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Step-by-Step Guide for Liaison Office for NRI in India

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Saving Mantra Blog: Step-by-Step Process for Liaison Office for NRI in India

NRIs and foreign companies often seek to explore business opportunities in India without engaging in commercial operations. Establishing a Liaison Office is the most suitable route for this purpose. It allows representation in India without generating income locally. This guide explains the complete step-by-step process for NRIs to set up a Liaison Office in India.

✔ What is a Liaison Office?

A Liaison Office acts as a communication channel between the foreign parent entity and Indian stakeholders. It cannot undertake commercial, trading, or industrial activities in India.

Permitted Activities

A Liaison Office may:

  • Facilitate communication between parent company & parties in India
  • Promote import/export from/to India
  • Represent parent company in India
  • Promote technical/financial collaborations
  • Act as a buying/selling agent (without actual trading)

Restricted Activities

A Liaison Office cannot:

  • Earn income in India
  • Undertake commercial, trading, or manufacturing
  • Invoice for services locally

All expenses must be funded through inward remittance from the parent company.

✔ Step 1: Check Eligibility Requirements

NRIs or foreign entities must satisfy:

  • A profitable track record of minimum 3 years
  • Net worth of USD 50,000 or more (confirmed by auditor)

✔ Step 2: Determine Approval Route

In India, Liaison Offices require RBI approval via:

  • RBI Automatic Route: Most sectors covered
  • RBI & Government Route: If parent entity is from a country of concern or sector-sensitive industry

Applications are submitted through AD Category-I Bank (Authorized Dealer Bank).

✔ Step 3: Prepare Required Documents

Foreign documents must be apostilled/notarized in the home country.

Mandatory Documents Include:

  • Certificate of Incorporation/Registration of Parent Company
  • Memorandum & Articles of Association
  • Latest audited financial statements (3 years)
  • Net worth certificate from CPA/CA
  • Board Resolution authorizing Liaison Office
  • Details of office premises in India
  • NRI passport copy (if individual)
  • KYC documents of parent company from home banker

✔ Step 4: File Application via FNC Form

The applicant must file Form FNC (Foreign Nationals Company) through the Authorized Dealer Bank, which forwards it to the RBI for approval.

✔ Step 5: Obtain RBI Approval

Upon review, the RBI issues the Approval Letter, which specifies:

  • Validity period (usually 3 years)
  • Permitted activities
  • Compliance conditions

Only after approval can the Liaison Office set up operations.

✔ Step 6: Open Bank Account in India

The Liaison Office must open:

  • Non-Interest Bearing Current Account

All operational expenses must be funded through inward remittances from the parent company.

✔ Step 7: Register with ROC (Ministry of Corporate Affairs)

Within 30 days of RBI approval, the Liaison Office must register as a Foreign Company with ROC using:

  • Form FC-1 (filing with MCA)
  • Filing of RBI approval letter
  • Documentation details of authorized representatives

✔ Step 8: Obtain PAN & TAN

The Liaison Office must apply for:

  • PAN (Permanent Account Number)
  • TAN (Tax Deduction & Withholding Account Number) if tax deduction is required

✔ Step 9: Annual Compliance Requirements

A Liaison Office must comply with:

RBI Compliances:

  • Annual Activity Certificate (AAC) from CA
  • Filing with RBI & Authorized Dealer Bank

MCA Compliances:

  • Financial statements filing
  • Annual return under Companies Act

Income Tax Compliances:

  • Filing of returns if applicable
  • Maintaining books of accounts
  • Statutory audits if required

✔ Step 10: Closure/Extension of Liaison Office

Before the expiry of the approval period, NRIs can apply for:

  • Extension, or
  • Closure (after clearing liabilities and audits)

Closure requires NOC from:

  • AD Bank
  • RBI
  • Income Tax Department

Conclusion

Setting up a Liaison Office in India is a structured process that enables NRIs and foreign companies to establish a non-commercial presence. With proper documentation, RBI approvals, and annual compliance, NRIs can efficiently engage with the Indian market.

Disclaimer

This article is for educational purposes only. Regulatory requirements may change. Please consult a qualified professional before making legal, tax, or compliance decisions.

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