Foreign Branch Office
Foreign Branch Office in India
A Foreign Branch Office is one of the most common entry routes for foreign companies to establish their presence in India. It serves as an extension of the parent company and is permitted to undertake specific activities as defined by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA).
1. Foreign Company
Foreign companies can set up different types of offices in India to carry out limited activities:
Liaison Office – Represents the parent company in India.
Branch Office – Can undertake activities such as export, import of goods, research, consultancy, etc.
Project Office – Established to execute a specific project in India under a contract.
2. Indian Company
Foreign investors can register an Indian company in the form of:
Joint Venture with an Indian partner.
Wholly Owned Subsidiary (100% Foreign Stake) under the Companies Act, 2013.
3. Limited Liability Partnership (LLP)
Governed by the provisions of the LLP Act, 2008.
FDI permitted under the automatic route in LLPs, especially for activities where 100% FDI is allowed without conditions.
No FDI-linked performance conditions need to be checked.
Note: This route is suitable for manufacturing, services, and other related business operations in India.
Features of a Foreign Branch Office in India
A Foreign Branch Office in India serves as an extension of the parent company and allows foreign enterprises to operate and expand their reach in the Indian market. Below are the key features of setting up a branch office in India:
Trading & Agency Role – Acts as a buying or selling agent for parent company products in India.
Research Activities – Conducts research in the field where the parent company is engaged globally.
Export & Import Activities – Facilitates export and import of goods and trading on a wholesale basis.
Collaboration Promotion – Helps in establishing technical and financial collaborations between Indian and foreign companies.
Consultancy Services – Provides consultancy services in sectors where foreign investment is permitted.
IT & Software Development – Engages in information technology services and software development in India.
Technical Support – Provides technical support for products supplied by the parent company.
Unlimited Liability – The branch office’s liability is not independent; the parent company is fully liable for branch obligations. If branch liabilities exceed its assets, the parent company’s assets are at risk of attachment.
Documents Required to Establish a Foreign Branch Office in India
To set up a Foreign Branch Office in India, companies must submit several documents to the Reserve Bank of India (RBI) and the Registrar of Companies (RoC). Below is the complete list of documents typically required:
Application Form – Details of proposed activities, branch office address, and authorized personnel.
Certificate of Incorporation – A certified copy of the foreign company’s incorporation, attested by the Indian embassy/consulate.
Memorandum and Articles of Association – Certified copy of the parent company’s constitutional documents.
Board Resolution – A resolution approving the establishment of a branch office in India and appointment of an authorized representative.
Financial Statements – Audited financial statements of the parent company for the last 5 years along with a net worth certificate from a CPA.
Power of Attorney – Authorization for a resident representative in India to accept legal notices on behalf of the branch office.
Address Proof – Lease agreement, utility bill, or NOC from the landlord for the branch office premises.
Identity Proof – Passport copies or ID documents of proposed personnel.
Other Documents – Any additional documents depending on the nature of activities, such as NOCs from regulatory authorities.
Note: Ensuring that all documents are accurate, complete, and properly attested is crucial for RBI and RoC approval. Seeking professional compliance support from Cardiff Service helps businesses achieve a smooth and hassle-free registration process.
1. Approval Modes
RBI Approval – If the parent company’s principal business falls under sectors where 100% FDI is permitted under the automatic route, only Authorized Dealer (AD Bank) approval is required.
Government Approval – If the business falls outside the automatic route, the company must seek approval from the Reserve Bank of India (RBI) in consultation with the Ministry of Finance, Government of India.
2. Eligibility
The foreign company must have a profitable track record for the previous 5 years.
A minimum net worth of USD 100,000 is required.
The company must demonstrate a clear business interest in India.
3. Application Submission
The foreign company must apply to the Reserve Bank of India (RBI) with:
Certificate of Incorporation
Board Resolution approving branch office setup
Letter of Authority from the parent company
Other required supporting documents
4. Approval & Registration
Once approved by the RBI, the company must register with the Registrar of Companies (RoC) within 30 days.
Obtain PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) from the Income Tax Department.
5. Permitted Activities of a Foreign Branch Office
A Branch Office in India may:
Promote parent company’s products and services
Conduct research work in areas of the parent company’s operations
Act as a communication channel between parent company and Indian customers
Provide consultancy services (within approved sectors)
Note: A Foreign Branch Office cannot conduct manufacturing, industrial activity, or generate income directly in India.
6. Compliance Requirements
File annual returns and maintain proper accounting records.
Appoint a resident representative to ensure legal and regulatory compliance.
Adhere strictly to RBI, RoC, and Income Tax regulations.
Frequently Asked Questions
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