You will be glad to know that the Reserve Bank of India has simplified and has liberalized the procedures for Setting up Project Office in India. Now permission is granted in general to the foreign entities to set up their project offices in India. This permission comes in accordance to the provisions in Regulation 4 and 5 of the FEMA Regulation 22. However the inter-alia includes a few specific conditions for Starting operations in India such as it must secure a contract to execute a project in India from any Indian company and the fund must be remitted inward from abroad, or the project must be funded by a bilateral or multilateral International Finance Agency.
Criteria to meet
There are a few other criteria set by the RBI for Setting up Project Office in India. The project must be cleared and approved by an appropriate authority and the company in India giving the contract has been allowed a term loan by any bank in India or a Public Financial Institution for the project. If the foreign company cannot meet these criteria then it has to approach the RBI for approval for setting up business in India. The foreign company must furnish a report through the AD Category-I bank branch to the regional office of Reserve Bank of India where the project office is to be set up.
Elements to include
The report must be carefully drafted within 60 days after Opening a Branch Office in India. The report must include all the required details that includes name and address of the foreign company, reference number and date of letter awarding the contract, details of the authority awarding the project, the total amount, address of the project office including e-mail address, phone and fax number, tenure of project, brief details of the project, and the AD branch of the bank and currency in which the account is opened. Apart from that, an undertaking is required for avail the general permission for company set up India under Regulation 5.
Opening the bank account
For setting up company in India, the foreign entity must open a foreign currency account following the specific rules as well. It must be opened through the AD Category-I banks. It must be subject to the general and specific permission of RBI and must have the required approval from the relevant sanctioning authority for company setup in India. Apart from that, there are limits to the debits and credits in the account. Debits will include the expenditure of the project and credits will include the foreign currency receipts. These receipts can be from the project sanctioning authority or from the parent company abroad or any bilateral or multilateral international financing agency.
List of Documents required
Specific documents are required for Opening a Company in India and for its registration. The list includes the certificate of incorporation, latest audited balance sheet of the foreign company, board resolution on company letter head, list of directors and secretary, power of attorney authorizing the foreign company to represent before the ROC and RBI, and declaration of the directors wanting to set up a project and liaison office in India. All these documents must be in English language and if not, these must be annexed with a certified translation and all must be notarized by the Notary Public and attested Indian High Commission official or Embassy.
Seema Mehra is a Chartered Accountant at Ashok Maheshwary & Associates, top accounting firms in india that provides accounting services in india in a convenient manner. She is a professional writer and loves to share Financial related topics.