Setting up a representative or branch office in India
If you do not want to set up a local business yourself, you should have a local representative either on a commission basis or as an agent. A local agent can deal with Indian bureaucracy and procedures for importing and exporting goods into and from the country. India does not have specific regulation for agents. However, in the 1872 Indian Contract Act there are rules for trade representation. Normally a written document is not needed to appoint an agent. Only Indian nationals can be appointed as agents for foreign companies. It is recommended to involve a lawyer with proper knowledge of Indian laws and regulation. In the contract you should explain the exact responsibilities of the principal and the agent.
If you want more control over your activities in India and you want a foreign national to manage your activities in India, you can decide to set up a representative or a branch office.
A representative office can undertake liaison activities on its company’s behalf but activities are restricted to:
- Representing the parent/group company
- Promoting the import/export in and from India
- Promoting technical/financial collaborations with Indian companies
- Coordinating communications with Indian companies
A branch office has more flexibility than a liaison office. A branch office can undertake the following activities:
- Import & export of goods
- Rendering professional or consultancy services
- Carrying out research work in areas in which its parent company is engaged
- Promoting technical/financial collaborations on behalf of the parent company/overseas group company
- Representing the parent/group companies in India and acting as the buying/selling agent in India
- Providing IT services and developing software in India
- Providing technical support for products supplied by parent company/group
Representative and branch offices are treated as extensions of the foreign company. Names of representative and branch offices shall be the same as the parent company.
To set up a branch or representative office for seafood related businesses approval is only needed from the Reserve Bank of India (RBI) because they are under the 100% automatic route for investment, which does not need specific Indian government approval. The application has to be made to the RBI through an Authorized Dealer Category 1 Bank.
When submitting to RBI a profit making track record of the mother company for the preceding three (representative office) or five (branch office) financial years should be provided. Additional a proof that the net worth of the parent company, in case of a representative office is not less than USD 50,000 and for a branch office not less than USD 100,000. When applying, many other documents are required, such as an English version of the Certificate of Incorporation or memorandum of association attested by the Indian Embassy in the country of registration and the latest audited balance sheet of the applicant entity. Once approved, RBI will allot a Unique Identification Number (UIN). Approval for representative offices are usually granted for a period of three years and can be renewed thereafter.
After approval, a certificate of establishment place of the business in India has to be obtained from the Registrar of Companies, which will allot a Corporate Identity Number (CIN). Also, within five days after the branch office came functional, it is required to submit a report in the prescribed format to the Director General of Police in the state where the office is active. Likewise, it is required to get a Personal Account Number (PAN), a Tax Deduction Number (TAN), Service Tax registration (if the company provides services), and VAT and CST registration (if the company carries out trading activities) from the tax authorities in India.