A branch office is suitable to establish a temporary presence in Indian cities. The branch office serves as an extension of the head office business and carries on the same business and activity as that of its parent company
Procedure for a Foreign company to set up a Branch Office in India
Foreign companies can set up a branch office in India. But unlike the case of setting up a company, a branch office requires approval from the Reserve Bank of India (RBI). Only upon getting the branch license from RBI, the foreign company can commence the operations.
A branch office is suitable for a foreign company to test and understand the Indian market as it does allow the companies to just do the major activity. Any additional activity to be carried by the Branch office shall be illegal.
- Reserve Bank Route — Principal business of the foreign entity falls under sectors where 100% Foreign Direct Investment (FDI) is permissible under the automatic route.
- Government Route — Principal business of the foreign entity falls under the sectors where 100% FDI is not permissible under the automatic route.
- Applications from entities falling under this category and those from NGOs / Non – Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.
Procedure for Approval from RBI
Currently as per the RBI Requirement, the application for the branch office and branch office is submitted through the Authorized dealer. The authorized dealers are the institutions having banking licenses.
The application in the prescribed form (Form FNC) should be submitted to the RBI.