The Reserve Bank on Thursday said companies incorporated in China, Pakistan, Bangladesh, Sri Lanka, Iran and Afghanistan will have to seek its permission to set up branch or liaison offices in India as general permission granted to entities of other nations will not apply to them.

“It is clarified that the general permission accorded in terms of the November 15, 2003 guidelines is subject to the adherence to the provisions of Regulation 4 (dealing with restrictions on setting up branch offices) ... dated May 3, 2000, along with their specified conditions,” the RBI said. 

As per the RBI guidelines, “... no person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the RBI”. 

The central bank had in 2000 barred citizens from the six neighbouring countries from opening any place of business in India under the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000. 

Subsequently, in guidlines released in 2003 the bank had granted general permission to a foreign entity for setting up a project office in India subject to certain conditions. Foreign companies were allowed to open project office if they have secured from an Indian firm a contract to execute a project in India and if the project is funded by inward remittance from abroad. 

Besides, permission was granted if the project is funded by a bilateral or multilateral international finance agency or if the project has been cleared by an appropriate authority. Overseas firms were allowed to open project office if 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. 

The Daily Independent/Bangladesh/ 10th Feb 2012