How to Start Project Office in India?
- The foreign company who wants to execute e project in India and that they will have a presence for limited period of your time .
- Generally foreign companies engaged in turnkey construction or installation found out a project office in India
Foreign entities who are rewarded a contract to execute a infrastructure or installation project in India, execute the project, through project offices duly registered with the Federal Reserve Bank of India (RBI) and therefore the Registrar of Companies (ROC).
The difference between project office and liason office is that project office can undertake commercial activities associated with the project awarded whereas a liason office cannot undertake any business activity
Revised Regulations 2016 under FEMA has delegated all powers of approving applications to AD banks except few cases.
In this article, we might discuss various aspects and procedure for fixing project office in India as per revised guidelines.
A foreign company can incorporate a project office in India only it’s secured a contract to execute a project in India from a Indian Company and
- The project is funded directly by inward remittance from abroad
- The project had been approved by appropriate authority
- The project is funded by international financial organization
- a corporation awarding the contract has been granted loan from public financial organization or bank in India
- RBI has given general permission for opening of Project Office in India if the above conditions are satisfied. However, if any entity resident in Pakistan, Bangladesh, Sri Lanka, Iran, Afghanistan, China, Macau and Hong-Kong desires to open project office in Jammu & Kashmir, North Eastern States and Andaman and Nicobar islands, approval is granted by RBI in consultation with Government of India. altogether other cases, Authorized Dealer Category-I banks are empowered to grant approval.
- Principal business falls in defence/telecom/private security/ information and broadcasting sector. However, no separate reference or approval of the govt of India (GoI) are going to be required in respect of proposal for opening of a PO concerning the defence sector, if contract that the PO is opened has been awarded by/entered into with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings;
Time Limit for Opening a Project Office
- The office shall be opened within 6 months from the date of approval letter.
- Extension for six months could also be granted by AD Category-I bank for reasons beyond the control of the person resident outside India.
- Further extension could also be granted by RBI only
- It takes generally takes 15 days to register a PO
What are the documents required along side the appliance for Project office
- Copy of the Certificate of Incorporation / Registration attested by the notary within the country of registration[If the first Certificate is during a language aside from in English, an equivalent could also be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate within the home country].
- Latest Audited record of the applicant company.[If the applicants’ home country laws/regulations don’t enforce auditing of accounts, an account certified by a licensed Public Accountant (CPA) or any Registered Accounts Practitioner by any name, clearly showing internet worth could also be submitted].
- Bankers’ Report from the applicant’s banker within the host country / country of registration showing the amount of years the applicant has had banking relations thereupon bank.
Procedure for getting approval for a PO office
- the appliance for establishing PO in India could also be submitted by the non-resident entity in Form FNC (Annex B) to a delegated AD Category – I bank (i.e. a billboard Category – I bank identified by the applicant with whom they shall pursue banking relations) along side the prescribed documents mentioned within the Form.
- The AD Category-I bank shall after exercising due diligence in respect of the applicant’s background, and satisfying itself as regards adherence to the eligibility criteria for establishing PO, antecedents of the promoter, nature and site of activity of the applicant, sources of funds, etc., and compliance with the extant KYC norms grant approval to the foreign entity for establishing PO in India.
- The AD Category-I banks may frame appropriate policy for handling these applications in conformity with the FEMA Regulations and Directions.
- An applicant that has received a permission for fixing of a PO shall inform the designated AD Category I bank on the date on which the PO has been found out . The AD Category I bank successively shall inform Federal Reserve Bank accordingly. just in case an approval granted by the AD bank has either been surrendered by the applicant or has expired with none PO being found out , the AD Category I bank shall inform RBI accordingly.