Draft Foreign Exchange Management (Establishment in India of a Branch Office, Liaison Office or Project Office or any other Place of Business) Amendment Regulations

Reserve Bank of India has laid out comprehensive guidelines under the Foreign Exchange Management (Establishment in India of a Branch Office, Liaison Office or Project Office or any other Place of Business) Regulations, 2016, last amended on January 21, 2019.

These regulations outline the eligibility, approval process, and operational conditions for foreign entities looking to establish a presence in India.

Who Can Set Up What?

Foreign entities can establish three main types of offices in India:

• Branch Offices (BO) – for commercial activities
• Liaison Offices (LO) – for non-commercial, representative functions
• Project Offices (PO) – for executing specific projects in India

Each type has defined eligibility criteria, primarily based on the parent company’s profit track record and net worth.

Key Regulatory Highlights:

• Prior RBI approval is mandatory unless exempted (e.g., firms operating in SEZs under 100% FDI sectors).
• Offices must submit Form FNC through an Authorised Dealer (Category-I Bank).
• Liaison Offices are allowed for three years, with extensions based on sector-specific guidelines.
• Specific provisions exist for remittance of profits, acquisition of property, and closure of offices.
• Entities from countries like China, Iran, Pakistan, and Bangladesh have additional compliance requirements, including police registration.

On a review, it has been decided to amend the extant regulations along the following lines:

1. The eligibility criteria for establishment of a place of business in India, are proposed to be relaxed.
2. The draft proposals offer greater operational freedom by shifting from prescriptive to a principle-based framework, which is expected to result in greater operational freedom.
3. The process for closure of non-compliant and inactive branch/office, are proposed to be simplified.

Comments/feedback on the draft regulations may be submitted through the ‘Connect 2 Regulate’ Section available on the RBI’s website or via email by October 24, 2025, with the subject line “Feedback on draft regulations on Branch or office”.