‘Destination India’ Made More Accessible… Easing the entry of BO/LO

In consonance with the avowed objectives of attracting Foreign Direct Investment (FDI), into the country, the Reserve Bank of India (RBI) has broadened the eligibility criteria/procedural guidelines for establishment of Branch/Liaison offices in India by foreign companies.

In terms of the new guidelines, such approvals would be based on certain parameters e.g. stipulated net worth and the profit-making track record in the home country. Eligibility criteria of a parent company can be availed by a subsidiary through filing of a ‘Letter of Comfort’ from the parent company.

In the same vein, where a proposal pertains to activities falling under the ambit of the automatic route (where 100% FDI is permissible under, as per the Policy) there such proposals will be dealt with by RBI itself. Where proposals fall outside the automatic route, there RBI will process it in consultation with the Government of India.

Recent RBI Circulars also provide:

Ø  Certain changes in the routing of applications for approval.

Ø  Allotment of a Unique Identification Number (UIN) both to the existing as well as new BO/LO.

Ø  Filing of the Annual Activity Certificate.

Ø  Permitted activities.

Ø  Applications for additional offices or undertaking additional activities.

Ø  Extension of validity of the approval of LO.

Ø  Winding up of BO/LO.

Well if good intentions (as evident from new policy guidelines) are backed by concrete action on the ground, by way of FDI friendly functioning of officialdom; it should certainly bring in a bevy of new investments into the country. Amen!