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A company expands its business by opening up its branch offices in various parts of the domestic country as well as in other countries. A branch office refers to an establishment which carries on substantially the same business and activity as is carried out by its Head Office. The opening up of branch offices is one of the options by which a foreign company can set up its business operations in India.

Foreign companies (other than incorporated in Nepal) engaged in manufacturing and trading activities abroad are allowed to setup branch office in India after obtaining the requisite approval from the Reserve Bank of India (RBI). Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by the Authorized Dealer in whose jurisdiction the office is set up.

Branch Office in Special Economic Zones (SEZs)

Reserve Bank has given general permission to foreign companies for establishing branch/unit in Special Economic Zones (SEZs) to undertake manufacturing and service activities. The general permission is subject to the following conditions:

such units are functioning in those sectors where 100 per cent FDI is permitted;

such units comply with part XI of the Companies Act,1956 (Section 592 to 602);

such units function on a stand-alone basis.

Permitted Activities

Export/Import of goods

Rendering professional or consultancy services, normally in the areas of parent's entity activity.

Carrying out research work, 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 agents in India.

Rendering services in Information Technology and development of software in India.

Rendering technical support to the products supplied by the Parent/ Group Companies.

Foreign Airline/shipping Company.

Restricted Activities

Retail trading activities of any nature is not allowed for a Branch Office in India.

A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.

The branch office cannot expand its activities or undertake any new trading, commercial or industrial activity other than those which are expressly approved by the RBI

The branch office cannot accept any deposits in India

The following eligibility criteria are also considered by the Reserve Bank while sanctioning Liaison Offices of foreign entities:

Track Record - A profit making track record during the immediately preceding five financial years in the home country.

Net Worth - Not less than USD 100,000 or its equivalent. (Net Worth is the total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name)

The application for establishing Liaison Office in India should be forwarded by the foreign entity through a designated AD Category - I bank to the Reserve Bank of India along with the prescribed documents.

Applicants that do not satisfy the eligibility criteria and are subsidiaries of other companies may submit a Letter of Comfort from their parent company in the prescribed form, subject to the condition that the parent company satisfies the eligibility criteria as prescribed.

Expand All


Whether any approval is required for establishing a Branch Office in India?
Whether residents of all countries can set-up branch office?
For what purpose a Branch Office can be established in India?
Is there any eligibility criteria required to be fulfilled for setting up of Branch Office?
How much time it takes to get the Branch Office established?
Is there any validity period/duration of Branch Office?
What is the rate of taxation on Branch Office?
Whether any approval is required for closing of Branch Office?
Why should I open a Branch office instead of incorporating a company?
Whether any physical presence is required during the approval process of setting up branch office?
Do I need to have some Indian residents in the Branch office?

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