Project Office Registration
The RBI allows a parent company based in another country for project office registration in India to represent the parent company’s interests when executing projects in India. However, the parent company must have a contractual relationship to execute a project in India. The project can be entitled to a foreign company by any Indian government sector or private sector enterprise.
Further, the project office can only engage in activities under the project’s scope undertaken by the parent company in India. Incidental and related activities are also considered under the scope of the project.
The registration process for Project office registration is executed as per the guidelines mentioned under section 6(6) of the Foreign Exchange Management Act 1999.
The Reserve Bank of India has the authority to approve a foreign company’s project office in India. However, before establishing a project office in India, the foreign company must first secure a contract with an Indian company.
RBI guidelines and Companies Act, 2013 has made it mandatory for a foreign company to acquire the registration certificate with the Registrar of Companies (ROC) if the foreign company wants to establish a project office in India. It has to adhere to all the procedural formalities during the project office registration process.
Investment Entry Routes in India
- Reserve Bank Route
The primary business of a foreign company falls under the criteria where 100 percent Foreign Direct Investment (FDI) is allowed.
- Government Route
A foreign entity’s primary business falls under the criteria where 100 percent foreign direct investment is not permitted. The Reserve Bank of India, in collaboration with the Ministry of Finance, Government of India, reviews applications from companies classified as Foreign Non-Government Organizations/Non-Profit Organizations/Government Bodies/Departments.
Requirement for Project Office Registration in India
- Formal Contact of the Project
It is necessary for the foreign company to have a secured project in India and to come under a formal and legal agreement that will help in the financial statement related to the project.
- Clearance of Project
Make sure that the project has been approved by the appropriate and recognized authorities.
- Foreign Funding
Ensure that the project is financially supported out of the inward remittance from the foreign country; else, an International Financing Agency must sponsor the project.
- Indian Funding
In the case of zero foreign funding, it becomes the responsibility of the Indian entity to obtain the term loan from a Public Financial Institution or a bank in India.