Introduction of Project Office
‘Project Office’ means a place of business to represent the interests of the foreign company executing a project in India.
The Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and
- The project is funded directly by inward remittance from abroad; or
- The project is funded by a bilateral or multilateral International Financing Agency; or
- The project has been cleared by an appropriate authority; or
A company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.
It is important to know that:
- Proprietary concerns set up abroad are not allowed to establish Branch /Liaison/Project Offices in India.
- Project Offices of a foreign entity, are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property.
- Project Offices are allowed to open non-interest bearing INR current accounts in India.
- Since in general no approval is required from RBI to set up a Project Office in India, there is a requirement to inform the Registrar of Companies in the prescribed form regarding the establishment of Project office along with relevant information and documents as asked by the Registrar at the time of filing.
Post Setting- Up Compliance
- Report to Director General of Police of the state within 5 working days of becoming functional as per the format prescribed by RBI.
- Submitting Annual Activity Certificate to be taken from auditors to RBI through AD bank and Director General of Police of the state on annual basis.
- The foreign company establishing a Project Office in India is to furnish report through the concerned AD branch, to the concerned Regional Office of Reserve Bank of India under whose jurisdiction the Project Office is set up, incorporating the following details.
- Name and address of the Foreign Company,
- Reference Number and date of letter awarding the contract.
- Particulars of the authority awarding the projects / contract,
- The total amount of contract,
- Address / e-mail address / telephone number / fax number of the Project Office,
- Tenure of Project Office,
- Brief details of the Project undertaken,
- AD branch with whom the account has been opened and the foreign currency in which the account is opened,
- An undertaking to the effect that the Project Office is eligible to avail the General Permission showing the reason thereof.
This Report shall be forwarded through the AD branch to the Regional Office concerned of the Reserve Bank of India within 2 months of establishment of the Project Office.
- Submitting Annual Return to Registrar of Companies in the prescribed form within sixty days of the last date of financial year.