Liaison Office Registration
A liaison office or a representative office works as a communication channel between the parent company settled abroad and their parties in India. Foreign companies take liaison office registration in India to explore and support business prospects in India.
Such an office acts as a communication bridge. It promotes import and export from/to India, promotion of technical and financial participation of foreign parents/group company, conducting market research, providing feedback, etc.
Foreign investors appreciate the opportunity that liaison offices offer. It allows international investors to investigate the Indian market and establish a fast-growing market while limiting their financial, legal, and administrative responsibilities.
Permitted Activities of Liaison Office in India;
- Establish healthy communication between the foreign head company and the parties in India with a motive to create market opportunities
- Promotion of import/export relationship between countries
- Form a financial and technical collaboration between Indian and overseas companies
- Represent the foreign parent company in India
As India is among rapidly growing and progressing economies globally, many multinational companies are willing to invest in the Indian market. Therefore, they are always looking forward to establishing their liaison office in India.
Important points to consider before registering Liaison office in India
- Net Worth Requirement
A parent company must have a beneficial track record of the past three years in a row, and they should own a net worth of more than $50,000 attested by their auditors.
- No Income Generating Activity
The parent company provides financial aid to all the operations of the liaison office since the liaison office is not allowed to earn any income in India.
- Name & New Additional Liaison Office
The name must be similar to that of the foreign parent company. In addition, a new approval is needed for each new liaison office from the Reserve Bank of India with complete justification.
- Taxation in India
Income tax authorities have the right to impose income tax on a liaison office.
Route of RBI Approval
Automatic route
In the automatic route, the proposed entity applicants do not require prior approval from RBI or the government of India. So these are the sectors where 100% FDI is allowed.
Also, such applicants belong to countries with whom India does not share land borders.
Approval Route
The approval route applies in the following circumstances;
- The applicant company is headquartered at, or an applicant is a citizen of Pakistan, China, Sri Lanka, Iran, Afghanistan, Bangladesh, Hong Kong, or Macau, and the application is for opening a BO/LO/PO in Jammu and Kashmir, Andaman and Nicobar Islands; and North East region.
- The principal business activity falls in the four sectors, namely Private Security, Telecom, Defence and Information, and Broadcasting.
- The applicant is an NGO