Foreign Company Registration in India — Branch Office, Liaison Office and Subsidiary

Foreign companies looking to establish a presence in India have several structural options — each with different regulatory requirements, permitted activities and tax implications. Understanding the differences between a Branch Office, Liaison Office, Project Office and Wholly-Owned Subsidiary is crucial before entering the Indian market. Here is the complete guide.

1. Liaison Office (LO)

A Liaison Office is the simplest entry structure — essentially a representative office that cannot carry on any business activity or earn income in India. Its permitted activities are strictly limited to:

• Collecting information about the Indian market
• Acting as a communication channel between the head office abroad and Indian customers/suppliers
• Promoting the parent company's products/services (but not selling them)

All expenses must be met by inward remittance from the parent company. Approval: From the Reserve Bank of India (RBI) through Form FNC. Initial approval is valid for 3 years (renewable). Annual compliance: Annual Activity Certificate from a CA to RBI and Ministry of Finance.

2. Branch Office (BO)

A Branch Office can carry on business activities similar to the parent company and can earn income in India. Permitted activities include: export/import, professional/consultancy services, research, technical support, IT and software development. A Branch Office cannot carry on manufacturing, retail trading or certain restricted activities without specific RBI approval.

Approval: RBI approval through Form FNC. Eligibility: parent company must have a profit track record of 5 years and net worth of USD 100,000. Tax treatment: Branch offices are taxed at 40% (plus surcharge and cess) on Indian-source income — higher than the 22% corporate tax rate.

3. Project Office (PO)

A Project Office is a temporary office established to execute a specific project in India. Suitable for construction, infrastructure and engineering companies with contracts in India. RBI general permission is available (no specific approval needed) if the project is funded by inward remittance or from a bilateral/multilateral international institution. The PO must be closed once the project is complete.

4. Wholly-Owned Subsidiary / Indian Company (Most Common)

Setting up a Private Limited Company or LLP where 100% of the equity is owned by the foreign company (or its affiliates) is the most popular and flexible entry route. Benefits:

• Can undertake virtually any business activity (subject to FDI sector restrictions)
• Corporate tax rate of 22% (or 15% for new manufacturing companies) — much lower than Branch Office
• Can raise funding from domestic investors as the company grows
• Perpetual existence even if the foreign parent changes
• No specific RBI approval needed for most sectors under automatic FDI route

Process: Incorporate a Private Limited Company under the Companies Act, 2013 through SPICe+ → File FDI declaration in Form FC-GPR with RBI via FIRMS portal after receiving share application money.

Registration with ROC — Form FC-1

Foreign companies establishing any place of business in India must register with the ROC within 30 days by filing Form FC-1 under Section 380 of the Companies Act, 2013. Documents required: certified copy of MOA/charter, list of directors, principal officer details, and FEMA approval letter.

Conclusion

India offers multiple entry routes for foreign companies — from the simple Liaison Office to a fully operational subsidiary. Choosing the right structure from the start saves significant regulatory and tax costs later. SPOTON helps foreign companies establish their India presence with the correct legal and tax structure, FEMA compliance and ongoing regulatory support.