Branch office of foreign company in India:As the name suggest the Branch office is setup by a foreign company in India to carry out the Branch activity for its business. The foreign company can have any revenue from the Indian Branch office only from the activity allowed by the Reserve Bank of India; it has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India.
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Branch office is suitable for a foreign company to test and understand the Indian market with a very strict control by the Reserve Bank of India, as it does allow the companies to do business but just to do the activity which are mentioned in the application of Branch office, Any additional activity to be carried by the Branch office shall be illegal. Branch office can carry additional business activities only with the prior approval from the Reserve Bank of India.