Non-resident and Foreigners business in India [Section 6(6)] - FEMA Ready Reckoner - FEMA

Non-resident and Foreigners business in India [ Section 6(6) of FEMA Act,1999 ] Without prejudice to the provisions of this section, It may be noted that section 6(6) is prefaced with the non-obstante expression Without prejudice to the provisions of this section, . the implication under section 6(6) do not affect the various regulation issued by the Reserve Bank section 6(1) to 6(5). The Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in India of a branch, office or other place of business by a person resident outside India, for carrying on any activity relating to such branch, office or other place of business. Relevant RBI Regulation In exercise of the powers vested in it by section 6(6), the Reserve Bank has framed regulation Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 to prohibit, restrict or regulate establishment in India of a branch or office or place of business in India by Non-resident. For general permission and the condition thereof specified in the branch, Project-office and Liaison Office Regulation. Restriction on Non-resident Business in India In terms of Regulation 3 , without Reserve Bank prior approval, a non resident establish India- a branch office; or Branch Office in relation to a company, means any establishment described as such by the company. [define Regulation 2 (d)] a liaison office; or Liaison Office means a place of business to act as a channel of communication between the principal place of business or Head Office or by whatever name called and entities in India but which does not undertake any commercial /trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel. [define Regulation 2 (e)] a project office or any other place of business by whatever name called. Project Office means a place of business in India to represent the interests of the foreign company executing a project in India but excludes a Liaison Office. [define Regulation 2 (f)] Site Office means a sub-office of the Project Office established at the site of a project but does not include a Liaison Office. [define Regulation 2 (g)] In terms of the provisos to Regulation 3 , prior approval of the Reserve Bank is not necessary in the following cases:- (a) A banking company resident outside India shall not require any approval under these Regulations for establishing any office in India if such company has obtained necessary approval under the provisions of the Banking Regulation Act, 1949. [ Clause (a) ] (b) An insurance company resident outside India shall not require any approval under these Regulations for establishing any office in India if such company has obtained approval from the Insurance Regulatory and Development Authority established under section 3 of the Insurance Regulatory and Development Authority Act, 1999. [ Clause (b) ] (c) A company resident outside India shall not require any approval under these Regulations to establish a branch office in the Special Economic Zones (SEZs) to undertake manufacturing and service activities, subject to the conditions that: i) such branch offices are functioning in those sectors where 100% FDI is permitted; ii) such branch offices comply with Chapter XXII of the Companies Act, 2013 ; and iii) such branch offices function on a stand-alone basis. [ Clause (c) ]