Setting Up of Business, Industrial and Labour Laws · Setting up of Branch Office, Liaison Office and Wholly Owned Subsidiary by Foreign Company

Forms of Entry for Foreign Companies in India

Updated 11 October 2026 · Fact-checked

A foreign company can enter India through a liaison office, branch office, project office, or by incorporating a wholly owned subsidiary. The first three are extensions of the foreign company with limited activities. A subsidiary is a separate Indian company. To answer questions, compare activity, legal status, liability and compliance.

Understand Forms of Entry for Foreign Companies in India

A foreign company means any company or body corporate incorporated outside India, whether it has a place of business in India or not (Explanation to section 234). When such a company wants to do business in India, it must pick a form of presence. The choice depends on what it wants to do and how much risk it will carry.

There are two broad groups. In the first group the foreign company itself operates in India through an office. These are the liaison office, the branch office and the project office. They have no separate legal identity. The foreign parent is liable for everything they do.

In the second group the foreign company incorporates an Indian company, usually a wholly owned subsidiary (WOS), where the foreign parent holds all the shares. The WOS is a separate legal person registered under the Companies Act, 2013. It can carry on any lawful business, subject to FDI policy for that sector.

Think of it as a ladder of commitment. A liaison office only represents the parent and cannot earn income. A branch office can carry on specified commercial activities. A project office is set up for one specific project. A WOS is a full Indian business with its own board, accounts and limited liability for the parent.

If a foreign company sets up a place of business in India, the Companies Act also applies to it as a foreign company. It must file documents with the Registrar within thirty days (section 380), display its name (section 382) and keep books of account (section 128). Mergers between Indian and foreign companies are a further route, covered in section 234, but this is a restructuring route and not a normal way to set up.

The detailed permissions and activity limits for each office are governed by foreign exchange rules and RBI regulations. Study them in the topics on liaison office, branch office and WOS. Here you must be able to list the forms and compare them.

Key rules to remember

Routes of entry: Liaison office | Branch office | Project office | Wholly owned subsidiary; The first three are extensions of the foreign company. The WOS is a separate Indian company.
Foreign company: Company or body corporate incorporated outside India, whether or not it has a place of business in India; This is the meaning given in the Explanation to section 234.
Filing on setting up a place of business: Deliver documents to the Registrar within 30 days of establishing a place of business in India (s. 380(1)); Includes certified charter or memorandum and articles, address of registered office, list of directors and secretary, and name and address of a person resident in India authorised to accept service.
Alteration in documents: Return of alteration within 30 days of the alteration (s. 380(3)); Applies to changes in the documents already delivered.
Display of name: Name and country of incorporation outside every office, in English and local language characters; in English on letters, bill-heads and notices (s. 382); If members' liability is limited, that fact must also be stated.
Books of account: Kept on accrual basis and double entry system; retained for not less than 8 financial years (s. 128(1), (5)); Fine for default on the officers named in s. 128(6): not less than ₹50,000, up to ₹5,00,000.
Legal status test: Office of foreign company = same legal person as parent; WOS = separate legal person; This drives liability, taxation and compliance differences.

How to solve Forms of Entry for Foreign Companies in India questions

Use this method for any question on forms of entry, whether it asks you to list, compare or advise.

1Define a foreign company in one line, using the section 234 Explanation.
2List the forms: liaison office, branch office, project office and wholly owned subsidiary.
3State the legal status of each. The three offices are part of the foreign company. The WOS is a separate Indian company.
4Compare on the points asked: permitted activity, income earning, liability of parent, regulatory approval and compliance.
5Add the Companies Act obligations if an office is set up: filing within 30 days under section 380, name display under section 382, books of account under section 128.
6If it is an advice question, match the client's purpose to the form. Only representation suggests a liaison office. Trading or a specific project suggests a branch or project office. Full-scale business with limited liability suggests a WOS.
7Close with a clear conclusion that names the recommended form and the main reason.

Quickest way: Four-form comparison grid

When to use it: Use it for short notes and difference questions when time is tight.

Write the four forms across the top of your rough work.
Under each, note three points: purpose, legal status, liability of parent.
Mark the one key limit: a liaison office cannot earn income from India.
Add the one Companies Act line: documents to the Registrar within 30 days (s. 380).
Turn the grid into short sentences and add a one-line conclusion.

