Establishing a Project Office in India: Procedures and Requirements

Setting up a Project Office (PO) in India is a suitable approach for foreign companies seeking a temporary business presence to execute projects within the country. This article provides an in-depth overview of the step-by-step procedure for establishing a Project Office in India.



Eligibility Criteria for Project Office Setup:

A foreign company can establish a Project Office in India if it secures a project contract from an Indian company that has been approved by the relevant authority. In addition to this primary condition, the following criteria must also be met:

  1. The project is financed through direct inward remittance from abroad.
  2. The project is funded by a bilateral or multilateral International Financing Agency (e.g., World Bank, IMF).
  3. The Indian contracting company receives a term loan from a Public Financial Institution or an Indian bank for the project.

Prior Approval from RBI:

In certain cases, the establishment of a Project Office requires prior approval from the Reserve Bank of India (RBI). These cases include:

  1. The foreign entity is from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau, and intends to open a Project Office in specific regions of India.
  2. The foreign entity's principal business falls within the sectors of Defense, Telecom, Private Security, or Information and Broadcasting.
  3. The foreign entity is an NGO, Non-Profit Organization, or a department of a foreign government engaged in activities under the Foreign Contribution (Regulation) Act, 2010 (FCRA).

Project Office Registration Process:

  1. Submission of Application:

The eligible foreign entity submits an application in Form FNC to a designated AD Category-I bank. The application should be accompanied by various documents, including:

Certificate of Incorporation/Registration with Memorandum and Articles of Association (translated and attested if not in English).

  • Banker's Report from the applicant's overseas bank.
  • Company Profile (in English).
  • List of Directors of Parent Company (translated and attested).
  • Power of Attorney (if applicable).
  • Letter of comfort from parent/group company (if required).
  • Copy of the contract from an Indian company.
  • Confirmation of regulatory clearances.

2.Verification and UIN Allotment:

The AD Category-I bank examines the application, conducts due diligence, and verifies compliance with eligibility criteria and KYC norms. Upon approval, a Unique Identification Number (UIN) is issued to the foreign entity.

3.Approval and Intimation:

The AD Category-I bank issues an approval letter to the foreign entity for setting up the Project Office in India. The foreign entity informs the bank of the PO establishment date, not exceeding six months from the approval letter. An extension may be granted if justified.

3.Registrar of Companies (MCA) Registration:

The foreign company must register the Project Office with the Ministry of Corporate Affairs (MCA) by filing Form FC-1 within 30 days of PO establishment. Required documents include certified copies of the foreign company's constitution, director details, RBI approval letter, and other relevant declarations.

Conclusion:

Establishing a Project Office in India offers foreign entities a way to have a temporary business presence for executing projects. Adhering to the outlined procedures and meeting eligibility criteria ensures a smooth and legally compliant establishment process.





 

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