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| Date : 31 May 2005 | | Business activities | | 11A.2,11A.7 | |
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Trading,
Commercial and Industrial Activities of Foreign Companies/Foreign Nationals
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11A.2
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(i) |
In
terms of Section 29(1)(a) of FERA 1973, foreign companies and foreign
nationals |
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(whether
resident in India or not) are required to obtain permission of Reserve
Bank to carry on |
| in
India, any activity of a trading, commercial or industrial nature or
to establish in India, a branch, office or other place of business for
carrying on such activities. Application for permission should be made
to the Central Office of Reserve Bank (Foreign Investment Division)
by Foreign Companies in form FNC 2 and by foreign nationals in form
FNC 3. |
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NOTES: |
A.
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Reserve Bank
has by Notification No. FERA.22/74-RB dated 11th October 1974 issued
under Section 29(1) of the Act granted general permission to shipping
companies incorporated outside India for carrying on their normal commercial
activities through agents provided such companies do not have a branch,
office or other place of business in India.
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B.
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See paragraph
11A.12 for details regarding exemption granted to foreign nationals
of Indian origin permanently resident in India.
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| (ii) |
Foreign
companies engaged in manufacturing or trading activities will be permitted
to |
| open
branches in India for the following purposes: |
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(a) |
To
represent the parent company/other foreign companies in various matters
in India, e.g., acting as buying/selling agent in India, |
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(b) |
To
conduct research work in which the parent company is engaged provided
the results of the research are made available to Indian companies, |
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(c) |
To
undertake export and import trading activities, and |
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(d) |
To
promote technical and/or financial collaborations between Indian companies
and overseas companies. |
| Applications
for opening of branches in India for the above purposes should be made
to the Central Office of Reserve Bank (Foreign Investment Division)
in form FNC 4. |
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(iii) |
Foreign
companies intending to set up a liaison office in India or to post a
representative |
| in
India for undertaking liaison activities on behalf of the parent company
or foreign trading companies intending to set up liaison offices in
India for promotion of exports from India should submit their applications
in form FNC 5 to the Central Office of Reserve Bank (Foreign Investment
Division). In approved cases, permission is granted initially for a
period of 3 years subject, inter alia, to the condition that the expenses
of the liaison/representative office are met exclusively out of inward
remittances. Applications for renewal of permission should, however,
be made to the concerned regional office of Reserve Bank under whose
jurisdiction the office is situated. |
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(iv) |
Applications
for opening temporary project/site offices in India by foreign companies |
| proposing
to engage in execution of specific projects/contracts undertaken with
the approval of Government of India/Reserve Bank should be submitted
in form FNC 5 to the concerned regional office of Reserve Bank under
whose jurisdiction the office will be situated. |
NOTE: Authorised
dealers need not insist on documentary evidence if the amount of credit of refund/claim
to QA 22 account does not exceed Rs.10,000.
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(v) |
In
terms of Section 29(2)(a) of the Act, it was obligatory for foreign
companies/foreign |
| nationals
who were carrying on trading, commercial or industrial activities in
India as on 1st January 1974 to apply to Reserve Bank for permission
to continue their activities in India. Applications received from companies/persons
were dealt with by Reserve Bank in terms of the Guidelines framed by
Government of India for the purpose. |
(vi)
Authorised dealers may open QA.22 accounts in the names
of Liaison Offices in India of foreign companies after verifying the relative
approval granted by Reserve Bank under Section 29(1)(a) of Foreign Exchange
Regulation Act, 1973. These accounts should be non-interest bearing and should
be funded exclusively by way of inward remittances through normal banking channels.
Authorised dealers may also allow credits in these accounts of refunds/claims
received from various Government Departments/Municipal Authorities, Insurance
Companies, refunds of security deposits on termination of lease of immovable
property etc., provided the original payment relating to the transaction was
made from the QA.22 account after verifying the original claim, refund order
received from Government Department/Municipal Authorities/Insurance Company/Utility
Company etc. In case of refund of security deposit from the landlords, the Lease
Agreement and correspondence leading to the termination of lease agreement and
refund of deposits may also be verified. Similarly, authorised dealers may also
allow credit of sale proceeds of assets of Indian branches/offices of foreign
companies to their respective QA.22 accounts provided these amounts are less
than the book value of the assets as certified by a Chartered Accountant and
the assets were acquired by payment from QA.22 account. Authorised dealers should
keep copies of documentary evidence so verified on their records for inspection
by their internal auditors/Reserve Bank.
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Practising
Profession or carrying on an Occupation, Trade or Business in India by
Foreign Nationals
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11A.7
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Under
Section 30 of FERA 1973, a foreign national wishing to practise a profession |
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or
carry on an occupation,trade or business in India should obtain prior
permission of |
| Reserve
Bank if he desires to seek facilities for remittance outside India of
his earnings in India by reason of such profession, occupation, trade
or business. Applications for obtaining permission of Reserve Bank should
be submitted in form EFN to the Office of Reserve Bank under whose jurisdiction
the applicant resides. |
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