AS a measure
towards improving the ease of doing business, it has now been decided that
except for a few sectors viz. Defence, Telecom, Private Security, Information
and Broadcasting and Non-government organization and except a few countries,
the power to grant approvals for establishment of Branch Office (BO)/Liaison
Office (LO)/Project Offices (PO) in India by foreign entities, would be delegated
to the Authorised Dealers Category-I Banks. Further, anyone who has been
awarded a contract for a project by a Government authority/PSU would be
automatically given approval to open a bank account.
Regulations in this regard have been notified by RBI vide G.S.R. 384 dated March
31, 2016.
Earlier these entities used to seek the approval of Reserve Bank of India (RBI)
before setting-up their BO/LO/PO office in India. While Reserve Bank of India
(RBI) gives permission in those cases where 100% FDI is allowed under automatic
route, all other cases are referred to the Government for approval.
The establishment of Branch Office (BO)/Liaison Office (LO)/Project Offices (PO)
in India by foreign entities is regulated in terms of FEMA 22/2000-RB dated May
3, 2000, as amended from time to time. The foreign entities can set-up their
BO/LO/PO in India without registering themselves as companies/trusts etc. under
Indian Laws.
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