Mar 31, 2019

Establishment of a Branch / Liaison / Project Office in India

The Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016 (‘Branch Office Regulations’) required prior approval of Reserve Bank of India (‘RBI’) to be obtained for opening a branch office, liaison office or project office or any other place of business in India (‘BO/LO/PO’), if the principal business of the non-resident applicant was within the defence, telecom, private security or information and broadcasting sector(s) (the ‘Relevant Sectors’). RBI, by way of its circular dated March 28, 2019, has notified that:

i.       for the opening of a BO/LO/PO in the Relevant Sectors, prior approval of RBI will not be required to be obtained, if the concerned ministry or regulator in India has granted its approval or license or permission regarding such proposal. The circular clarifies that the term ‘permission’ will not include general permission, if any, available under the automatic route in respect of the abovementioned sectors (vis-à-vis foreign direct investment); and

ii.      for proposals regarding opening of project offices in the defence sector, a separate reference or approval from the Government of India will not be required, if the applicant has been awarded a contract by, or has entered into an agreement with, the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.




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