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A foreign company is permitted to establish a project office in India either on a permanent basis or on a temporary basis. This can be done only if the foreign company has secured a contract from an Indian company to execute a project in India.
But before a project office begins its operations in India, it is mandatory for a project office to get registration done with Reserve Bank of India (RBI) and Registrar of Companies (ROC).
'Project Office' means a place of business to represent the interests of the foreign company executing a project in India but excludes a Liaison Office.
What is a Project office?
A project office is a temporary or permanent establishment of a foreign company in India. A foreign company can establish a project office in India only if it has secured a contract from an Indian company to execute a project in India.
Who can set up a Project Office?
Foreign companies can set up a project office in India with the prior permission of RBI, provided they have a secured contract from an Indian company for execution of a project in India, and
In case the above criteria are not met, the foreign entity has to approach the Reserve Bank of India to get the approval.
What are the conditions to open a Project office in India?
RBI has simplified the procedures for the establishment of a Project Office in India. However, there are certain conditions that need to be fulfilled to open a Project Office in India. There are certain conditions that need to be complied with such as
What are the permissible debits and credits to the INR account of a Project Office?
The permissible debits to the INR account of a Project Office are restricted to meeting the local expenses of the office or expenses relating to winding up or completion of the project. For such intermittent remittances, the project office has to furnish supporting documents to the AD bank justifying that sufficient provisions have been made by the project office to meet the liabilities in India.
Similarly, the permissible credits to the INR account of a Project Office are restricted to funds received from the head office for meeting the day to day office expenses or receipt of funds under any contract. A project office should not receive any amount other than mentioned above without prior approval of RBI.
What are the permitted activities to the Project office in India?
Foreign companies are permitted to establish a project office in India either on a permanent basis or on a temporary basis in order to execute specific projects. However, such project office cannot carry on any activity other than the activity directly relating to the execution of the project for which it has been established.