Set Up a Liaison Office in India: Eligibility, Documents, & Process

• Company formation / Compliances
• ||
• March 5, 2026

A Liaison office in India is known as a representative office in India, and is set up by a foreign company in India to have its physical presence in India for coordination and communication purposes, but it cannot earn income or conduct business operations in India.

It acts as a channel of communication between the head office (outside India) and parties in India, without undertaking any commercial, trading, or industrial activity in India.

So, in short, if you have a company, for example, in the USA, and you want to establish a presence in India only for connection, communication purposes, client engagement, or new market exploration, then you can choose to set up a Liaison Office in India.

Why do foreigners want to set up a liaison office in India?

Many foreign businesses outside India are eager to enter the Indian market due to favorable conditions such as low operational costs, ease of manufacturing, availability of skilled manpower, and a large consumer base.

However, before setting up a full company, many prefer to start with a Liaison Office. The main reason behind entering the Indian market through a Liaison Office is to test the market, build business relationships, understand regulatory requirements, and reduce risk before making a major investment.

Here are the key reasons people like to start:

• Market Exploration & Entry: for most foreign companies, a liaison office in India helps them to understand the Indian market before committing to full-scale investment.
• Promotion & Communication: Offices promote imports/exports, technical collaborations, and act as a bridge between the parent company and Indian partners.
• Tax Benefits: As they do not generate income in India, they are generally not subject to local corporate income tax.

Let’s understand with an example- Let’s take a practical example:

The practical example is Coloplast, a Denmark-based medical device company. Before expanding full commercial operations in India, companies like Coloplast typically establish a Liaison Office to:

• Coordinate with Indian hospitals and distributors
• Understand regulatory approvals for medical devices
• Promote collaboration and partnerships
• Support communication between Indian stakeholders and the global head office

Once the company is confident about market demand and regulatory clarity, it may establish a subsidiary or other commercial entity in India for full-scale operations.

Eligibility to Set up a Liaison Office in India

To set up a liaison office in India from almost any part of the world, your entity must have:

• Net Worth: $> 50,000 USD or its equivalent
• Profit Track Record: Profit-making record for the immediately preceding 3 financial years.

Exemption: In case you don’t meet the eligibility criteria mentioned above, there is a subsidiary exemption available that allows the applicant company to be a subsidiary of another company and does not meet the required financial criteria on its own. Then it can still apply by submitting a Letter of Comfort (LOC) from its parent or group company.

To know more about this LOC and how we can do this, you can contact our professional for that.

Steps to set up a Liaison office in India

Before moving or jumping straight to the steps and forms, foreign entities need to first determine which route they want to apply through, because under FEMA, there are two approval routes: the Automatic Route and the Government Route.

Let’s understand these routes:

• Automatic Route (RBI route) – Where the principal business of the foreign entity falls under sectors where 100 percent FDI is permissible. If you want the list of permissible activities, you can find it here-https://masllp.com/foreign-direct-investment-in-India.
• Government route – Where the principal business of the foreign entity falls under the sectors where 100 percent FDI is not permissible under the automatic route.

Applications from entities falling under this category and those from non-government organizations are considered by the RBI in consultation with the Ministry of Finance, Government of India.

• Additionally, applications from Non-Government Organizations (NGOs), Non-Profit Organizations (NPOs), or government bodies/departments must use this route.
• Jurisdictional Requirement: Entities from or citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau also require prior RBI approval in consultation with the Government of India.

Now here is the step-by-step guide for both routes:

Professional Tips: To know more about how you can find the AD bank at a minimum cost and as per your requirements in India, you can contact a professional who can guide you better.

You can also take professional help from a CS in India for filing this form FNC because it is a very critical form and needs to be submitted as per the FEMA and RBI regulations.