Common mistakes in Forms of Entry for Foreign Companies in India

Treating a branch office or liaison office as a separate legal entity.
Students see an Indian address and registration and assume it is an Indian company.
Fix: State clearly that these offices are part of the foreign company, and the parent is liable for their acts. Only a WOS is a separate legal person.
Saying a liaison office can carry on commercial activity and earn income.
It is confused with a branch office.
Fix: Remember a liaison office acts as a channel of communication for the parent and does not earn income in India. Branch offices carry on permitted commercial activities.
Forgetting the Companies Act filing duty for a foreign company with a place of business in India.
Students focus only on FEMA and RBI permissions.
Fix: Add section 380: deliver documents to the Registrar within 30 days of establishing the place of business, and file alterations within 30 days.
Writing that a WOS must have a single shareholder.
Wholly owned is mistaken for one person.
Fix: Wholly owned means the foreign parent holds all the shares. A private company needs at least two members, so a nominee holds a share for the parent.
Quoting wrong section numbers for name display or books of account.
Several sections about foreign companies are learnt together.
Fix: Link: s. 380 documents, s. 382 display of name, s. 128 books of account, s. 234 merger with foreign company.
Calling section 234 the route to set up a branch.
It deals with foreign companies, so it feels relevant.
Fix: Section 234 deals with mergers and amalgamations between Indian and foreign companies. It needs prior RBI approval and is not a way of opening an office.

Worked examples

Example 1

Zentra Gmbh, a German company, wants to understand the forms in which it can set up business in India. Explain the available forms and say which is best if it wants to sell its products directly in India with limited liability for the parent.

Show the solution

Provision: a foreign company is any company incorporated outside India, whether or not it has a place of business here. It can enter through a liaison office, branch office, project office or a wholly owned subsidiary.
Analysis of offices: the three offices form part of Zentra itself. They have no separate identity, so Zentra is liable for their acts.
Liaison office: it can only represent Zentra and communicate. It cannot earn income, so it does not allow direct sales.
Branch office: it can carry on permitted commercial activities, but Zentra remains fully liable for it.
Wholly owned subsidiary: an Indian company registered under the Companies Act, 2013, with Zentra holding all the shares. It is a separate legal person and can sell products, subject to the FDI policy for the sector. Zentra's liability is limited to its investment in the shares.
Conclusion: since Zentra wants to sell directly and limit its liability, a wholly owned subsidiary is the suitable form.

Answer: Zentra can enter through a liaison, branch or project office or a wholly owned subsidiary. Because it wants direct sales with limited parent liability, the wholly owned subsidiary is best.

Example 2

Orion Inc., a US company, opens a branch office in Pune on 1 August. State its main obligations under the Companies Act, 2013 for this place of business.

Show the solution

Provision: Orion is a foreign company with a place of business in India. Section 380(1) requires it to deliver documents to the Registrar within thirty days of establishing the place of business.
Documents: certified copy of charter or memorandum and articles (with certified English translation if needed), full address of registered or principal office, list of directors and secretary, name and address of a person resident in India authorised to accept service, address of the principal place of business in India, and a declaration about convictions or debarment.
Timing: 30 days from 1 August ends on 30 August, so the filing must be made by then.
Alteration: any later change in these documents must be reported by a return within thirty days (s. 380(3)).
Display: Orion must show its name and country of incorporation outside the Pune office in English and local language characters, and in English on letters, bill-heads and notices (s. 382). If liability of members is limited, it must say so.
Accounts: books of account must be kept on accrual basis and double entry system, and retained for at least eight financial years (s. 128). Default by the responsible officers attracts fine of ₹50,000 to ₹5,00,000.
Conclusion: Orion must file with the Registrar by 30 August, display its name properly and maintain books of account.

Answer: Orion must deliver the prescribed documents to the Registrar within 30 days, that is by 30 August (s. 380), display its name and country as required (s. 382) and maintain books of account (s. 128).

Exam tips

Practise the difference between branch office and liaison office and between branch office and WOS. Questions often ask for these comparisons.
In every answer say whether the form is a separate legal entity. This single point earns marks across most comparisons.
Quote section numbers exactly: 380 for documents, 382 for display of name, 128 for books of account, 234 for merger with a foreign company.
Keep the 30-day period in mind, for both initial filing and alterations.
In advice questions, end with a clear recommendation and give the reason in one line.

Practice questions from Setting up of Branch Office, Liaison Office and Wholly Owned Subsidiary by Foreign Company

Forms of Entry for Foreign Companies in India in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Forms of Entry for Foreign Companies in India: frequently asked questions

What are the modes of entry for a foreign company in India?

The common forms are a liaison office, a branch office, a project office and a wholly owned subsidiary. The first three are offices of the foreign company. The subsidiary is a separate Indian company.

What is the difference between a branch office and a liaison office?

A liaison office only represents the parent and acts as a communication channel. It does not earn income in India. A branch office can carry on permitted commercial activities for the parent.

Branch office vs wholly owned subsidiary: which is better?

It depends on the purpose. A branch is part of the foreign company, so the parent is fully liable. A wholly owned subsidiary is a separate Indian company, so the parent's liability is limited to its shares. A subsidiary suits full-scale business.

Does a foreign company have to register under the Companies Act when it opens an office in India?

It must deliver the prescribed documents to the Registrar within thirty days of establishing its place of business in India (section 380). It must also display its name and country (section 382) and keep books of account.