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As foreign companies grow, they seek to expand their business overseas. Establishment of a Branch Office (BO) helps foreign companies to achieve strategic growth by enabling easier management of the business in the particular country or area.
A foreign company can set up a Branch Office in India after getting approval from the regulatory authority i.e., Reserve Bank of India (RBI). However, it can earn revenue from the Branch Office only by way of activities allowed by the RBI.
Branch office has been defined as per Companies Act 2013 and FEMA Act 1999.
A Branch Office is an extension of the parent company. It is suitable for foreign companies which are looking to set up a temporary office in India and not planning for long-term operations in India.
What activities can a Branch Office undertake in India?
A Branch Office represents a parent company and usually carries out same activities as that of the parent company. However, RBI permits only the following activities to be undertaken by the Branch Office in India:
(The permitted activities are subject to change from time to time as per the decision of Govt of India )
What are the prohibited activities for a Branch Office in India?
A Branch Office is not allowed to undertake the following activities:
If a Branch Office is willing to undertake an activity in addition to what has been permitted initially by the RBI, then it has to take the necessary permission from the RBI. The Branch Office is also required to justify the need along with comments of the designated AD Category - I bank through which it is filing the request.
(The prohibited activities are subject to change from time to time as per the decision of Govt of India)
What are the requirements and conditions for opening a Branch Office in India?
The eligibility criteria of the Parent company for opening a branch office in India are:
Other requirements and conditions for establishing Branch Office in India:
What are the post incorporation requirements for Branch Office in India?
After Incorporation, following are the mandatory requirements for a Branch Office in India: