, the applicant company has secured a contract from an Indian company to carry out a project in India. Alongside this, there are certain conditions-
The inward remittance, coming from abroad is funding the project
A Multilateral or bilateral International Financing Agency is funding the project
An appropriate authority has permitted the project
An Indian company or entity, which is associated with the contract has been permitted Term Loan for the project by any Public Financial Institution or by a bank, situated in India.
Having a secured project in India, a foreign entity can ask for permission to set up a project office in the country. Here are the mandatory requirements to apply for setting up a project office,
Formal Contract of The Project
As mentioned earlier, a foreign company looking to set a PO needs to have a secured project in India with a formal agreement for the same financial statement.
The project needs to be funded through inward remittance from abroad or at least an International financing agency need to fund the project
Clearance of Project
A certificate of clearance which shows the appropriate authority or ministry has cleared the project. In some cases, a clearance certificate from the environment ministry is also applicable.
If in case there is no foreign funding the company need to avail a term loan from a bank or public financial institute in India through the Indian Entity who has awarded the contract
Our end to end solution for setting up your Project Office in India involves the below processes. Have a look.
The global economic growth has already started its journey of shifting towards developing nations. Being one of the fastest-growing economies in the world, India offers plenty of opportunity to businesses looking to expand their operations in India. A physical existence is what you need to break into India’s developing business sector. However, the right kind of presence can be the make or break.
A foreign company can smoothly operate in India by opening a Branch Office. The parent company must obtain approval from the Reserve Bank of India, and get the registration done with ROC prior to branch office setup. A corporate body formed outside India willing to open their branch office in the country needs to get permission from the Reserve Bank under the FEMA act 1999.
Foreign companies looking for a limited presence in India should opt for setting up a project office in the country. It is the ideal method for companies who have the objective of completing a project within a specific time frame. Foreign companies need to get approval from the Reserve Bank of India and register themselves with the RoC if they have a contract to execute a project in India.
Transfer pricing is all about determining the nature, treatment and taxability of intra-group transactions across several geographies. The transaction is put to test by the determination of arm’s length price of the transaction as per the prescribed transfer pricing methodologies.
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