{"id":13147,"date":"2021-06-29T01:51:46","date_gmt":"2021-06-28T20:21:46","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=13147"},"modified":"2022-01-24T19:00:41","modified_gmt":"2022-01-24T13:30:41","slug":"overview-on-liaison-office-project-office-branch-office","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/","title":{"rendered":"overview on liaison office, project &#038; branch office"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d07fe738255\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d07fe738255\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#LIAISON_OFFICE_PROJECT_OFFICE_BRANCH_OFFICE\" title=\"LIAISON OFFICE, PROJECT OFFICE &amp; BRANCH OFFICE\">LIAISON OFFICE, PROJECT OFFICE &amp; BRANCH OFFICE<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#LIAISON_OFFICE\" title=\"LIAISON OFFICE\">LIAISON OFFICE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#BRANCH_OFFICE\" title=\"BRANCH OFFICE\">BRANCH OFFICE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#PROJECT_OFFICE\" title=\"PROJECT OFFICE \n\">PROJECT OFFICE \n<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#PROVISIONS_FOR_ESTABLISHMENT_OF_BRANCHLIAISONPROJECT_OFFICES_BY_FOREIGN_ENTITIES\" title=\"PROVISIONS FOR ESTABLISHMENT OF BRANCH\/LIAISON\/PROJECT OFFICES BY FOREIGN ENTITIES \n\">PROVISIONS FOR ESTABLISHMENT OF BRANCH\/LIAISON\/PROJECT OFFICES BY FOREIGN ENTITIES \n<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#DOCUMENTS_REQUIRED\" title=\"DOCUMENTS REQUIRED\">DOCUMENTS REQUIRED<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#SUMMARIZED_DETAILS_OF_VALIDITY_AND_TIME_PERIOD_FOR_REGISTRATION\" title=\"SUMMARIZED DETAILS OF VALIDITY AND TIME PERIOD FOR REGISTRATION\">SUMMARIZED DETAILS OF VALIDITY AND TIME PERIOD FOR REGISTRATION<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#PERMISSIBLE_SOURCES_FOR_FUNDING_ODI\" title=\"PERMISSIBLE SOURCES FOR FUNDING ODI\">PERMISSIBLE SOURCES FOR FUNDING ODI<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#OVERSEAS_INVESTMENT_UNDER_AUTOMATIC_ROUTE\" title=\"OVERSEAS INVESTMENT UNDER AUTOMATIC ROUTE\">OVERSEAS INVESTMENT UNDER AUTOMATIC ROUTE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#PROCEDURE_TO_BE_FOLLOWED_UNDER_THE_AUTOMATED_ROUTE\" title=\"PROCEDURE TO BE FOLLOWED UNDER\u00a0THE AUTOMATED\u00a0ROUTE\">PROCEDURE TO BE FOLLOWED UNDER\u00a0THE AUTOMATED\u00a0ROUTE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#OVERSEAS_INVESTMENT_UNDER_RBI_APPROVAL_ROUTE\" title=\"OVERSEAS INVESTMENT UNDER RBI APPROVAL ROUTE\">OVERSEAS INVESTMENT UNDER RBI APPROVAL ROUTE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#COMPLIANCES_BY_INDIAN_PARTY-ON_INVESTMENT_FINANCIAL_COMMITMENT\" title=\"COMPLIANCES BY INDIAN PARTY-ON INVESTMENT\/ FINANCIAL COMMITMENT\">COMPLIANCES BY INDIAN PARTY-ON INVESTMENT\/ FINANCIAL COMMITMENT<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#payment_banks_an_overview\" title=\"payment banks an overview\">payment banks an overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#Last_date_of_DIN_KYC_Has_been_extended\" title=\"Last date of DIN KYC Has been extended\">Last date of DIN KYC Has been extended<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#Filing_of_Director_KYC_DIR-3\" title=\"Filing of Director KYC DIR-3\">Filing of Director KYC DIR-3<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/carajput.com\/blog\/overview-on-liaison-office-project-office-branch-office\/#significant-changes-introduced-in-foreign-director-investment-policy\" title=\"significant-changes-introduced-in-foreign-director-investment-policy\">significant-changes-introduced-in-foreign-director-investment-policy<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/06\/ACTIVITIES-PERMITTED-FOR-OVERSEAS-INVESTMENT.