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Foreign Companies have established their presence in India since 1990. Due to restrictive trade practices followed in the past, India had limited foreign regulation policy. After liberalization in 1991, foreign investment in India was promoted. This led to many companies establishing a branch office and liaison office in India. However, these establishments have to follow specific guidelines under the respective foreign exchange laws in India. The Reserve Bank of India has brought out master directions as well as circulars related to setting up branch office and liaison office in India.
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The Reserve Bank of India (RBI) has brought out the Foreign Exchange Management Act, 1999 in India to deal with foreign exchange transactions. Foreign companies have to comply with the rules related to setting up companies in India. Under section 6(6) of the Foreign Exchange Management Act, 1999 (FEMA) the establishment of the Branch office and liaison office in India is analyzed. This section has to be read with Notification No. FEMA 22/2000-RB dated May 3, 2000.
In this article, we are going to cover the aspects regarding the branch office and liaison office in India. Foreign companies that want to run their businesses in India have to comply with the respective foreign exchange regulations to form such offices.
The following are the differences between setting up a branch office and liaison office in India:
Read our article:FEMA Compliance on Export of Goods and Services
Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.
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