Liaison Office Setup in India

Entering a competitive market like India comes with its risks and challenges. Companies want to explore this market without taking huge risks. This is where Liaison Office fits in.

Liaison Office allows foreign companies to set up a simple, non-commercial base, rather than a full-fledged business operation. This gives them time to build relationships, understand the market and explore available opportunities. It’s an ideal structure that offers businesses ease of establishment and operational freedom.

Stratrich is the ideal partner for setting up a Liaison Office in India. We add value to your company as we understand that each client has diverse needs and accordingly help them foster business growth in India.

Activities Liaison Office can Undertake in India

The Liaison Office is permitted to undertake the following activities:

  • Representing the parent Company in India
  • Promoting export/import from/to India
  • Promoting technical/financial collaborations between the parent company and companies in India
  • Acting as a communication channel between the parent company and Indian companies

Forming a Liaison Office in India

There is a process that a parent company needs to follow to set up a Liaison Office in India.

  1. Step 1: Determine the Route

    The first step is to determine the route for registering a Liaison Office in India. There are two routes available:

    • Reserve Bank Route: Where 100% Foreign Direct Investment (FDI) is permissible under the automatic route.
    • Government Route (Ministry of Finance): Where the principal business of the foreign entity falls under sectors where 100% FDI is not permissible under the automatic route or application from NGO/Non-Profit Organizations/Government Bodies/Departments.
  2. Step 2: Obtain Prior Approval

    Request the RBI’s prior approval for financial compliance.

  3. Step 3: File Application

    Submit the application form with all necessary documents to the Authorised Banker.

  4. Step 4: Approval Routes

    Two routes are available for approval:

    • Automatic Route: If the foreign entity's primary business is allowed to get 100% FDI using the automatic route.
    • Other Route: If the foreign entity's main line of business falls into a category not covered by the automatic route.
  5. Step 5: RBI Approval

    The RBI issues approval based on the chosen route and sector. After approval, the Liaison Office is allocated a Unique Identification Number (UIN). This approval is initially granted for a period of 3 years and may be extended from time to time.

  6. Step 6: Registration

    Complete the Liaison Office registration process with the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (ROC). You will receive the official Certificate of Establishment of Place of Business, issued by the ROC.

  7. Step 7: Compliance Regulations

    We help you ensure legal compliance by assisting in annual reports and maintaining financial records. We also assist in obtaining important tax documents such as TAN, PAN, and GST.

Our Services for Liaison Office Setup in India

We offer comprehensive services for setting up a Liaison Office in India, right from the documentation stage to incorporation approval.

  • Application made to the RBI
  • Approval documents received from the RBI
  • Documents and representation made to the RBI
  • Regular compliance assistance
  • Assistance in tax filing

Why Choose Stratrich?

  • Single point access for pre-incorporation and post-incorporation compliance
  • Experienced team of CA, CS and legal professionals
  • Complete handholding to foreign investors and NRIs
  • Provision for recruitment and market research on a need basis
  • Smooth and efficient registration process with quick turnaround time

Frequently Asked Questions (FAQs)

A Liaison Office (LO) acts as a communication channel between a foreign company and parties in India, but it cannot conduct business or generate income in India.

It takes approximately 50 to 60 working days.

No, a liaison office is strictly prohibited from generating income.

At the time of closure of the Liaison Office, the company has to submit the designated AD bank with the following documents:

  • Copy of the Reserve Bank's approval from the sectoral regulator(s) for establishing the Liaison Office.
  • No-objection/Tax Clearance Certificate from the Income-Tax authority for the remittance/s.
  • Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
  • A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
  •  Any other document specified by the Reserve Bank while approving.

The Liaison Office gets an approval for three years, which can be renewed upon request.

A company must meet the following conditions for the establishment of a Liaison Office:

  • Must have a three-year record of profitable operations in the home country; and,
  • Must have a minimum net worth of US$50,000 verified by the most recent audited balance sheet or account statement.

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