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Branch Office

Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices (BO) in India with specific approval of the Reserve Bank. Such BOs are permitted to represent the parent / group companies and undertake certain activities in India. However, retail trading activities or manufacturing / processing activities are not allowed for a BO. Reserve Bank of India considers the track record of the applicant company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinising the application. Profits earned by the BOs are freely remittable from India, subject to payment of applicable taxes.

A BO can undertake the following activities in India:

Export / Import of goods.
Rendering professional or consultancy services.
Carrying out research work, in areas in which the parent company is engaged.
Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
Representing the parent company in India and acting as buying / selling agent in India.
Rendering services in information technology and development of software in India.
Rendering technical support to the products supplied by parent / group companies.
Foreign airline / shipping company.

Eligibility

A BO has to obtain permission from RBI. The application in form FNC should be forwarded by the foreign entity through a designated AD Bank to RBI which will be considered by RBI under two routes:

Reserve Bank Route: Where principal business of the foreign entity falls under sectors where 100% FDI is permissible under the automatic route.
Government Route: Applications from entities falling under this category and those from NGO’s / NPO’s / Government Bodies / Departments are considered by RBI in consultation with the Ministry of Finance.

In addition, the following eligibility criteria is also considered by RBI:

Profit making track record of the foreign entity in its home country for the preceding 5 FYs for BO.
Net worth (paid up share capital + free reserves – intangible assets) of USD 1,00,000/- for BO as per the last audited Balance Sheet.

Without prior permission of the Reserve Bank, no person being a citizen of / registered in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau can establish in India, a BO in India. - by A M B JAIN & CO.

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