Branch Office Setup

Establish your Indian business presence through a compliant branch office structure

Foreign companies looking to expand their operations into India may establish a branch office, subject to the various applicable foreign exchange regulations and regulatory approvals. A branch office allows an overseas company to undertake permitted business activities in India without incorporating a separate Indian subsidiary.

However, the proposed activities, financial eligibility, country of incorporation and regulatory requirements must be assessed before making an application. The setup involves compliance under the Foreign Exchange Management Act (FEMA), 1999 and the Companies Act, 2013.

Challenges in Setting Up a Branch Office in India

Foreign companies may face several regulatory and procedural challenges when establishing a branch office in India, including:

• Determining whether the proposed business activities are permitted under the applicable RBI framework.
• Meeting the prescribed financial eligibility criteria.
• Identifying whether the application requires RBI or Government approval.
• Preparing and certifying overseas corporate documents.
• Completing registration with the Registrar of Companies (ROC).
• Understanding applicable tax, banking and annual reporting requirements.

A proper assessment before filing helps avoid documentation gaps and delays in the establishment process.

Get Branch Office Setup Assistance

Understand the regulatory requirements and approval route applicable to your proposed Indian operations. Remind Legal can assist with the eligibility assessment, documentation, application coordination and post-setup compliance support.

Quick Facts

What Is a Branch Office in India?

A Branch Office (BO) is an establishment of a foreign company in India that carries out specific business activities permitted under the applicable FEMA regulations. It operates as an extension of the foreign parent company and it does not have a separate legal identity independent of that company.

A branch office may carry out only those activities permitted under the various applicable regulatory frameworks and approved by the relevant authorities. It cannot undertake the unrelated business activities or function as a separate Indian-incorporated entity.

The branch office structure is generally considered by foreign companies that want to conduct permitted commercial operations in India while retaining the parent company's legal identity.

Who Can Set Up a Branch Office in India?

A company incorporated outside India may apply to establish a branch office in India, subject to the applicable eligibility conditions and approval procedure.

The proposed establishment must satisfy the relevant financial, business and regulatory requirements. The applicant's country of incorporation, ownership, business sector and proposed Indian activities may also affect the approval route.

Eligibility Requirements for Branch Office Setup

Under the existing RBI framework, the general eligibility criteria for a branch office include: -

• Profit-Making Track Record: The foreign entity should have a profit-making track record during the immediately preceding five financial years in its home country.
• Minimum Net Worth: The applicant should have a net worth of at least USD 100,000 or its equivalent.
• Parent Company Support: A subsidiary that does not independently satisfy the financial criteria may submit a Letter of Comfort from its parent or group company, subject to the prescribed conditions.
• Permitted Business Activities: The proposed activities must fall within the activities permitted under the applicable RBI framework.
• Regulatory Compliance: The applicant must satisfy the applicable FEMA, KYC and other regulatory requirements.

Net worth is usually assessed based on the paid-up capital and free reserves, after deducting intangible assets, as reflected in the latest audited financial statements or certified accounts.

These are the criteria under the existing RBI framework and should be rechecked against the applicable regulations and notifications at the time of filing.

Legal Requirements for Branch Office Setup in India

FEMA, 1999 and RBI Regulations

The establishment of a branch office by a foreign entity is regulated under Section 6(6) of FEMA, 1999, read with the Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016 and the various relevant RBI directions.

The application is usually submitted to a designated Authorised Dealer (AD) Category-I bank. The bank examines and verifies the applicant's eligibility, business activities, background, source of funds and required KYC documents before granting the approval under the delegated framework.

Permitted Activities

A branch office can undertake only the activities permitted under the applicable RBI framework. These generally include: -

• Export and import of goods.
• Professional or consultancy services, subject to applicable restrictions.
• Research work in which the parent company is engaged.
• Promoting technical or financial collaborations.
• Representing the parent company in India and acting as its buying or selling agent.
• Information technology and software development services.
• Technical support for products supplied by the parent or group companies.
• Representing a foreign airline or shipping company.

The permitted activities are subject to the applicable conditions and approval. A branch office cannot undertake activities outside its authorised scope.

Companies Act, 2013

After establishing its place of business in India, the foreign company must comply with Chapter XXII of the Companies Act, 2013.

Under Section 380, the foreign company must deliver prescribed documents and particulars to the Registrar of Companies within 30 days of establishing its place of business in India. These include its constitutional documents, overseas office address, director’s details, authorised Indian representative and Indian office address.

Tax and Other Regulatory Requirements

The branch office must obtain the PAN and comply with the various applicable Indian tax provisions. TAN may be required where the branch is liable to deduct or collect tax. GST registration, labour registrations and local establishment-related registrations may also apply depending on the nature and scale of operations.

Documents Required for Branch Office Setup

The documents generally required include: -

Documents issued outside India may require notarisation, apostille or consular attestation, certification and translation, depending on the country of origin and the applicable filing requirements.

Branch Office Setup Process in India

The establishment process generally involves the following steps: -

Step 1: Eligibility and Activity Assessment

Assess the foreign company's financial eligibility, country of incorporation, business background and proposed activities to determine whether a branch office is an appropriate structure.

