Project office
Project Office means a place of business to represent the interests of the foreign company executing a project in India.
Establishing project office is one of the ideal methods for foreign companies to set a business presence in India if the object is to have a presence for a limited period of time. It is essentially a branch office set up with the limited purpose of executing a specific project.
Project office of a foreign company can be set up in India only after obtaining the permission from Reserve Bank of India. Before setting up a project office in India, foreign companies need to secure a contract with an Indian company to start a project.
A Foreign company establishing a project office in India is required to be registered with the Registrar of Companies (ROC) and to comply with certain procedural formalities, as prescribed under the Companies Act, 2013 and RBI guidelines.
Investment Entry Routes In India
Reserve Bank Route
Where the principal business of the foreign entity falls under activities/sectors where 100 percent Foreign Direct Investment (FDI) is permissible under the automatic route.
Government Route
Where the principal business of the foreign entity falls under the activities/sectors where 100 percent Foreign Direct Investment is not permissible then applications from entities falling under this category including Foreign Non-Government Organizations/Non-Profit Organizations/Government Bodies/Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.
Criteria
General permission has been granted by the Reserve Bank of India to establish a project office in India by a foreign entity if the following conditions are satisfied.
The project has to be funded directly by inward remittance from abroad; or
The project is required to be funded by a bilateral or multilateral International Financing Agency; or
The project has been cleared by an appropriate authority
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.
Restrictions
Any Branch Office established in India is prohibited from the following activities:
Retail trading activities of any nature.
Manufacturing or processing activities, directly or indirectly.
Identification of Joint Venture partner if required.
Agreement with Joint venture Partner.
Check from the FDI Policy whether that sector falls under the automatic route or Government approval route
After ascertainment of the route to be followed, check what sectoral limit is prescribed.
If the investment requires prior government approval, the approval to be sought through online portal, https://fifp.gov.in/ after receiving the approval proceed as in automatic route but subject to conditions mentioned in the approval letter.