A person resident outside India or an entity incorporated outside India may enter India for doing business by:
Foreign companies may set up a Liaison Office (also known as a Representative Office) in India subject to prior approval from the Reserve Bank of India.
A Liaison Office can undertake only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers.
A Liaison Office can undertake the following activities in India:
Companies incorporated outside India and engaged in manufacturing or trading activities can set up a Branch Office in India subject to prior approval from the Reserve Bank of India.
Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India:
Normally, the Branch Office should be engaged in the activity in which the parent company is engaged. However, retail trading activities of any nature is not allowed for a Branch Office in India. A Branch Office is also not allowed to carry out manufacturing or processing activities in India.
'Project Office' means a place of business to represent the interests of the foreign company executing a project in India. A project office can only carry out activities relating and incidental to execution of the specific project in India.
A Project Office may be set up by foreign companies without any prior permission provided they have secured a contract from an Indian company to execute a project in India, and
However, if the above criteria are not met, the foreign entity has to approach the Reserve Bank of India for approval.
Foreign Non-Government Organizations, Non-Profit Organizations, Foreign Government Bodies/Departments may set up a Project Office in India only with the prior permission of the Government.