Branch Office in India.
Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent/group companies and undertaking the following activities in India:
Export/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 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.
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, processing activities in India, directly or indirectly. Branch offices are permitted to acquire property for their own use and to carry out the permitted/ incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China are not allowed acquire immovable property in India even for a Branch Office. These entities are allowed to take such property on lease basis only for a period not exceeding five years. Entities from Nepal are allowed to establish only Liaison Offices in India. Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.
Branch offices have to submit annual activity certificates from chartered accountants to RBI.
Branch Office in Special Economic Zones (SEZs)
RBI 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 (Section 592 to 602)
Such units function on a stand-alone basis
In the event of winding-up of business and for remittance of winding-up proceeds, the branch shall approach an Authorized Dealer Category-I Bank with the documents as mentioned in "Closure of Office" except the copy of RBI approval.