Foreign companies · India entry
Branch, Liaison, or Project Office?
Before a subsidiary, foreign companies have three lighter-touch options to enter India. Each comes with different RBI approval requirements, tax consequences, and activity restrictions.
What brings you to India?
Liaison Office
Ear to the ground. Cannot earn a rupee.
Parent req: USD 50K net worth OR 3 profitable years
Can earn income?
No
Activities allowed
Market research, promoting parent, coordination only
RBI approval
Required (AD bank → RBI, 6–8 weeks)
Validity
3 years (renewable up to 6 yrs for mfg/infra parents)
Tax filing in India
None required (no income)
Annual compliance
AAC from auditor + audited accounts to RBI by 30 Sep
Parent net worth req
USD 50,000 minimum OR 3 yrs profitable track record
Project Office
Project-specific. Sunsets when the work is done.
Parent req: Awarded contract / letter of intent
Can earn income?
Yes — from the specific project only
Activities allowed
Scope of the awarded contract only
RBI approval
Not needed if: inward remittance funded OR govt/PSU awarded OR multilateral agency funded
Validity
Duration of the project (no fixed term)
Tax filing in India
Yes — whether PE exists depends on DTAA with parent's country
Annual compliance
AAC to AD bank; RBI reporting; Income Tax if taxable PE
Parent net worth req
None — contract/letter of award is sufficient
Branch Office
Full operations. Taxed like a foreign company.
Parent req: USD 100K net worth AND 3 profitable years
Can earn income?
Yes — bill clients, repatriate profits after tax
Activities allowed
Export/import, professional services, R&D, IT/consulting, technical support
Activities NOT allowed
Retail trading, manufacturing, processing
RBI approval
Required (AD bank → RBI; manufacturing/telecom sectors need prior FIPB clearance)
Validity
No fixed term — annual activity compliance required
Tax in India
40% + surcharge + 4% cess = up to 43.7% effective on profits
Annual compliance
AAC + Income Tax return + ROC filing + transfer pricing if applicable
Parent net worth req
USD 100,000 minimum AND 3 yrs profitable track record
Key rules to know
All three modes are governed by FEMA 1999 and RBI Master Directions on Establishment of Branch / LO / PO. BO and LO require submission via Form FNC to an AD Category-I bank, which forwards to RBI.
Branch Offices are taxed as foreign companies at 40% + surcharge + 4% cess on Indian-source income — significantly higher than a wholly owned subsidiary under the new regime (22%). Consider whether a subsidiary makes more sense beyond ₹50L annual India revenue.
LO ≠ marketing office: you cannot accept orders, receive payments, or sign commercial contracts. Violations are treated as FEMA contraventions with significant penalties.
Common questions
India entry, statute-cited.
What are the options for a foreign company entering India?+
A foreign company can set up a liaison office (only for market research and parent-company liaison, with no revenue), a branch office (for the parent's activities in India), a project office (for a specific project), or incorporate an Indian subsidiary — a Pvt Ltd under the Companies Act 2013. The tool compares all four on RBI approval, compliance, and tax exposure.
Does a liaison office need RBI approval?+
Yes — establishing a liaison or branch office requires RBI approval, generally under the FEMA (Non-debt Instruments) Rules 2019 route through the AD bank, except where an inward remittance-funded office or a government/multilateral-agency-awarded project qualifies for the automatic route. The tool flags which route applies to your case.
What annual compliance does a branch/liaison office carry?+
Each office must file an Annual Activity Certificate (AAC) with its AD bank by 30 September, certified by an auditor, per the RBI Master Directions on establishment of branch/liaison offices (October 2024). Non-filing is a FEMA contravention under s.13, compoundable under s.15 of FEMA 1999 — with amounts that are case-specific rather than a fixed schedule.
When is a branch office taxed in India?+
A branch office carrying on business in India creates a permanent establishment, so its Indian-source income is taxed here under the Income-tax Act 1961 (and transfer-pricing documentation applies where it transacts with the parent). A liaison office that confines itself to permitted activities typically does not create a PE. The tool compares the two so you don't take on a PE unknowingly.
How is a project office different?+
A project office is set up for a specific project (construction, turnkey) and is usually on the automatic route if the project is awarded by a government or PSU or funded by an inward remittance or multilateral agency — the fastest entry mode. Its compliance is lighter, but it is limited to the project; a continuing India business ultimately needs a branch or subsidiary.