Post-Approval Steps (Common for Both Routes)

After you get your establishment completed through the above-mentioned steps, the next most important thing is to complete the post-registration steps. Let’s understand the Key Compliance Requirements for the Liaison Office in India:

1. Register with ROC: Within 30 days of approval, the LO must register with the Registrar of Companies (ROC) office of the Ministry of Corporate Affairs. For this registration, you need to file Form FC-1 to obtain a corporate Identity Number.
2. Obtain PAN and TAN: these are used for tax filing purposes, and can be applied for via the Income Tax Department of India. Although an LO cannot generate income, that’s why it is not required to pay any tax, but it is still required to comply with Indian tax regulations, file annual tax returns, and withhold taxes (TDS) on payments made to employees or vendors
3. Submit Annual Activity Certificate: Each year, a liaison office must file an Annual Activity Certificate(AAC), prepared by a chartered accountant, to the RBI, verifying that the office’s activities are within its charter (Annex-3).
4. Open Bank Account: Open a non-interest-bearing INR current account with the AD Bank.
5. Register with Police: Applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau, or Pakistan must register with the state police authorities.

 Activities allowed for the liaison office in India

• Representing in India the parent company/group companies.
• Promoting export/import from/to India.
• Promoting technical /financial collaborations between parent/group companies and companies in India.
• Collecting information about possible market opportunities, sources of supply, and providing information about the parent company and its products to the prospective Indian customers, or vice versa, to its vendor.
• Acting as a communication channel between the parent company and Indian companies.

Restrictions on the Activities of a liaison office

• A Liaison Office is not permitted to undertake any commercial / trading / Industrial activity, directly or indirectly, and therefore cannot earn any income in India.
• A liaison office can neither borrow nor lend money.
• It cannot acquire, Hold (other than by way of lease for a period not exceeding five years), transfer, or dispose of any immovable property in India, without prior approval of the RBI.

Legal Framework Governing Liaison Offices

The following are the Regulatory Authorities governing the Liaison office in India:

• Foreign Exchange Management Act, 1999 (FEMA).
• RBI’s Foreign Exchange Management (Establishment in India of a Branch Office, Liaison Office or Project Office or any other place of business) Regulations.

Documents Required to Set up a Liaison Office in India

Here is the key checklist required in India to set up:

1. A certified copy of the Incorporation of the parent company.
2. Memorandum & Articles of Association.
3. A copy of the parent company’s latest audited balance sheet (this must be for the last 3 years.
4. Net worth certificate attested by a Certified Public Accountant (CPA).
5. Banker’s report from the applicant’s bank in the home country.
6. Board Resolution/Letter of Authority from the parent company approving the Indian office.
7. Complete details of directors and shareholders.
8. KYC documents (passport/identity proof) of the authorized representative/signatory in India.
9. Detailed description of the proposed activities in India.

Note: Certain documents must be translated into English and notarized/apostilled by the Indian Embassy in the home country.

For any documents that are certified by the professional CA, CS, or CPA, you can contact us!

Conclusion

Most foreigners do proper research on how to set up a Liaison Office in India, but they often get stuck on what to do next and how to proceed. That is why it is important to first understand the complete compliance requirements and then move forward with the filings.

It is always better to seek professional help if you are not able to handle the process yourself. Entering a completely new market requires proper guidance, and a local professional can make your journey easier and safer. We are not referring to just any consultant  — you should consult a qualified and compliant professional, such as a CA or CS registered in India.

How Mercurius Can Help?

At Mercurius, we are a professional firm with over 17 years of experience in this field.

Our team includes qualified CAs, CPAs, and CS professionals who have assisted foreign nationals and NRIs from more than 60 countries in setting up their businesses in India — whether it is a Liaison Office, Branch Office, or Wholly Owned Subsidiary.

We provide complete end-to-end support — from registering the entity to helping manage operations in India and ensuring timely annual compliance filings.

We act as your trusted partner in India, allowing you to focus on your business growth and expansion while we handle the regulatory, legal, and compliance requirements in the Indian market.

If you require any assistance in setting up a liaison office in India, please contact Mercurius. If you have any query regarding this, please click here.

For a video explanation of this article, click here.