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-13149\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2021\/06\/ACTIVITIES-PERMITTED-FOR-OVERSEAS-INVESTMENT.jpg\" alt=\"ACTIVITIES PERMITTED FOR OVERSEAS INVESTMENT\" width=\"984\" height=\"565\" \/><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"LIAISON_OFFICE_PROJECT_OFFICE_BRANCH_OFFICE\"><\/span><span style=\"color: #ff0000;\"><strong>LIAISON OFFICE, PROJECT OFFICE &amp; BRANCH OFFICE<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A company\u00a0that&#8217;s\u00a0incorporated outside India has\u00a0the choice\u00a0to own\u00a0offices in India that\u00a0don&#8217;t seem to be\u00a0primarily subsidiary companies. Subject to the\u00a0depository financial institution\u00a0of India (\u201cRBI\u201d) guidelines,\u00a0a distant\u00a0company can have a branch office, liaison office, or project office. The functions\u00a0of those\u00a0offices are limited as these\u00a0don&#8217;t seem to be\u00a0full-fledged offices\u00a0sort of a\u00a0subsidiary office.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"LIAISON_OFFICE\"><\/span><span style=\"color: #000080;\"><strong>LIAISON OFFICE<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Liaison offices\u00a0because the\u00a0word suggest\u00a0it&#8217;s\u00a0an office that facilitates close working relationships between the parent company situated abroad\u00a0and also the\u00a0business parties in India.\u00a0the opposite\u00a0term for Liaison offices is Representative Office. Liaison offices have restrictions\u00a0and can&#8217;t\u00a0undertake any business activities in India and also cannot earn any income in India.<\/p>\n<p>The liaison office can undertake only\u00a0the subsequent\u00a0activities in India:<\/p>\n<ul>\n<li>Represent the foreign company in India.<\/li>\n<li>Promote export from or import to India.<\/li>\n<li>Encouragement of the technical\/financial collaboration between the parent or group companies along with the Indian companies.<\/li>\n<li>Act as a\u00a0communicating\u00a0between the parent company\u00a0and therefore the\u00a0Indian company.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"BRANCH_OFFICE\"><\/span><strong><span style=\"color: #000080;\">BRANCH OFFICE<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A branch office mirrors the function of a parent company. The offices are established to perform similar business operations\u00a0because the\u00a0foreign parent company at different locations in India. Branch offices can\u00a0stick with it\u00a0substantially\u00a0the identical\u00a0business\u00a0because the\u00a0parent company.\u00a0they will\u00a0perform\u00a0all the trading activities that a parent company does.\u00a0the most important\u00a0restriction being\u00a0affecting\u00a0manufacturing activities although\u00a0the identical\u00a0is\u00a0subcontracted to Indian Manufacturers.<\/p>\n<p>The branch office can undertake only\u00a0the subsequent\u00a0activities in India:<\/p>\n<ul>\n<li>Providing professional or consultancy services<\/li>\n<li>Promote export from or import to India<\/li>\n<li>Performing research\u00a0add\u00a0which the parent company is engaged<\/li>\n<li>Encourage technical\/financial collaboration between parent or group companies and Indian companies<\/li>\n<li>Representing\u00a0the corporate\u00a0in India and acting as an agent for trading<\/li>\n<li>Providing services in information technology and software development in India<\/li>\n<li>Providing technical support in respect of the products supplied by the parent company<\/li>\n<li>Operate as\u00a0an overseas\u00a0airline or\u00a0company<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"PROJECT_OFFICE\"><\/span><strong><span style=\"color: #000080;\">PROJECT OFFICE<\/span><br \/>\n<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The RBI grants the parent company situated abroad\u00a0to own\u00a0project offices in India for representing the interests of the parent company executing projects in India but excludes Liaison Office.