Foreign Branch Office Registration in India: An Overview

Introduction to Foreign Branch Office Registration in India

Foreign branch office registration in India allows a foreign company to set up an extension of its overseas business, enabling it to carry on the same activities as the parent company under Indian laws and FEMA branch office regulations. A branch office is not a separate legal entity; it is treated as an extension of the foreign parent company operating in India. It can undertake activities like trading, consultancy, project execution, or liaison work, but cannot engage in manufacturing or retail trading on its own.

Branch offices are governed by the Companies Act, 2013, and the Foreign Exchange Management Act (FEMA), 1999. Setting up a foreign branch office in India requires prior approval from the Reserve Bank of India (RBI), usually obtained through an authorized dealer (AD) bank. Once registered, the branch must file annual returns with ROC, submit an Annual Activity Certificate (AAC) to the AD Bank and the Income Tax Department, and comply with FEMA and tax laws.

The regulatory framework applicable to branch office setup in India for foreign companies is primarily governed by the FEMA Act 1999 and the Companies Act 2013, with the RBI and the Ministry of Corporate Affairs (MCA) as the key regulators.

1. Foreign Exchange Management Act, 1999 (FEMA): FEMA empowers RBI to regulate the establishment, operation, and closure of branch offices by individuals resident outside India.
2. FEMA (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other place of business) Regulations, 2016: FEMA branch office regulations lay down the eligibility, permitted activities, approval process, and compliance requirements for branch offices.
3. Companies Act, 2013: A foreign company operating a branch office in India must comply with Chapter XXII of the Companies Act, including registration, filing of annual accounts, and other statutory obligations.

1. Reserve Bank of India (RBI): RBI is the primary regulator for foreign exchange aspects, including prior approval for setting up a branch office and monitoring remittances, reporting, and compliance.
2. Ministry of Corporate Affairs (MCA) / Registrar of Companies (ROC): ROC registration for foreign branch offices is mandatory, and they must file annual returns and financial statements as required under the Companies Act.
3. Income Tax Department: The branch is treated as a nonresident entity and must comply with Indian tax laws, including filing of returns and payment of taxes.

Who Can Set Up a Foreign Branch Office in India?

Under the foreign branch office setup in India, only eligible foreign entities incorporated outside India are permitted to establish a branch office, subject to specific regulatory conditions.

1. A foreign company (body corporate) incorporated outside India under the laws of its home country.
2. A foreign firm or other association of individuals (e.g., partnership) incorporated outside India may also be allowed, but the primary route is through a company.
3. The company should have a profit-making track record in its home country for the immediately preceding five financial years.
4. The company must have a net worth of not less than USD 100,000 (or its equivalent in foreign currency).

A branch office of a foreign company in India is permitted to carry out only those activities specifically allowed under 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, issued by the Reserve Bank of India (RBI).

1. The branch can carry on trading activities, including export and import of goods, in line with the business of the parent company.
2. The branch may provide professional, technical, or consultancy services, subject to the sectoral regulator’s policy and any licensing requirements.
3. The branch can conduct research and development activities in the same field as the parent company or its overseas group companies.
4. The branch may promote technical or financial collaborations between Indian companies and the parent company or its overseas group companies.
5. The branch can act as a representative of the parent in India and function as a buying or selling agent for the parent or group company.
6. The branch may engage in software development and related IT services, including providing technical support for products supplied by the parent or group company.
7. A branch office may be set up to represent a foreign airline or shipping company in India.
8. The branch office must carry on activities that are substantially the same as those carried on by the parent company abroad.
9. Activities must be permitted under India’s FDI policy; if the activity falls in a sector with restricted FDI, prior government approval (instead of the normal RBI route) may be required.

The branch cannot undertake any activity outside the above list without specific approval from RBI or the Central Government.

As a part of branch office registration in India, a branch office is strictly prohibited from engaging in certain activities under 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 RBI’s Master Directions.

1. A branch office cannot carry on retail sales of goods or services directly to end consumers in India.
2. Manufacturing, production, or processing of goods in India is not permitted, whether directly or indirectly, unless the branch is located in a Special Economic Zone (SEZ) and has specific approvals.
3. Branch offices are not allowed to enter into agriculture, plantation, or related activities in India.
4. Construction of buildings or infrastructure projects is generally not permitted for a branch office without specific government approvals.