Step 2: Identify the Approval Route

Evaluate whether the application can be processed through the designated AD Category-I bank or requires the prior RBI or Government approval under the various applicable conditions.

Step 3: Prepare the Application and Documents

Prepare and organise Form FNC and compile the prescribed corporate, financial, ownership and business documents. Arrange the required certification and attestation of overseas documents.

Step 4: Submit the Application to the AD Bank

Submit the application to the designated AD Category-I bank. The bank conducts the due diligence and then examines the applicant's eligibility, KYC details and various proposed activities.

Step 5: Obtain Regulatory Approval

Where the application falls within the delegated approval framework, the AD bank processes it in accordance with the RBI directions. Applications requiring the prior approval are referred to the relevant authority.

Step 6: Establish the Indian Office

After obtaining the required approval, establish the branch office at the approved location and complete the applicable banking and various operational formalities.

Step 7: Complete ROC Registration

File the prescribed documents and various required particulars with the ROC under Section 380 of the Companies Act, 2013 within the applicable period.

Step 8: Obtain Tax and Other Registrations

Apply for PAN and complete GST, TAN and other registrations wherever applicable before commencing the relevant activities.

UThe overall cost of setting up a branch office depends on the regulatory route, document certification requirements, professional assistance and registrations applicable to the proposed activities.

There is no single fixed government fee applicable to every branch office proposal. The actual cost should be assessed based on the applicant's circumstances and current filing requirements.

Branch Office Setup Timeline

The timeline depends on the completeness of documents, due diligence by the AD bank, the need for RBI or Government approval and subsequent ROC and tax registrations.

Applications involving additional regulatory scrutiny or overseas document certification may take longer. Therefore, no uniform approval timeline should be assumed for every applicant.

Validity / Renewal

A branch office does not generally have the same fixed approval validity period prescribed for certain other categories of foreign offices. However, it must continue to satisfy the conditions of its approval and applicable FEMA requirements.

The foreign company should also monitor changes in its business activities, ownership, address and other particulars and complete the required regulatory reporting or approvals.

Exceptions / Special Cases

Certain applications may require prior RBI or Government approval, including cases involving specified countries, sensitive business sectors or applicants such as foreign government bodies and certain non-profit entities.

For example, the existing RBI framework identifies specific cases involving applicants from Pakistan and certain other jurisdictions, specified locations and sectors such as defence, telecom, private security and information and broadcasting. The applicable conditions and exceptions must be examined individually.

Post-Registration Compliance

After setting up the branch office, the foreign company must maintain ongoing regulatory and statutory compliance, including: -

• Annual Activity Certificate (AAC): Obtain the certificate from a practising Chartered Accountant and submit it to the designated AD Category-I bank and the prescribed tax authority in accordance with RBI directions.
• ROC Filings: File financial statements and other prescribed documents under Sections 381 and 384 of the Companies Act, 2013 and applicable rules.
• Tax Compliance: File applicable income-tax returns, GST returns and TDS statements, wherever required.
• Accounting Records: Maintain proper books of account and financial records relating to Indian operations.
• Change Reporting: Report changes in the company's registered particulars, authorised representatives or Indian office details within the prescribed period.
• Permitted Activities: Ensure that the branch office operates within the activities and conditions approved by the relevant authority.

The branch office must also comply with applicable labour, local and sector-specific requirements.

Common Mistakes to Avoid

• Applying without checking the financial eligibility criteria.
• Selecting activities that are not permitted for a branch office.
• Submitting incomplete or improperly certified overseas documents.
• Overlooking prior approval requirements.
• Missing the 30-day ROC filing requirement under Section 380.
• Treating the branch office as a separate Indian incorporated company.
• Ignoring annual activity, tax and corporate reporting obligations.

Why Choose Remind Legal?

Setting up a branch office in India requires coordination between FEMA regulations, RBI directions, company law and applicable tax requirements. Remind Legal can assist foreign companies with: -

• Preliminary eligibility and the regulatory assessment.
• Review of the proposed Indian business activities.
• Preparation and verification of the application documents.
• Assistance with the Form FNC and coordination with the designated AD bank.
• ROC registration documentation and filing support.
• Guidance on applicable tax registrations and post-setup compliance.

What Information Do We Need From You?

To assess the branch office proposal, the following information may be required: -

• Country and year of incorporation of the foreign company.
• Latest audited financial statements.
• Details of directors, shareholders and parent or group companies.
• Nature of existing business activities.
• Proposed activities in India.
• Proposed Indian office location.
• Details of the authorised representative in India.

Get Started with Branch Office Setup in India

Planning to establish a branch office in India? Begin with an assessment of your company's eligibility, proposed activities and applicable approval requirements.

Remind Legal  can assist with the documentation, regulatory application process and related registration formalities.

Legal Disclaimer

The information provided on this page is for general informational purposes and does not constitute any legal, financial or tax advice. Branch office eligibility, approval requirements and various compliance obligations depend on the foreign company's circumstances, proposed activities and various applicable laws. The regulatory framework and filing requirements should be verified at the time of application.