Foreign Company Setup in India

"Foreign company registration" often means setting up a branch, liaison or project office in India, but none of these is a separate company. A branch office is part of the foreign parent, with no separate legal identity, so its liabilities are the parent's. A wholly owned subsidiary, on the other hand, is an Indian company with its own board and limited liability. The choice affects tax, what the Indian entity can do, how profits come home and what has to be reported every year. Getting it wrong is costly: a liaison office cannot invoice Indian customers, and converting it later is a fresh approval. We help choose the structure, obtain the approvals and keep the entity compliant.

Ways to set up in India

• Subsidiary: for full operations, local hiring and a long-term presence.
• Branch office: for permitted activities such as import and export, consultancy, research and technical support, without forming a company.
• Liaison office: for market research, representing the parent and building relationships, with no income.
• Project office: for a specific contract, closed when the project ends.

Two sets of rules, in parallel

FEMA and the RBI

Branch, liaison and project offices need approval under FEMA, applied for through an authorised dealer bank in Form FNC. A subsidiary's foreign investment follows the automatic route or the government approval route, depending on the sector; most sectors allow 100% foreign investment without prior approval, but some are capped or need approval.

Companies Act and the Registrar

Under section 2(42), a company incorporated outside India with a place of business in India is a foreign company. Section 380 requires it to file Form FC-1 with the Registrar within 30 days of establishing that place of business. This applies to branch, liaison and project offices. A subsidiary is instead incorporated as an Indian company.

Investors from countries sharing a land border

Investment by entities from, or beneficially owned by persons from, countries sharing a land border with India needs prior government approval under Press Note 3 (2020) as amended, in addition to the usual process, whatever the structure. Branch and liaison office applications from these countries also need security clearance. Timelines need to allow for this.

The process

1. Choose the structure and route: check the sector's FDI route and whether the land border rule applies. Correcting a wrong structure after filing usually means starting again.
2. Documents: parent's incorporation certificate, constitution, audited accounts and board resolution, notarised and apostilled or consularised.
3. Application: Form FNC through the authorised dealer bank for a branch, liaison or project office; SPICe+ for a subsidiary.
4. Approval: RBI approval for a branch or liaison office usually takes four to six weeks; a subsidiary is often incorporated in 7 to 15 working days.
5. ROC registration: Form FC-1 within 30 days of setting up the place of business.
6. PAN, TAN and bank account: needed before the entity can operate or receive funds.
7. Ongoing compliance: ROC, FEMA and income tax filings from then on.

Financial criteria for the parent

• Branch office: a profit-making track record for the immediately preceding five years and net worth of at least USD 100,000.
• Liaison office: a profit-making track record for the preceding three years and net worth of at least USD 50,000.

Where these are not met, a letter of comfort from the parent company may be considered.

After registration

How we help

Chartered accountants and company secretaries in one team handle both the RBI and ROC sides. The activity certificate, ROC filings and tax returns all come from the same records, so we can spot inconsistencies before the bank or Registrar does. We plan the work around your structure: a liaison office does not have the same obligations as a subsidiary. For a subsidiary, we also handle incorporation, FC-GPR and FLA reporting and ongoing compliance.

Common questions

Is a branch office the same as a subsidiary?

No. A subsidiary is a separate Indian company. A branch is the foreign company itself operating in India, so its liabilities remain with the parent.

Can a liaison office earn income?

No. It can represent the parent, research the market and act as a communication channel, but it cannot invoice, sign commercial contracts or earn income in India.

Does a liaison office file income tax returns?

Yes. Returns and annual statements are required every year, whatever its income.

Can a liaison office become a branch or subsidiary later?

Yes, but it needs fresh approval under the new structure. It is not an automatic upgrade.