Business Setup in India
With a population exceeding 1.3 billion, India continues to attract global business interest. Setting up and registering a business in such a vibrant yet evolving economy calls for expert guidance and local insights.
At Value Recruiters, we offer end-to-end support to help foreign companies establish a strong foothold in India. Whether you’re planning to set up a Liaison Office, Branch Office, or Project Office, our team provides the right assistance and professional expertise to ensure your smooth entry and long-term success in the Indian market.
Branch Office
Whether it’s engaging in the export and import of goods or offering professional and consultancy services, foreign companies are permitted to establish a branch office in India to carry out specific business operations. However, setting up a branch office requires prior approval from the Reserve Bank of India (RBI) and must comply with the regulations outlined under the Foreign Exchange Management Act (FEMA), 1999.
Branch Office In India
✅ Same Name as Parent Company: The branch office must operate under the same name as your company abroad.
📈 Proven Financial Track Record: Your parent company should have a profitable track record for at least the past 5 years.
💼 Financial Responsibility: If the branch office doesn’t generate revenue in India, the parent company must cover its financial obligations.
💰 Minimum Net Worth Requirement: As per the latest audited balance sheet, your company should have a total paid-up capital or net worth of at least USD 100,000.
Activities Branch Office Can Do
💼 Providing professional or consultancy services
🌍 Importing or exporting goods to and from India
🔬 Conducting research in areas related to the parent company’s business
🤝 Representing the parent company in India, including acting as a buying or selling agent
💻 Offering IT and software development services
🛠️ Providing technical support for products of the parent company
Liaison Office
The main purpose of setting up a Liaison Office in India is to study the market, understand the investment climate, and manage the company’s interests in a specific region.
For foreign companies, establishing a Liaison Office is often the first step toward doing business in India. It involves thorough research to identify market opportunities and supply sources, while also serving as a communication bridge between the parent company and Indian stakeholders—including regulatory authorities and potential customers.
Liaison Office In India
🚫 No Commercial Activities: A Liaison Office is not permitted to carry out any business or commercial operations in India.
💸 No Borrowing or Lending: It cannot borrow or lend money within the country.
🏦 Expenses Covered by Parent Company: All operating costs must be funded through inward remittances from the parent company, sent via the designated bank.
🧾 No Tax Liability: Since it doesn’t generate income in India, a Liaison Office is not subject to Indian taxation.
Activities Liaison Office Can Do
🤝 Representing the Parent Company or Group in India
🌐 Promoting export and import activities between India and the home country
💡 Facilitating financial and technical collaborations between the parent company and Indian businesses
📞 Serving as a communication link between the parent company and Indian stakeholders
Project Office
Setting up a Project Office in India is one of the most effective ways for foreign companies to establish a temporary yet strong presence for executing specific projects.
To get started, foreign companies must obtain approval from the Reserve Bank of India (RBI) and complete registration with the Registrar of Companies (RoC).
At Value Recruiters, we assist foreign businesses through every step of the process—right from documentation to registration—ensuring full compliance with the Companies Act, 2013. Once the required formalities are completed, you’re all set to launch your project office and begin operations in India.
Condition For Project Office
💸 Direct Funding from Abroad: The project must be funded through inward remittances from the parent company abroad.
🌍 Funding by Agencies: Projects can also be financed by multilateral or bilateral financing agencies.
✅ Approval from Authorities: In some cases, the project must be cleared by a relevant regulatory authority in India.
🏦 Funding via Indian Institutions: The project may also be awarded by an Indian company or entity, with a Term Loan granted by a Public Financial Institution or an Indian bank.
Activities Project Office Can Do
💰 Funded through Inward Remittance: The project must be directly financed from abroad via inward remittances.
🌐 Supported by Financing Agencies: It can also be funded by a multilateral or bilateral financing agency.
✅ Cleared by an Appropriate Authority: In specific cases, the project may require approval from a competent Indian authority.
🏗️ Contract Awarded with Local Financing: An Indian company or entity awarding the contract may also provide funding through a Term Loan granted by a Public Financial Institution or an Indian bank.
FAQs
Why India?
According to a recent World Bank report, India has significantly improved its ease of doing business thanks to a wave of impactful reforms. It’s now much easier for companies to pay taxes, obtain construction permits, and carry out cross-border transactions.
In fact, the “Doing Business 2019” report lists India among the top 10 most improved economies globally.
With a population of over 1.36 billion, India presents a massive and diverse market for foreign businesses. From automotive, infrastructure, and chemicals to pharmaceuticals, textiles, and more—India offers unmatched opportunities for companies looking to expand their global footprint.
How can foreign companies open Liaison Office or Branch Office in India?
Foreign companies planning to establish a Liaison Office or Branch Office in India must submit an application using Form FNC, along with the necessary documents. This application is addressed to the General Manager, Foreign Exchange Department, at the Central Office Cell of the Reserve Bank of India (RBI).
However, the entire process must be routed through an Authorised Dealer (AD) Bank, which acts as an intermediary between the foreign entity and the RBI for necessary approvals.
Are there any minimum net worth requirements for a foreign company intending to establish a Branch Office (BO) or Liaison Office (LO) in India?
To set up a Liaison Office (LO) or Branch Office (BO) in India, a foreign company must meet the following financial criteria based on its latest audited balance sheet:
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🏢 Branch Office: Minimum net worth of USD 100,000 or its equivalent.
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📨 Liaison Office: Minimum net worth of USD 50,000 or its equivalent.
These financial thresholds ensure that the foreign entity has sufficient backing to support its operations in India.
Does a Liaison Office come under the taxation policy of India?
A Liaison Office in India is not permitted to carry out any commercial, industrial, or trading activities, either directly or indirectly. As a result, it does not generate any income within India, and therefore, is not subject to taxation under Indian tax laws.