It acts purely as a communication channel between the foreign parent company and Indian businesses, without engaging in any trading, commercial, or manufacturing activity. Additionally, a Liaison office provides tax optimisation.
Permitted Activities:
Eligibility Criteria:
Validity:
The approval is generally valid for 3 years. Upon expiry, the liaison office in India may apply for renewal or convert into a Joint Venture or Wholly Owned Subsidiary, subject to applicable approvals.
Unlike a liaison office, it is permitted to generate income through the activities approved by the RBI.
While it enjoys a leaner compliance framework compared to incorporated entities, a branch office in India is taxed at 35% on profits earned from Indian operations.
Permitted Activities:
Eligibility Criteria:
Validity:
No fixed validity period under FEMA unless specifically stated during approval. A branch office in India can operate indefinitely if it adheres to permitted activities and ongoing compliance requirements.
Profit Remittance:
Profits, net of applicable Indian taxes, may be freely repatriated to the parent company.
It is a temporary setup dedicated to completing the contract.
Key Features:
Tenure:
The project office in India remains operational only until the completion of the specific project.
Profit Remittance:
Profits, after paying applicable Indian taxes, may be remitted to the foreign parent company.
Seamless setup of your liaison, branch, or project office in India with full compliance.
We help you choose the right entry route for your business goals.
Fast-tracked coordination with Authorised Dealer Banks and regulators.
From filings to remittances, we handle it all post setup.
Proven experience in helping businesses expand into India.
Liaison office India setup is one of the most common entry routes for foreign companies looking to establish a presence in India without incorporating a subsidiary, but it comes with a specific FEMA compliance framework that must be followed precisely. Branch office FEMA rules govern what a foreign company’s Indian branch or liaison office can and cannot do: a liaison office is restricted to promotional and representational activities only, it cannot undertake commercial activity, earn income in India, or remit funds outside the permitted scope. The liaison office India setup process requires prior RBI approval (not automatic route), submission of financial statements of the foreign parent, and annual activity certificates certifying compliance with the restricted scope of operations.
Branch office FEMA rules differ from liaison office India setup rules in one critical respect: a branch office is permitted to carry out the same activities as the foreign parent and can earn income in India, remit profits abroad, and engage in commercial transactions. However, branch offices require RBI approval in most sectors and must comply with annual reporting obligations including filing of Annual Activity Certificates and financial statements with the AD bank and RBI. Liaison office India setup violations, including commercial activity beyond the permitted scope, incorrect remittances, or failure to file annual certificates, can result in the RBI revoking the registration entirely. At Femabide Advisorz, we handle the complete liaison office India setup and branch office FEMA rules compliance, from RBI application to annual reporting, ensuring your Indian office remains compliant throughout its operational life.
