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BRANCH OFFICE IN INDIA

Branch Office (BO) setting up is the way for foreign entities to enter India and explore the potential of Indian markets. Foreign entities can set up offices in India without registering themselves as comPANies. BO office establishment of a BO in India is regulated by the by RBI through Foreign Exchange Management Act (FEMA). Entities who want to open BO in India need to apply to the Reserve Bank of India (RBI) in the prescribed format along with associated documents.

 

Eligibility Criteria prescribed by RBI for opening Branch Office: 

The foreign entity must have a profit-making track record for the preceding five financial years in the home country.

Net worth should not be less than USD 100,000 or its equivalent.

 

Permitted activities of Branch Offices in India:  

  A branch office cannot carry out manufacturing activities. However, these activities can be sub-contracted to Indian manufacturers. The activities permitted for branch offices are enumerated below:- 

Export / Import of goods

Carrying out research work in which the parent Company is engaged

Rendering professional or consultancy services

Promoting technical or financial collaborations

Representing the parent Company in India and acting as buying/selling agent

Rendering services in IT

Providing technical support to the products supplied by the parent Company

Airline / Shipping

Automatic Route: 

If the principal business off foreign entity falls under sectors where 100% FDI is allowed, AD Category-I bank may consider such applications under delegated powers.

Approval Route: 

If principal business falls under sectors where 100% FDI is not allowed. In such cases, applications are considered by RBI in consultation with Ministry of Finance, Govt of India.

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FAQ - Frequently asked questions

How do I open a branch office?

To open a branch office, a company has to get approval from its directors. Hence a company must call a board meeting on a pre-decided date by giving notice to all the directors. Board of directors must pass a resolution to open a branch office. And BOD must authorize a director to carry on all the related activities.


How do I open a branch office?

To open a branch office, a company has to get approval from its directors. Hence a company must call a board meeting on a pre-decided date by giving notice to all the directors. Board of directors must pass a resolution to open a branch office. And BOD must authorize a director to carry on all the related activities.


Can an Indian company open a branch office abroad?

A person resident in India being a Firm or Company or Body Corporate registered in India are eligible to establish a branch outside India.


What is the branch business?

A branch office is a location, other than the main office, where a business is conducted. Most branch offices consist of smaller divisions of different aspects of the company such as human resources, marketing, and accounting.


Is a branch a company?

A Branch is a more independent entity that conducts business in its own name but still acts on behalf of the company. A Branch is not legally separate from the foreign parent company and so is also subject to the local laws governing the foreign parent company.


What is the difference between a branch and representative office?

A representative office is not allowed to generate profit, while a branch office is allowed to perform certain activities of the parent company and may generate profits.