RBI has issued directions to all the Authorised Dealer (AD – Category I) vide notification dated March 28, 2019 under Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016.
It has been advised to ADs that for opening of a Branch Office ‘BO’/ Liason Office ‘LO’/ Project Office ‘PO’ or any other place of business in India, where the principal business of the applicant falls in the Defence, Telecom, Private Security and Information and Broadcasting sector, no prior approval of the Reserve Bank of India shall be required, if Government approval or license/permission by the concerned Ministry/ Regulator has already been granted. For PO relating to defence sector, no separate reference or approval of Government of India shall be required if the said non-resident applicant has been awarded a contract by/entered into an agreement with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.
Earlier by a notification dated January 21, 2019, Clause (c) of Regulation 5 of Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 was substituted by following:
“Provided that approval of the Reserve Bank of India is not required in case where Government approval or license/permission by the concerned Ministry/ Regulator has already been granted. Further, in the case of proposal for opening a project office relating to defence sector, no separate reference or approval of Government of India shall be required if the said non-resident applicant has been awarded a contract by/entered into an agreement with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.”
The notification also clarified that the term “permission” used does not include general permission, if any, available under Foreign Direct Investment in the automatic route, in respect of the above four sectors.
Click here for the notification.
Click here for the amendment.