RBI Approval and the Automatic Route Explained

For foreign branch office registration in India, obtaining permission from the RBI to set up a branch office, and this is generally done under the automatic route for eligible entities. Under the automatic route, RBI approval is granted without requiring a separate case-by-case clearance, provided the foreign company is a body corporate, has a profit-making track record for the first five years, and has a net worth of at least USD 100,000 (or equivalent). The application is submitted through an Authorized Dealer Category-I bank in Form FNC, along with documents like the certificate of incorporation, audited financials, and board resolution.

If the company is from a sensitive jurisdiction (e.g., Pakistan, China, etc.) or proposes activities in a sensitive sector (defense, telecom, etc.), it must follow the “specific approval route,” which requires prior approval of the Central Government and then RBI clearance.

To register a branch office in India, a foreign company must submit two sets of documents: one for RBI approval (via an AD bank) and another for registration with the Registrar of Companies (ROC) under the Companies Act, 2013.

1. Duly filled Form FNC branch office in India (application for branch office).
2. Certificate of Incorporation of the foreign company, in English, duly notarized and apostilled/legalized as per the Hague Convention or attested by the Indian Embassy/Consulate.
3. emorandum and Articles of Association (or equivalent charter documents) of the parent company, in English, similarly notarized/apostilled/attested.
4. Audited financial statements for the last five years, showing a profit-making track record.
5. Banker’s report/standby certificate from the overseas bank, confirming the company’s financial standing.
6. Board resolution authorizing the opening of a branch office in India and appointing authorized signatories in India.
7. Letter of Comfort from the parent company (if the applicant is a subsidiary and does not meet the net worth/profit criteria).
8. Details of the proposed branch office in India (address, nature of activities, authorized capital, etc.).
9. KYC documents (passport, PAN, address proof) of directors and authorized representatives in India.

1. RBI branch office approval letter (attested copy).
2. Certificate of Incorporation of the foreign company.
3. Charter documents (Memorandum & Articles or equivalent) of the foreign company.
4. Board resolution authorizing the establishment of the branch office in India.
5. Power of Attorney / Board Resolution in favor of the authorized representative(s) in India.
6. List of directors, secretary, and key managerial personnel of the foreign company.
7. List of shareholders holding 10% or more of the shares.
8. KYC of the authorized representative(s) in India (passport, PAN, address proof).
9. Address proof of the principal place of business in India (rent agreement, NOC, utility bill, etc.).
10. Copy of any other regulatory permission (if applicable, e.g., from sectoral regulators like SEBI, IRDAI, etc.).

1. All documents not in English must be accompanied by a certified English translation.
2. Documents executed outside India must be notarized and apostilled (for Hague Convention countries) or attested by the Indian Embassy/Consulate (for non Hague countries).
3. The branch must also obtain PAN, TAN, and GST registration (if applicable) and open a bank account in India in the name of the branch office.

Setting up a branch office in India involves a structured, two stage process: first obtaining approval from the Reserve Bank of India (RBI) and then registering with the Registrar of Companies (ROC) under the Companies Act, 2013.

Submit an application for RBI approval for a branch office in India through an Authorized Dealer Category-I bank of India using:

1. Form FNC branch office in India.
2. Supporting documents listed above

The AD bank reviews the application and forwards it to RBI for approval under the automatic route (for eligible companies) or the specific approval route (for sensitive jurisdictions/sectors). Once approved, RBI issues a permission letter (often with a unique identification number) allowing the establishment of the branch office in India.

Within 30 days of RBI approval, the branch office must be registered with the Registrar of Companies (ROC) in the state where the office is located.

1. RBI approval letter.
2. Certificate of Incorporation and charter documents of the foreign company.
3. Board resolution and power of attorney/board resolution in favor of the authorized representatives in India.
4. List of directors, secretary, and shareholders holding 10% or more shares.
5. KYC of authorized representative(s) and address proof of the principal place of business in India.

