Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.
In case a foreign company wants to establishment office, and the foreign company has secured a contract from an Indian company to execute a project in India, prior permission from RBI is not needed, provided:
Besides that, in case the above conditions are not met the foreign entity has to approach the RBI for the approval.
The foreign entity must have secured a Project in India, and a formal and legally binding agreement is executed for the same financial statement.
That the project has been cleared from appropriate and recognised authority or ministry and if applicable from the environment ministry.
The project must be funded out of the Inward remittances from abroad, or an International Financing Agency must fund the project.
In the absence of foreign funding, the Indian Entity awarding the contract shall avail the term loan from a Public Financial Institution or a bank in India