India has become a remarkable marketplace attracting businesses from all around the world to invest in the country and start their operations in India. India is a developing market where people have started to explore alternative, better-quality and technologically-advanced products and services.
Having a physical presence in India is the key to tap into the vast potential of human resources available in India and find a way into the growing market of the country. One of the easiest ways to enter the Indian market is by setting up a Branch Office in India.
What is a Branch Office?
A branch office is a temporary office a foreign company can set up in India when it does not have long-term plans to run operations. One of the most preferred India Entry Strategy, a branch office can be set up by a foreign company in India for the following purposes:
- Export or Import of goods
- Rendering professional or consultancy services
- Carrying out research work, in which the parent company is engaged.
- Promoting technical or financial collaborations between Indian companies and a parent or overseas group company.
- Representing the parent company in India and acting as buying or 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 or group companies.
- Foreign airline or shipping company
Prior Approval of RBI For Setting Up Branch Office In India
A branch office can be set up in India only after the prior approval by Reserve Bank of India (RBI) is received in the following cases:
- The applicant is a citizen of or registered company in Pakistan.
- The applicant is a citizen of or registered company in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a liaison or branch office in Jammu and Kashmir, North East region and Andaman and the Nicobar Islands.
- The principal business of the applicant falls under the ambit of Defence, Telecom, Private Security and Information and Broadcasting sectors.
- The applicant is a Non-Government organization, Non-Profit organization, body, agency or department of a foreign government.
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Conditions for Setting Up a Branch Office in India
A foreign company can open a branch office in India by obtaining approval of the RBI through AD Category 1 Banker and further registration of the foreign company with the MCA. To set up a branch office in India as a way of India entry, the foreign company must fulfil the following requirements and conditions:
- The name of the Branch office must be kept the same as the parent company.
- All the expenses of the branch office must be handled by the parent company.
- The foreign company must have a profitable turnover in the past 5 years before setting up a branch office in India.
- The net worth of the parent company must be not less than USD 100,000.
Documents required for forming a Branch Office in India
There are numerous documents required to set up a branch office in India which include:
- Form FNC 1.
- Letter to seek approval from the RBI.
- Authority letter to allow local agents/representatives to act on behalf of the parent company.
- Certificate of Incorporation.
- Memorandum & Articles of association of the parent company attested by the Indian embassy or notary public in the country of registration.
- Board resolution to open a Branch Office.
- Latest audited Balance sheet and annual accounts of the parent company.
- Name, Address, email ID and telephone number of the authorized person in the home country.
- Bank details.
- Proof of identity of all the Directors.
- Details of the Individuals / Company holding more 10% of Equity.
- Structure of the Organization and its Shareholding pattern.
- KYC of Shareholders holding more than 10% Equity in the Applicant Company.
The application form along with the requisite documents are filed with the RBI and the branch office registration takes 45-60 days for the RBI to approve. After the approval, the branch office must be registered as a company or LLP with the ROC in the state where the branch office is to be set up.
The following documents are required to register with the Registrar of Companies:
- Form 44
- Charter, Statutes or Memorandum and Articles of association or other Instrument constituting or defining the constitution of the company.
- Details of individuals directors
- Details of corporate directors.
- Letter of Approval by RBI.
- Power of attorney or board resolution in favour of the authorised representatives.
LetsComply is internationally recognised as a Virtual CFO for businesses and provides end-to-end services to foreign companies to set up their branch office in India. Call us at +91-9717070500 or send an email at firstname.lastname@example.org to begin the process of opening a branch office in India.