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What is Liaison Office ? 

A Liaison Office is an extended arm of the Foreign Company in India. It is a representative office and can undertake only liaison activities. A Liaison Office is subject to various conditions on activities, the Liaison Office is permitted to undertake the following activities only:

  • 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.

A Liaison Office is not allowed to undertake any business activity and hence cannot earn any income in India. The Expenditures of such an office are met entirely through inward remittances of foreign exchange from their Head Office outside India. Normally a Liaison Office is setup for collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers

PROCEDURE INVOLVED

1. Submit application in Form FNC with the required documents

2. The applications from such entities in Form FNC will be considered by the Reserve Bank under two routes:

  • Reserve Bank Route - Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.
  • Government Route - Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non - Government Organisations / Non - Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.

3. Apart from the above, there are certain additional criteria by Reserve Bank of India which need to be fulfilled:

• Track Record - a profit making track record during the immediately preceding three financial years in the parent country.

• Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].The total net worth should not be less than USD 50,000 or its equivalent.

4. The permission to set up Liaison offices is initially granted for a period of 3 years and this may be extended from time to time upon application by Liaison Office. A Unique Identification Number (UIN) is granted to the Liaison Office on approval

Register Liaison Office in India – FAQs

1. Can Foreign Insurance Companies / Banks set up Liaison Office in India?

Foreign Insurance companies can establish Liaison Offices in India only after obtaining approval from the Insurance Regulatory and Development Authority (IRDA). Similarly, foreign banks can establish Liaison Offices in India only after obtaining approval from the Department of Banking Operations and Development (DBOD), Reserve Bank of India.

2. Are there any compliance that a Liaison Office has to fulfill after its setup in India?

Liaison offices have to file an Annual Activity Certificate (AACs) from the Auditors, as at end of March 31, along with the audited Balance Sheet on or before September 30 of that year, stating that the Liaison Office has undertaken only those activities permitted by Reserve Bank of India. 

3. Can a Liaison Office undertake sales or provide services to Indian Customers/Clients?

No, A Office cannot undertake sales or provide services to Indian customers. As mentioned above, the activities that a Liaison office can undertake are: 

  • 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.

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