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The set up and regulation of Project Office are governed by Foreign Exchange Management Act, 1999 and the Regulations issued by Reserve Bank of India from time to time. Project Office are generally set up by foreign entities to execute an awarded project by the Indian Companies. RBI allow foreign entities to establish project offices in India, provided they have secured a contract from an Indian company to execute a project in India.
General Conditions for setting up project office in India for a person resident outside India are given below:
The applications for establishment of Project Office in a sector in which 100% FDI is allowed are routed through designated AD Category I Bank. The application are submitted to AD Category-I bank in Form FNC along with the prescribed documents mentioned in the Form, as per the guidelines issued by the Reserve Bank of India.
PO can approach AD Category I Bank in India to open a Non Interest Bearing Foreign Currency Account for its operations in India subject to certain conditions. The permissible credits in bank account shall be foreign currency receipts from the Project Sanctioning Authority and remittances from parent/ group company abroad or bilateral/ multilateral international financing agency. While the permissible debits shall be payment of project related expenditure.
Project Office is just an extension of the foreign companies in India and cannot undertake any additional activity in India except the activities relating or incidental to the execution of the project.
Any foreign entity (except an entity from Pakistan) who has been awarded a contract for a project by the Government authority/Public Sector Undertakings or are permitted by the AD to operate in India may open a bank account without any prior approval of the Reserve Bank. Each Project Office can open two foreign currency accounts, usually one denominated in USD and other in home currency of the project awardee, provided both are maintained with the same AD Category–I bank.
Remittance of Profit
AD Bank can permit intermittent remittances by Project Office pending winding up/ completion of the project provided they are satisfied with the bonafides of the transaction subject to certain conditions
Extension of fund and non-fund based facilities
AD Category I Bank may extend Fund/Non Fund facilities to Project Office on the basis of Board approved policy, business prudence and compliance to extant rules/regulations stipulated by DBR, RBI.
Closure of Project Office
Requests for closure of Project Office and for remittance of winding-up proceeds needs to be submitted to designated AD Category - I bank along with prescribed documents.
From Foreign Entity
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Approval of RBI for establishing Project Office is required in following cases: