Foreign companies can open 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 parties in India.
A Liaison Office (also known as Representative Office). It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India.
The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers.
PROCEDURE FOR SETTING UP LIAISON OFFICE
Any foreign company intending to establish a Liaison Office in India is required to obtain prior approval from the RBI, The Supreme Bank of India, Which may take up to 3-4 weeks for processing of the application. Approval is usually granted for 3 years and can be renewed on expiry thereof.
A LIAISON OFFICE CAN UNDERTAKE THE FOLLOWING ACTIVITIES IN INDIA:
Representing in India the parent company / group companies.
Promoting export / import from / to India.
Promoting technical/financial collaborations between parent/group companies and companies in India.
Acting as a communication channel between the parent company and Indian companies.