<\/p>\n<p>The project office can only undertake the activity relating and attendant the project. the first condition for opening a project office India is that the parent company must have secured a contract from an Indian company.<\/p>\n<p><span style=\"color: #000080;\"><strong>The following table illustrates the circumstance\u00a0during which\u00a0the above offices can undertake inward remittances:<\/strong><\/span><\/p>\n<table style=\"height: 311px;\" width=\"834\">\n<tbody>\n<tr>\n<td><strong>LIAISON OFFICE<\/strong><\/td>\n<td>ONLY RECEIVE INWARD REMITTANCES FROM THE PARENT COMPANY THROUGH NORMAL BANKING CHANNELS.<\/td>\n<\/tr>\n<tr>\n<td><strong>BRANCH OFFICE<\/strong><\/td>\n<td>ALL THE EXPENSES OF THE BRANCH OFFICE WILL BE INCURRED USING THE FUNDS RECEIVED FROM ABROAD OR THE INCOME GENERATED BY THE BRANCH.<\/td>\n<\/tr>\n<tr>\n<td><strong>PROJECT OFFICE<\/strong><\/td>\n<td>ONLY RECEIVE INWARD REMITTANCES FROM THE PARENT COMPANY THROUGH NORMAL BANKING CHANNELS.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><span class=\"ez-toc-section\" id=\"PROVISIONS_FOR_ESTABLISHMENT_OF_BRANCHLIAISONPROJECT_OFFICES_BY_FOREIGN_ENTITIES\"><\/span><strong><span style=\"color: #000080;\">PROVISIONS FOR ESTABLISHMENT OF BRANCH\/LIAISON\/PROJECT OFFICES BY FOREIGN ENTITIES<\/span><br \/>\n<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>PREREQUISITES <\/strong><\/span><\/p>\n<p>The parent company must obtain permission from the\u00a0bank\u00a0of India (RBI)under provisions of\u00a0exchange\u00a0Management Act, 1999 (\u201cFEMA\u201d) when\u00a0it&#8217;s\u00a0desirous of opening a Liaison or Branch Office. The applications in Form FNC\u00a0are going to be\u00a0considered by the RBI under two routes:<\/p>\n<ol>\n<li>Reserve Bank Route: If the principal business of the foreign parent company falls under the 100 sectors where\u00a0one hundred pc\u00a0Foreign Direct Investment (FDI) is permissible under\u00a0the automated\u00a0route, applications\u00a0are going to be\u00a0processed by RBI.<\/li>\n<li>Government Route: If the principal business of the foreign parent company\u00a0doesn&#8217;t\u00a0constitute\u00a0the 100 sectors where 100% FDI is permissible under\u00a0the automated\u00a0route or\u00a0the applying\u00a0is from companies that are Non- Profit Organizations\/ Non \u2013 Government Organizations \/ Government Bodies\/ Departments, such applications\u00a0are\u00a0considered by the RBI in consultation with the Ministry of Finance, Government of India.<\/li>\n<\/ol>\n<p><span style=\"color: #000080;\"><strong>Additionally, the RBI\u00a0also will\u00a0consider\u00a0the subsequent\u00a0criteria while sanctioning the Liaison office\/ Branch office of a parent company.<\/strong><\/span><\/p>\n<table style=\"height: 329px;\" width=\"849\">\n<tbody>\n<tr>\n<td><\/td>\n<td><strong>NET WORTH<\/strong><\/td>\n<td><strong>TRACK RECORD<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>LIAISON OFFICE<\/strong><\/td>\n<td>GREATER THAN OR EQUAL TO USD 50000 OR ITS EQUIVALENT<\/td>\n<td>A TRACK RECORD SHOWING PROFIT DURING THE IMMEDIATELY PRECEDING 3 FINANCIAL YEARS IN THE HOME COUNTRY.<\/td>\n<\/tr>\n<tr>\n<td><strong>BRANCH OFFICE<\/strong><\/td>\n<td>GREATER THAN OR EQUAL TO USD 100000 OR ITS EQUIVALENT<\/td>\n<td>A TRACK RECORD SHOWING PROFIT DURING THE IMMEDIATELY PRECEDING 5 FINANCIAL YEARS IN THE HOME COUNTRY.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"DOCUMENTS_REQUIRED\"><\/span><span style=\"color: #000080;\"><strong>DOCUMENTS REQUIRED<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>The documents required in respect of establishment of Branch or Liaison Offices will be as follows &#8211;<\/strong><\/span><\/p>\n<ol>\n<li>The Certificate of Incorporation Registration, Memorandum of Association and Articles of Association copy attested by the\u00a0notary\u00a0within the\u00a0country of registration. The documents must be in English, if not then\u00a0the identical\u00a0must be translated, notarized and cross-verified or attested by the Indian Embassy or Consulate\u00a0within the\u00a0home country.