Setting up a liaison office in India
To facilitate and promote the parent company’s business activities, and act as a communications channel between the foreign parent company and Indian companies Foreign companies can establish liaison office in India.
A liaison office is permitted to engage in the following activities:
- Facilitate communication between the overseas head company and parties in India to establish market opportunities;
- Promote imports/exports between countries;
- Establish financial and technical cooperation between overseas and Indian companies; and
- Represent the overseas head company in India.
The Foreign Exchange Management Act (FEMA) governs the application and approval process for the establishment of liaison office in India.
Under the Act, foreign enterprises must receive specific approval from the Reserve Bank of India’s (RBI) Foreign Exchange Department to operate a liaison office in the country.
Foreign insurance companies can establish LOs in India only after obtaining approval from the Insurance Regulatory and Development Authority (IRDA).
Foreign banks can establish LOs only after obtaining approval from the Department of Banking Regulation (DBR), RBI.
Applications are to be submitted through Form FNC Annex-1 (Application for Establishment of Branch/Liaison Office in India).
