To set up a project office the foreign company needs an approval from the Reserve Bank of India and register themselves under RoC. Apart from that there are certain formalities under the Companies Act, 2013 that you need to achieve to start a project office.
Foreign companies looking for a limited presence in India should opt for setting up a project office in the country. It is the ideal method for companies who have the objective of completing a project within a specific time frame. Foreign companies need to get approval from the Reserve Bank of India and register themselves with the RoC if they have a contract to execute a project in India.
There are certain documentation and compliance requirements that businesses need to go through to have their project office in India.
Condition For Project Office |
Activities Project Office Can Do |
| The project needs to be directly funded from abroad through inward remittance | The project needs to be directly funded from abroad through inward remittance |
| A multilateral or bilateral financing agency can also fund the project | A multilateral or bilateral financing agency can also fund the project |
| In certain cases the project can also be cleared by a proper authority | In certain cases the project can also be cleared by a proper authority |
| An Indian company or entity is awarding the contract and grant a Term Loan through a Public Financial Institution or an Indian bank | An Indian company or entity is awarding the contract and grant a Term Loan through a Public Financial Institution or an Indian bank |
Project Office Registration
A project office is nothing but a place of business established with the intention of representing a foreign entity to execute a project in India. Companies are allowed to form project offices either on a temporary basis or permanent. Businesses need to register the office from RBI and RoC before they start their actual operations. Companies need to fulfill certain conditions for the registrations. An application through the category 1 AD Bank along with the documents related to project agreement is required.
Why establish a Project Office in India?
Foreign Companies face certain issues while incorporating a Subsidiary Company or Private Limited Company in India. The issues are-
- The requirement of heavy compliance
- Wastage of time and resources
- Closer proceedings take huge time
To curb these issues and make the entry and exit process easier for the Foreign Companies, RBI has permitted the Foreign Companies to set up a Project Office in India. Given that, the applicant company has secured a contract from an Indian company to carry out a project in India. Alongside this, there are certain conditions- The inward remittance, coming from abroad is funding the project or, A Multilateral or bilateral International Financing Agency is funding the project or, An appropriate authority has permitted the project or, An Indian company or entity, which is associated with the contract has been permitted Term Loan for the project by any Public Financial Institution or by a bank, situated in India.
Minimum Requirements For Setting Up a Project Office in India
Having a secured project in India, a foreign entity can ask for permission to set up a project office in the country. Here are the mandatory requirements to apply for setting up a project office, As mentioned earlier, a foreign company looking to set a PO needs to have a secured project in India with a formal agreement for the same financial statement. The project needs to be funded through inward remittance from abroad or at least an International financing agency need to fund the project A certificate of clearance which shows the appropriate authority or ministry has cleared the project. In some cases, a clearance certificate from the environment ministry is also applicable. If in case there is no foreign funding the company need to avail a term loan from a bank or public financial institute in India through the Indian Entity who has awarded the contract
The enterprise was founded by Chartered Accountant Mr. Jothilingam S.