Once registration is successful, ROC allots a Corporate Identity Number (CIN) to the branch office, confirming its legal presence in India.

1. PAN from the Income Tax.
2. TAN for tax deduction purposes.
3. GST Registration (if the branch’s turnover exceeds the threshold or it is engaged in taxable supplies).

1. RBI approval letter.
2. ROC registration certificate and CIN.
3. PAN, TAN, and KYC of authorized signatories.

1. Once the bank account is opened, the branch can commence operations in India but must comply with:
2. Annual Activity Certificate (AAC): File an AAC along with audited financial statements with the AD bank and the Income Tax Department every year by 30 September.
3. RoC Fillings: File annual returns, balance sheets, and profit and loss accounts with ROC as required under the Companies Act.
4. Tax Compliance: File income tax returns, GST returns, and TDS/TCS returns as applicable.
5. Reporting to RBI: Report any changes in activities, address, or authorized representatives to the AD bank/RBI as required.

Failure to comply with these requirements can attract penalties under FEMA, the Companies Act, and tax laws.

Foreign branch office registration in India: foreign companies commonly face several practical and regulatory challenges, which, if not managed well, can delay operations, increase costs, or even lead to non-compliance.

1. India has a multilayered regulatory framework involving RBI, MCA, income tax, GST, and sectoral regulators, making it difficult for foreign companies to keep track of all filings, approvals, and reporting requirements.
2. Branch offices must comply with FEMA, the Companies Act, tax laws, and sector-specific rules, and any delay or error in R0C filings, GST returns, or the Annual Activity Certificate (AAC) can attract penalties.
3. Many foreign companies struggle to decide whether to set up a branch office, liaison office, project office, or a subsidiary, each with different eligibility, activities, and tax implications.
4. Documents from abroad (certificate of incorporation, MOA/AOA, financials, board resolutions) must be notarized and apostilled (for Hague countries) or attested by the Indian Embassy/Consulate, which can be time-consuming and costly.
5. Poorly drafted or inaccurate translations of foreign documents can lead to rejections by ROC or AD banks, delaying RBI approval and ROC registration.
6. Obtaining RBI approval via an AD bank can be slow, especially if the application is incomplete, the company is from a sensitive jurisdiction (e.g., China, Pakistan), or the proposed activities fall in a sensitive sector (defense, telecom, etc.).
7. India’s tax system (corporate tax, GST, TDS, and international tax rules) is complex, and foreign companies often face challenges in determining permanent establishment (PE) status, tax residency, and transfer pricing for transactions with the parent.

Conclusion

A branch office registration in India provides a simple entry route for foreign companies to conduct trading, consultancy, or representation in India, but it is not a separate legal entity and has strict FEMA and Companies Act compliance. It is suitable only for permitted activities like export/import, IT, and liaison work, and it cannot undertake manufacturing or retail. For long-term, scalable operations, especially in restricted sectors, a subsidiary is usually a better choice.

Before setting up a branch, a foreign company must carefully assess eligibility, activities, regulatory approvals, costs, and exit options to ensure a compliant and sustainable presence in India. Careful planning and professional guidance are essential to ensure that foreign branch office registration in India is completed efficiently and remains compliant over the long term.

We help foreign companies set up branch offices in India with end-to-end support. From RBI approval and FEMA compliance to ROC filings and ongoing regulatory requirements, our team ensures a smooth, compliant, and efficient foreign branch office registration process tailored to your business needs.

• Adding a Designated Partner to an LLP: Legal Requirements and Process

Frequently Asked Questions (FAQs) –

A foreign branch office in India is an extension of a company incorporated outside India. It is not a separate legal entity and operates in India under RBI approval, FEMA regulations, and the Companies Act, 2013.

Yes. Prior approval from the Reserve Bank of India is mandatory.

A branch office may engage in activities such as import and export trading, consultancy services, research and development, IT services, and acting as a representative of the parent company, subject to FEMA regulations.

A branch office cannot undertake manufacturing, retail trading, agriculture, plantation activities, or construction without specific approval.

A foreign company incorporated outside India with a profit-making track record of at least five years and a minimum net worth of USD 100,000 is eligible, subject to RBI and FEMA conditions.