<\/li>\n<li>The Audited\u00a0record\u00a0of the applicant company for the last three years or Account\u2019s statement certified by any Registered Accounts Practitioner or\u00a0an authorized\u00a0Public Accountant (CPA) clearly showing\u00a0the online\u00a0worth.<\/li>\n<li>A report from the applicant\u2019s banker\u00a0within the\u00a0host country or country of registration showing\u00a0the number of years of the applicant\u2019s banking relations\u00a0therewith\u00a0bank<\/li>\n<li>Power of Attorney in favor of the signatory of Form FNC\u00a0just in case\u00a0the top\u00a0of the overseas entity\u00a0isn&#8217;t\u00a0signing Form FNC.<\/li>\n<li>All details of activities conducted\u00a0within the\u00a0project office in India.<\/li>\n<li>Proof of Residence of the authorized personnel.<\/li>\n<li>Copy of the passport of authorized personnel.<\/li>\n<li>A letter stating that the corporate will open a checking account in India.<\/li>\n<\/ol>\n<p><span style=\"color: #000080;\"><strong>The documents for opening project office are as follows:<\/strong><\/span><\/p>\n<ul>\n<li>The Certificate of Incorporation, Memorandum of Association &amp; Article of Association attested by Indian Embassy\/Notary Public\u00a0within the\u00a0country of Registration.<\/li>\n<li>Audited\u00a0record\u00a0(current) of the applicant company.<\/li>\n<li>A resolution by the Board of the parent company stating the intention behind establishing the project office in India.<\/li>\n<li>Documentary proof that shows the Project Office is financially backed by the bilateral or multilateral International Financing Agencies OR the Indian Company has obtained term loan for the Project Office, availed from the Financing Institution or Bank in India.<\/li>\n<li>A report from the applicant\u2019s banker\u00a0within the\u00a0host country or country of registration, which shows\u00a0the quantity\u00a0of years the applicant has had banking relations\u00a0therewith\u00a0bank.<\/li>\n<li>A letter of authority issued by the parent company in\u00a0relevancy\u00a0the local representative.<\/li>\n<li>All details of activities conducted\u00a0within the\u00a0project office in India.<\/li>\n<li>Proof of residence of the authorized personnel.<\/li>\n<li>Copy of passport of the authorized personnel.<\/li>\n<li>A letter stating that the corporate will open a checking account in India.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"SUMMARIZED_DETAILS_OF_VALIDITY_AND_TIME_PERIOD_FOR_REGISTRATION\"><\/span><span style=\"color: #000080;\"><strong>SUMMARIZED DETAILS OF VALIDITY AND TIME PERIOD FOR REGISTRATION<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 532px;\" width=\"866\">\n<tbody>\n<tr>\n<td><strong>PARTICULARS<\/strong><\/td>\n<td><strong>TIME PERIOD FOR REGISTRATION<\/strong><\/td>\n<td><strong>VALIDITY OF REGISTRATION<\/strong><\/td>\n<td><strong>VALIDITY OF APPROVAL FOR ESTABLISHMENT OF OFFICE<\/strong><\/td>\n<\/tr>\n<tr>\n<td>LIAISON OFFICE<\/td>\n<td>40-45 DAYS<\/td>\n<td>THREE YEARS<\/p>\n<p><strong>EXCEPTION<\/strong>\u00a0\u2013 CONSTRUCTION DEVELOPMENT &amp; NBFC \u2013 TWO YEARS<\/td>\n<td>6 MONTHS FROM DATE OF APPROVAL<\/td>\n<\/tr>\n<tr>\n<td>BRANCH OFFICE<\/td>\n<td>40-45 DAYS<\/td>\n<td>NO SPECIFIC TIME FRAME GENERALLY 2-3 YEARS<\/td>\n<td>6 MONTHS FROM DATE OF APPROVAL<\/td>\n<\/tr>\n<tr>\n<td>PROJECT OFFICE<\/td>\n<td>10-15 DAYS<\/td>\n<td>DEPENDS ON PROJECT TIMELINE<\/td>\n<td>6 MONTHS FROM DATE OF APPROVAL<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"PERMISSIBLE_SOURCES_FOR_FUNDING_ODI\"><\/span><span style=\"color: #ff6600;\"><strong>PERMISSIBLE SOURCES FOR FUNDING ODI<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"OVERSEAS_INVESTMENT_UNDER_AUTOMATIC_ROUTE\"><\/span><span style=\"color: #000080;\"><strong>OVERSEAS INVESTMENT UNDER AUTOMATIC ROUTE<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Under\u00a0the automated\u00a0Route, an Indian Party\u00a0doesn&#8217;t\u00a0require any prior approval from the\u00a0banking concern\u00a0for creating\u00a0overseas direct investments\u00a0in an exceedingly\u00a0Wholly Owned Subsidiary (WOS) abroad. The Indian Party should approach\u00a0a certified\u00a0Dealer Category \u2013 I bank for effecting the remittances towards such investments.