The Reserve Bank of India has proposed that foreign companies wishing to set up liaison and branch offices in the country need to have a minimum networth of $ 50,000 and $ 100,000, respectively.
In a draft notification the apex bank has also said that foreign companies must have a five-year track record of profit to set up a liaison office or a branch in India.
As per the current eligibility norms for establishing a branch or liaison office in India, a foreign company is required to obtain the approval of either the Reserve Bank or the central government.
A liaison office, as per the RBI norms, is allowed to represent the foreign company in India and act as a communication channel between the parent company and domestic firms.
The branch offices, however, can take the activity of exporting or importing goods and render professional or consultancy services. They can also conduct research in which the parent company is engaged.