Govt eases approval for foreign firms to set up branch offices

New Delhi: To improve ease of doing business for foreign entities, the government on Tuesday relaxed approval process for setting up of their branch, liaison and project offices in the country.

Except for defence, telecom, private security, information and broadcasting and non-government organisation sectors, such approvals can now be given by certain banks, as against the earlier requirement of RBI approval for the same, the Finance Ministry said in a statement.

"Further, anyone who has been awarded a contract for a project by a government authority/PSU would be automatically given approval to open a bank account," it said.

The sectors like defence, telecom, private security, information and broadcasting and non-government organisation, like earlier, will still require to seek the RBI approval before setting up their branch, liaison or project offices in India.

"As a measure towards improving the ease of doing business, it has now been decided that except for a few sectors viz defence, telecom, private security, information and broadcasting and non-government organisation and except a few countries, the power to grant approvals for establishment of branch, liaison, project offices by foreign entities, would be delegated to the Authorised Dealers Category-I Banks," the statement added.

While the RBI gives permission in those cases where 100 percent FDI is allowed under automatic route, all other cases are referred to the government for approval.

The establishment of such offices in India by foreign entities is regulated in terms of FEMA 22/2000-RB.

The foreign entities can set up their offices in India without registering themselves as companies or trusts under Indian Laws.

As per RBI data, there are 106 authorised dealers category-I banks which includes IDFC Bank, Bandhan Bank, Doha Bank Credit, Suisse AG, Union Bank of India, State Bank of India, Punjab National Bank, Barclays Bank PLC and Abu Dhabi Commercial Bank, among others.