<\/p>\n<p>\u201cIndian Party\u201d is any or combination of the following:<\/p>\n<ul>\n<li>A company incorporated in India<\/li>\n<li>A body corporate incorporated under an Act of Parliament<\/li>\n<li>A partnership firm registered under the Indian Partnership Act, 1932<\/li>\n<li>A\u00a0liability\u00a0partnership incorporated under the\u00a0indebtedness\u00a0Partnership Act, 2008, and includes\u00a0the other\u00a0entity in India as\u00a0is also\u00a0notified by the\u00a0banking company.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>ACTIVITIES PERMITTED FOR OVERSEAS INVESTMENT<\/strong><\/span><\/p>\n<p>An Indian company can make overseas investment in any activity (except\u00a0people who\u00a0are specifically prohibited)\u00a0during which\u00a0it&#8217;s\u00a0experience and expertise. However, for undertaking activities\u00a0within the\u00a0financial sector, certain additional conditions\u00a0laid out in\u00a0Regulation 7\u00a0is also\u00a0adhered to.<\/p>\n<p>It is to be noted that the real estate sector and Banking have been prohibited from overseas investment. However, Indian banks operating in India can\u00a0founded\u00a0JV\/WOS abroad provided they obtain clearance under the Banking Regulation Act 1949.<\/p>\n<p>Only an Indian Company engaged in financial sector activities can make investment\u00a0within the\u00a0financial services sector provided it fulfills\u00a0the subsequent\u00a0norms:<\/p>\n<ul>\n<li>has earned\u00a0profit\u00a0during the preceding three financial years from the financial services activities;<\/li>\n<li>is registered with\u00a0the acceptable\u00a0regulatory agency\u00a0in India for conducting financial services activities;<\/li>\n<li>has taken approval from the requisite regulatory authorities, incorporated both in India as well as abroad in respect of venturing into such financial sector activity;<\/li>\n<li>has fulfilled the prudential norms regarding capital adequacy as prescribed by the concerned administrative body in India.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>The criteria for overseas direct investment\/ financial commitment under\u00a0the automated\u00a0Route are as under:<\/strong><\/span><\/p>\n<ul>\n<li>The Indian Party can invest up to 400% of its net worth (as per the last audited Balance Sheet) in WOS for any bonafide activity permitted as per the law of the host country subject to prior RBI approval for limit exceeding USD 1 Billion per FY;<\/li>\n<li>The Indian Party\u00a0isn&#8217;t\u00a0on the Reserve Bank\u2019s exporters\u2019 caution list \/ list of defaulters to the\u00a0industry\u00a0published\/ circulated by the Credit Information Bureau of India Ltd. (CIBIL) \/ RBI or\u00a0the other\u00a0credit information company as approved by the\u00a0Federal Reserve Bank\u00a0or under investigation by the Directorate of Enforcement or any investigative agency or regulatory authority; and<\/li>\n<li>The Indian Party routes all the transactions\u00a0referring to\u00a0the investment\u00a0in an exceedingly\u00a0WOS through\u00a0only 1\u00a0branch of\u00a0a certified\u00a0dealer (bank) to be designated by the Indian Party.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>\u201cFinancial commitment\u201d means\u00a0the number\u00a0of direct investments outside India by an Indian Party and includes \u2013<\/strong><\/span><\/p>\n<ul>\n<li>by way of contribution to equity shares of the WOS abroad;<\/li>\n<li>as loans to its WOS abroad;<\/li>\n<li>100% of\u00a0the quantity\u00a0of corporate guarantee issued on behalf of its overseas WOS;<\/li>\n<li>100% of\u00a0the number\u00a0of bank guarantees; and<\/li>\n<li>50% of the quantity of performance guarantee issued on behalf of its overseas WOS.