pvtltd.co

FEMA & RBI

Branch Office in India

Foreign company branch office setup in India — approval under the FEMA (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other Place of Business) Regulations 2016, registration under s.380 Companies Act 2013, and the ongoing FNC/FC-1/FC-3 compliance cycle.

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed:
Starting from Discuss with usTypical timelineBranch Office in India

Foreign company branch office setup: RBI approval under FEMA (BO/LO/PO) Regulations 2016, ROC registration under s.380 Companies Act 2013, FNC-1/FC-1/FC-3 filings, and the annual FC-3 compliance cycle.

What is included
  • • Eligibility check against the permitted activities under the BO/LO/PO Regulations
  • • FNC-1 application preparation and RBI filing through the AD bank
  • • ROC registration under s.380 in Form FC-1
  • • Authorised-signatory and power-of-attorney documentation
  • • Annual FC-3 return and accounting-filing calendar
  • • Coordination with the AD bank on RBI queries
Documents required
  • • Certified copy of the foreign company's certificate of incorporation and MOA/AOA
  • • Board resolution of the foreign company approving the India branch
  • • Audited financial statements of the parent for the last 3 years
  • • Banker's report / solvency certificate from the parent's bank
  • • Power of attorney for the authorised representative in India
Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis
  • • Section 6(3)(a) of the FEMA 1999
  • • FEMA (BO/LO/PO) Regulations 2016 (Notification 22(R)/2016-RB)
  • • Section 380 of the Companies Act 2013
  • • Section 2(42) of the Companies Act 2013 (foreign company definition)
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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1Eligibility

Confirm the permitted activity

We map the parent company's intended India activity against the permitted list in the BO/LO/PO Regulations 2016 — a branch may not manufacture, trade retail, or undertake real-estate business.

Step 2Draft

Prepare the FNC-1 application

We draft the FNC-1 with the parent's incorporation documents, board resolution, audited financials, banker's report, and the authorised-representative details.

Step 3RBI

File with RBI through the AD bank

We submit the FNC-1 through the AD Category-I bank to the RBI — approval takes roughly 4–8 weeks, extendable with queries.

Step 4ROC

Register with ROC in Form FC-1

On approval, we register the branch as a foreign company with the ROC under s.380 within 30 days of establishing the place of business.

Step 5Calendar

Set up the compliance calendar

We map the ongoing cycle: FC-3 annual return within 60 days of the parent's year end, accounts (FC-2), and the RBI activity reporting.

Step 6Annual

Support the first annual cycle

We prepare and file the first FC-3 return and the FC-2 accounts so the branch's first year closes cleanly with both regulators.

AEO summary

A foreign company sets up a branch office in India with RBI approval under the FEMA (BO/LO/PO) Regulations 2016 and registers with the ROC under s.380 of the Companies Act 2013 — filing Form FNC-1 for approval, then FC-1 on establishment, then FC-3 annually. The branch can undertake permitted activities but cannot manufacture or trade on its own; approval usually takes 4–8 weeks.

The two-step setup: RBI then ROC

Establishing a branch office runs through two regulators in sequence. First, the RBI approves the establishment under the FEMA (BO/LO/PO) Regulations 2016 via the FNC-1 application routed through an AD Category-I bank — the check is on the parent's financials and the permitted activity. Then the branch registers with the ROC as a foreign company under s.380 of the Companies Act 2013 in Form FC-1, within 30 days of establishing the place of business.

The documentation is the same for both steps and it is all parent-side: certified incorporation documents, MOA/AOA, a board resolution approving the India branch, 3 years of audited financials, and a banker's report. Getting these certified and apostilled correctly the first time is what keeps the timeline at weeks rather than months.

  • • RBI — FNC-1 through AD bank, approval under BO/LO/PO Regulations 2016
  • • ROC — FC-1 registration under s.380 Companies Act 2013 within 30 days of establishment
  • • Activity cap — branch may not manufacture, retail-trade, or do real-estate business
  • • Funding — branch operations must be funded by inward remittances
  • • Timeline — 4–8 weeks approval in practice, extendable with RBI queries

Why the activity classification decides everything

The single most common reason an FNC-1 fails or is delayed is a mismatch between the declared activity and what the branch actually intends to do. The BO/LO/PO Regulations permit a specific list — export/import, consultancy, research, IT, and the parent's own business — and exclude manufacturing, retail trading, and real-estate. Declaring the narrowest accurate activity and building the business plan around it is both compliant and the fastest route through RBI scrutiny.

