Branch Office in India for a US Company: RBI Approval and Permitted Activities

Prepared by AU Corporate's CA-led advisory team · Published 14 October 2026 · Confirm current eligibility, approval and permitted activities before applying.

A US company considering an Indian presence may compare a branch office with an Indian subsidiary, liaison office or distributor arrangement. A branch office is not a separate Indian company: it is an Indian presence of the foreign entity, and its activities and operations must fit the applicable foreign-exchange framework and any approval conditions.

Quick answer

What should a US company check before opening a branch office in India?

Confirm that the foreign company and proposed activity are eligible under current rules, obtain advice on the applicable RBI/authorised-dealer-bank approval route, define the permitted scope, and plan tax, accounting, reporting, staffing and closure obligations before signing local contracts or leasing premises.

1. Decide whether the branch-office model fits

A branch can be relevant where the foreign company wants to conduct a permitted activity in India directly. It should not be chosen only because it sounds simpler than incorporation. The foreign company remains the legal entity behind the Indian branch, which affects contracting, liability, tax and group governance.

Map the intended work: customer support, consulting, technical services, research, project delivery, sourcing or another activity. The exact scope matters because permission to establish a branch does not automatically permit every business activity the parent performs elsewhere.

2. Check eligibility and the approval route

Before committing to the structure, assess the foreign company's eligibility, track record and financial information against the current framework, along with any sector-specific or investor-specific restrictions. The approval route and supporting evidence should be confirmed with an authorised dealer bank and qualified advisers under the rules in force at the time of application.

Start with the Reserve Bank of India's official website and foreign-investment directions. Do not rely on a checklist from a prior year without checking the current requirements and bank process.

3. Define permitted activities and local contracts

Document the planned activities and compare each one with the applicable permission and rules. Review whether the branch will invoice customers, provide services, import goods, employ staff, hold inventory or sign contracts. Make sure customer proposals, contracts, website descriptions and actual operations are consistent with the approved scope.

Write a clear activity description and operating plan.
Map who will negotiate, sign and perform local contracts.
Check any restrictions on commercial activity, trading or manufacturing.
Identify sector licences or registrations that may apply separately.

4. Plan tax, accounting and remittances

A branch may have Indian tax obligations on income attributable to its Indian activities. Assess the domestic tax rules and applicable treaty separately, and review withholding tax, GST where relevant, books and records, tax audits or other reporting that may apply. Do not assume that the branch's tax treatment will be the same as that of an Indian subsidiary.

Plan how head-office expenses will be allocated and supported, which records will be maintained in India, and how payments or remittances will be documented. The tax treatment should reflect the actual functions, contracts and costs, not simply the accounting label used by the group.

5. Build the ongoing compliance calendar

Before launch, assign responsibility for local accounting, tax filings, employment and payroll compliance, bank reporting, renewal or change notifications and document retention. Approval conditions may require records or periodic submissions; capture these in the calendar rather than relying on informal reminders.

Maintain approval letters, bank correspondence and changes in activities.
Keep local books, contracts, invoices and head-office allocation workings.
Review tax, GST and payroll obligations as the business evolves.
Confirm the process for changing the activity, address or authorised signatories.
Plan closure and remittance steps before deciding to discontinue the branch.

6. Compare a branch with other entry routes

A branch is one option, not a default. A subsidiary may suit a business that wants a separate Indian legal entity, local equity investment or a long-term team. A liaison office has a narrower representative purpose and is not a substitute for a revenue-generating operation. A distributor may support market testing without the same local footprint, but offers less direct operational control.

See our branch office vs subsidiary comparison and liaison office guide for the structural differences.

Frequently asked questions

Can a US company open a branch office in India?

Potentially, subject to the applicable foreign-exchange framework, eligibility criteria, activity restrictions and approval process. The company should confirm the current requirements with an authorised dealer bank and relevant advisers before committing to the structure.

Can an Indian branch office carry out the same activities as a subsidiary?

No assumption should be made that the activities are interchangeable. A branch office is an extension of the foreign company and may conduct only activities permitted under the applicable approval and rules.

Can a branch office in India earn revenue?

A branch may be permitted to carry out specified activities under the applicable framework and approval. The proposed business, contracts and revenue model should be checked against the permitted scope before operations begin.

Is a branch office the same as a liaison office?

No. A liaison office generally has a narrower representative role and is subject to restrictions on commercial activity. A branch office may undertake a different permitted scope, subject to the applicable rules and approval.

Does a branch office have Indian tax and reporting obligations?

Potentially, yes. Review income-tax, tax treaty, withholding, GST where relevant, accounting, statutory reporting and any RBI or authorised-dealer-bank conditions that apply to the approved activity.

This article is general information, not legal or tax advice. Eligibility, permitted activities and approval processes depend on current rules and the proposed facts; confirm them before acting.