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"PROCEDURE_TO_BE_FOLLOWED_UNDER_THE_AUTOMATED_ROUTE\"><\/span><span style=\"color: #000080;\">PROCEDURE TO BE FOLLOWED UNDER\u00a0THE AUTOMATED\u00a0ROUTE<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Indian Party\u00a0meaning to\u00a0make overseas direct investment under\u00a0the automated\u00a0route is required to\u00a0top off\u00a0form ODI online through AD bank duly supported by the documents listed therein, i.e., certified copy of the Board Resolution, Statutory Auditors certificate and Valuation report (in case of acquisition of an existing company) as per the valuation norms and approach\u00a0a licensed\u00a0Dealer (designated Authorized Dealer)\u00a0for creating\u00a0the investment\/remittance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"OVERSEAS_INVESTMENT_UNDER_RBI_APPROVAL_ROUTE\"><\/span><span style=\"color: #000080;\"><strong>OVERSEAS INVESTMENT UNDER RBI APPROVAL ROUTE<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Proposals not covered by the conditions under the automated route require prior approval of the banking concern that a particular application in Form ODI with the documents prescribed therein is required to be made through the Authorized Dealer Category \u2013 I banks.<\/p>\n<p><span style=\"color: #000080;\"><strong>Reserve Bank shall take\u00a0into consideration\u00a0the subsequent\u00a0factors while considering such applications:<\/strong><\/span><\/p>\n<ul>\n<li>clear\u00a0viability of the WOS outside India;<\/li>\n<li>Contribution to external trade and other benefits\u00a0which is able to\u00a0accrue to India through such investment;<\/li>\n<li>Financial position and business\u00a0data\u00a0of the Indian Party\u00a0and also the\u00a0foreign entity; and<\/li>\n<li>Expertise\u00a0and skill\u00a0of the Indian Party\u00a0within the\u00a0same or related line of activity as of the WOS outside India.<\/li>\n<\/ul>\n<p>With a view to enabling recognized star exporters with a proven\u00a0journal\u00a0and a consistently high export performance to reap\u00a0the advantages\u00a0of globalization and liberalization, proprietorship concerns and unregistered partnership firms are allowed\u00a0to line\u00a0up WOS outside India with the prior approval of the\u00a0bank\u00a0subject to satisfying certain eligibility criteria.<\/p>\n<p>An application in form ODI\u00a0could also be\u00a0made to the Chief\u00a0chief,\u00a0depository financial institution\u00a0of India,\u00a0exchange\u00a0Department, Overseas Investment Division,\u00a0office, Amar Building, 5th Floor, Fort, Mumbai 400 001, through their bank.<\/p>\n<p>Registered Trusts and Societies engaged in manufacturing \/ educational \/ hospital sector are allowed to create investment within the same sector(s) in a very WOS outside India, with the prior approval of the Federal Reserve Bank.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"COMPLIANCES_BY_INDIAN_PARTY-ON_INVESTMENT_FINANCIAL_COMMITMENT\"><\/span><span style=\"color: #000080;\"><strong>COMPLIANCES BY INDIAN PARTY-ON INVESTMENT\/ FINANCIAL COMMITMENT<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li>Filing Form ODI along with:<\/li>\n<\/ol>\n<ul>\n<li>Certified copy of Board Resolution for investment<\/li>\n<li>Statutory Auditor\u2019s Certificate<\/li>\n<li>Valuation report for\u00a0the worth\u00a0of shares<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>Obtain UIN through AD bank \u2013 required for all investments<\/li>\n<li>Post investment, ensure receipt of share certificates or\u00a0the other\u00a0document as evidence and submit within six months to AD bank.