Can a US Company Open a Liaison Office in India? Activities, Approval and Limits

Prepared by AU Corporate's CA-led advisory team · Published 14 October 2026 · General information; confirm current eligibility and approval requirements before applying.

A US company considering India may want a local presence to understand the market, communicate with prospective customers or coordinate with its overseas headquarters before it begins commercial operations. An Indian liaison office may fit a limited representative purpose, but it is not a substitute for a sales office or operating subsidiary. Its permitted activities, funding and approval conditions need to be checked before the company commits to an office or hires a team.

1. What a liaison office is allowed to do

A liaison office is generally a communication channel between the foreign head office and parties in India. Depending on the applicable rules and approval conditions, activities may include representing the parent, promoting exports or imports, facilitating technical or financial collaboration, and collecting or sharing information about potential market opportunities. The specific scope must be checked against the current regulatory directions and the office's permission.

The key limitation is that a liaison office is not intended to carry on commercial, trading or industrial activity or earn business income in India. Do not assume that an activity is permitted merely because it is described as marketing, business development or customer support. Review what staff will actually do, who contracts with customers, who invoices, and where revenue-generating decisions take place.

2. Funding and expenses

A liaison office's operating expenses are generally met through inward remittances from its foreign parent, subject to the applicable banking and foreign-exchange requirements. Plan the budget around office rent, staff, professional support, travel and reporting costs. The office should not be structured on the assumption that it can cover those costs through Indian sales or service revenue.

3. Eligibility and approval route

Applications by foreign entities to establish a liaison office are governed by the FEMA framework and the Reserve Bank of India's directions on branch offices, liaison offices and project offices. Applications are generally handled through an authorised dealer Category-I bank, which assesses the proposal against the applicable criteria and determines whether additional approval is required. The applicant's track record, financial position, home-country status, proposed activities and sector can affect the route and documents.

Start with the RBI Master Direction on establishing branch, liaison and project offices. It should be read with subsequent amendments and the bank's current checklist. Do not rely on an old checklist or assume that a process described for one type of applicant applies to every US company.

4. Ongoing records and reporting

Before opening the office, agree who will maintain the approval letter, parent remittance evidence, expenditure ledger, employment and vendor records, tax documents and bank correspondence. RBI directions also address annual activity certification and other conditions for these offices. Confirm the exact deadlines, certificate requirements and any local registrations that apply to the particular office.

• Keep the approval and permitted-activity scope available to the team managing India operations.
• Reconcile inward remittances from the parent to the office's recorded expenses.
• Maintain vendor invoices, payroll records, bank statements and accounting support.
• Track the annual activity certificate and any bank or regulatory reporting dates.
• Review proposed new activities before staff undertake them, especially customer-facing or revenue-related work.

5. Liaison office vs branch office vs subsidiary

The right structure depends on what the US company actually intends to do in India. A liaison office may be appropriate for limited representative functions; a branch office may carry out only the activities permitted under the applicable framework; and an Indian subsidiary is a separate company that can conduct its permitted business. These options are not interchangeable, and a liaison office should not be selected simply because it appears administratively lighter.

Compare the permitted activities, tax and liability implications in our guide to branch office vs subsidiary in India. If the presence is tied to a specific contract or project, review the separate requirements for a project office in India. If the company intends to hire staff and deliver services or sell to Indian customers, an incorporated subsidiary may need to be evaluated instead.

6. Questions to answer before applying

1. What exact activities will India-based staff perform during a typical week?
2. Will the office negotiate or conclude sales, deliver services, or generate revenue in India?
3. How will expenses be funded, and what remittance evidence will the bank require?
4. Does the parent meet the current eligibility criteria, and is a government or RBI approval route relevant?
5. Who will own the annual compliance calendar and maintain records?
6. Could the business plan change soon enough that a branch or subsidiary is more suitable?

Frequently asked questions

This guide is general information, not legal, tax or regulatory advice. Permitted activities and approval requirements depend on the facts and the rules in force when the application is made.