General Permission- Reserve Bank of India has granted general permission to foreign companies to establish Project Offices in India subject to fulfilment of certain conditions categorized under eligibility criteria below.
However, as per the provisions of A.P. (DIR Series), Circular No. 44 dated May 17, 2005, an intimation regarding the establishment of the project office in India shall be sent to Reserve Bank of India through an authorised AD Category-I Bank.
Governing Law- Foreign Exchange Management Act, 1999 read with Foreign Exchange Management (Establishment in India of branch or office or other place of business) Regulations, 2000.
- the project is funded directly by inward remittance from abroad; or
- the project is funded by a bilateral or multilateral International Financing Agency; or
- the project has been cleared by an appropriate authority; or
- a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.
Time Period- There is no particular time limit as to the duration of the project office. The same shall be subject to the contract between the foreign company and Indian company.
Permitted Activities- Again the activities of project office would depend upon the nature of the contract awarded by the Indian company to the foreign company.
Closure of Project Office –
Reserve Bank of India has granted general permission for closure of Project office and for remittance of surplus money on completion/winding up of the project subject to fulfilment of certain conditions.
FLOW CHART- PROCEDURE FOR ESTABLISHMENT OF PROJECT OFFICE IN INDIA
- Identification of an AD Category-I bank, with whom the Applicant Foreign Company intend to pursue banking relations in India
- Preparation and submission of intimation in the prescribed format to Reserve Bank of India through AD Category-I Bank regarding the establishment of the project office in India.
- Filing of documents with the Registrar of Companies for obtaining Certificate of Commencement of business in India.