How to set-up a Branch office in India

A Branch office is one of the means by which a foreign company can set up its business presence in India. A branch office is permitted to represent the foreign company in India and do permitted commercial activities and also earn income thereon. Branch office is regulated by Reserve Bank of India.

The purpose and role of a branch office is more exhaustive then the liaison office which, is not allowed to do any commercial activity in India.

A Branch office is allowed to undertake business activity which is mentioned in its license granted by Reserve Bank of India. Some of these activities are-

Export/ import of goods
Professional or consultancy services
Research work
Technical and financial collaborations
Representing parent company in India
Information technology and software development
Any other activity permitted by RBI

A company desirous of opening a Branch office in India is required to obtain permission from RBI. Application to RBI is made through an Authorized Dealer which is normally a bank. Only those organizations which fulfill the following criteria are allowed to make an application for opening a Branch office-

Track Record- The foreign company shall have track record of making profit in immediately 5 preceding years in its home country.

Net worth- The net worth of foreign company as per its latest audited financial statements shall not be less than USD 100,000.

Further, the application is considered by RBI under routes-

Automatic route- In cases where business activity of the foreign company falls in category in which 100% FDI is permitted, approval is granted by RBI on its own.

Government route- In cases where business activity of the foreign company does not fall in 100% FDI category, RBI grants approval after clearance from Ministry of Finance.

Setting up of a Branch office is a very specialized process requiring huge documentation and sound knowledge of legal regulations. This needs to be handled by an expert in this field. Legal Dost takes pride in offering its expertise in opening a Branch office in India. For further information about opening a branch office in India contact Legal Dost.

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