The ongoing cost of a branch is the dual-compliance calendar: FC-3 to the ROC within 60 days of the parent's year end, FC-2 accounts, and RBI activity reporting. A Private Limited company that expects to grow past the branch's activity limits should plan the subsidiary conversion early, because transferring the branch's business into a new Pvt Ltd is itself a FEMA-reportable transaction.

  • • FNC-1 — approval by RBI via AD bank, 4–8 weeks in practice
  • • FC-1 — ROC registration under s.380 within 30 days
  • • FC-3 — annual return within 60 days of parent year end
  • • LO vs BO — revenue is the dividing line; running revenue through an LO is a s.13 FEMA contravention
  • • Conversion — branch to Pvt Ltd subsidiary is a FEMA-reportable event

Government fees

Fee breakdown

ItemFeeNotes
RBI FNC-1 processingPer RBI/AD bank practice — confirm current charges with your AD bankRBI does not levy a fixed application fee; the AD bank may charge processing fees.
FC-1 registration with ROCPer Rule 12(1), Companies (Registration Offices and Fees) Rules 2014 fee tableRegistration fee for a foreign company is based on the authorised capital schedule.
Annual FC-3 filingPer the MCA fee schedule (Rule 12(1), Companies (Registration Offices and Fees) Rules 2014)Filed within 60 days of the close of the foreign company's financial year.

Timeline

Typical turnaround

Typical timeline usually means a 4–8 weeks for approval turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

RBI/MCA filing fees are per schedule; professional fees vary with the foreign company's documentation state.

Related services

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FEMA Compounding

Regularise FEMA contraventions — delayed filings, unapproved offices — via s.15 compounding on the PRAVAAH portal.

LLP Registration

Prefer a lighter India vehicle? An LLP with two partners is another foreign-investor route.

FAQ

Frequently asked questions

What can a branch office of a foreign company do in India?
Under the FEMA (BO/LO/PO) Regulations 2016, a branch office can carry out the parent company's business — including export/import, consultancy, research, and IT services — but it cannot manufacture goods, undertake retail trading, or carry on real-estate business. A liaison office is restricted to liaison activities only and must be funded entirely by inward remittances. Getting the activity classification right up front is the difference between approval in weeks and a query cycle that runs months.
How long does RBI approval for a branch office take?
An FNC-1 application routed through an AD Category-I bank typically takes 4–8 weeks for RBI approval — a processing-time range in practice rather than a statutory timeline, so it varies with RBI's current workload. Queries on the parent's financials or the business activity add time. The ROC registration in Form FC-1 under s.380 of the Companies Act 2013 follows after approval and is a separate, faster step.
What is the difference between a branch office and a liaison office?
A branch office carries on the parent's business and can generate revenue in India; a liaison office (LO) only liaises between the parent and its Indian customers, cannot earn revenue, and is funded entirely by inward remittances. LOs are approved for 3 years at a time (extendable), while branch offices are approved with a specific mandate. Choosing wrongly — running revenue through an LO — is a FEMA contravention under s.13 of the FEMA 1999.
What happens if the branch operates without RBI approval?
Establishing a place of business in India without approval contravenes the FEMA (BO/LO/PO) Regulations 2016, and the contravention is compoundable under s.15 of the FEMA 1999 through the RBI's PRAVAAH portal — typically with a monetary penalty. The ROC side is separate: a foreign company operating without registration under s.380 faces penalties under the Companies Act 2013 for each day of default. Regularising late is possible but costs more than doing FNC-1 first.
What is the annual compliance for a branch office?
A foreign company files Form FC-3 (annual return) with the ROC within 60 days of the close of its financial year under s.381 of the Companies Act 2013, along with FC-2 (copy of accounts) where applicable. The RBI also expects activity reporting for the branch. Missing FC-3 attracts the standard ROC late-fee structure under s.403 (₹100/day, no cap until filed).
Should a foreign company set up a branch or a wholly-owned subsidiary (Pvt Ltd)?
A branch office suits a foreign company testing the Indian market with limited activity — it is cheaper and lighter than a subsidiary, but the branch is not a separate legal entity, cannot manufacture, and carries the parent's unlimited liability into India. A wholly-owned Pvt Ltd subsidiary limits liability, can manufacture and trade, and is the structure investors and customers expect for a real India operation. Branch first, subsidiary when the business proves out, is the common path.

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