<\/li>\n<li>Report\u00a0the main points\u00a0of\u00a0the selections\u00a0taken by a WOS regarding diversification of its activities \/setting\u00a0from\u00a0step down subsidiaries\/alteration in its share holding pattern within 30 days of the approval\u00a0of these\u00a0decisions by the competent authority concerned of such WOS in terms of the local laws of the host country.<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>During Investment:<\/li>\n<li>On changes in investment\u00a0report back to\u00a0RBI through AD bank within 30 days of approval by competent authority of WOS<\/li>\n<li>Repatriate to India all dues viz. dividends, royalty, technical fees, etc. within 60 days of falling due.<\/li>\n<li>Annual Filing:<\/li>\n<li>Annual Performance Report (APR)\u00a0partly\u00a0II of Form ODI by 31st December\u00a0per annum<\/li>\n<li>Annual Return on Foreign Assets &amp; Liabilities (FLA) by 15th July\u00a0per annum<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Where the law of the host country\u00a0doesn&#8217;t\u00a0mandatorily require auditing of the books of accounts of WOS, the Annual Performance Report (APR)\u00a0is also\u00a0submitted by the Indian Party\u00a0supported\u00a0the un-audited annual accounts of the WOS provided:<\/p>\n<ul>\n<li>Statutory Auditors of the Indian Party certify that law of the host country\u00a0doesn&#8217;t\u00a0mandatorily require auditing of the books of accounts of WOS\u00a0and also the\u00a0figures\u00a0within the\u00a0APR are as per the un-audited accounts of the overseas WOS and<\/li>\n<li>Also, the un-audited annual accounts of the WOS should have been adopted and ratified by the Board of the Indian party.<\/li>\n<\/ul>\n<p>Read our articles:<\/p>\n<ul>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"payment_banks_an_overview\"><\/span><a href=\"https:\/\/www.caindelhiindia.com\/blog\/payment-banks-an-overview-2\/\">payment banks an overview<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Last_date_of_DIN_KYC_Has_been_extended\"><\/span><a href=\"https:\/\/carajput.com\/learn\/last-date-of-din-kyc-update-has-been-extended.html\">Last date of DIN KYC Has been extended<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"Filing_of_Director_KYC_DIR-3\"><\/span><a href=\"https:\/\/carajput.com\/learn\/filing-of-director-kyc-dir-filing-of-director-kyc-dir3-kyc.html\">Filing of Director KYC DIR-3<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<li>\n<h4><span class=\"ez-toc-section\" id=\"significant-changes-introduced-in-foreign-director-investment-policy\"><\/span><a href=\"https:\/\/carajput.com\/blog\/significant-changes-introduced-in-foreign-director-investment-policy\/\">significant-changes-introduced-in-foreign-director-investment-policy<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>LIAISON OFFICE, PROJECT OFFICE &amp; BRANCH OFFICE A company\u00a0that&#8217;s\u00a0incorporated outside India has\u00a0the choice\u00a0to own\u00a0offices in India that\u00a0don&#8217;t seem to be\u00a0primarily subsidiary companies. Subject to the\u00a0depository financial institution\u00a0of India (\u201cRBI\u201d) guidelines,\u00a0a distant\u00a0company can have a branch office, liaison office, or project office. The functions\u00a0of those\u00a0offices are limited as these\u00a0don&#8217;t seem to be\u00a0full-fledged offices\u00a0sort of a\u00a0subsidiary office. &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[9966],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/13147"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=13147"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/13147\/revisions"}],"predecessor-version":[{"id":13151,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/13147\/revisions\/13151"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=13147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=13147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=13147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}