India has emerged as one of the most attractive destinations for global expansion. With a fast-growing economy, skilled workforce, and rising consumer demand, many international businesses are choosing to open a branch office in India instead of creating a separate subsidiary. For UK and European companies looking to test the Indian market or expand their operations efficiently, a branch office provides a flexible and strategic entry route.

This guide explains everything foreign companies need to know — from eligibility to compliance — when planning to open a branch office in India.

Why UK and European Businesses Choose India for Expansion

India is currently one of the world’s fastest-growing major economies, offering access to a large consumer base and a strong service sector. For European and UK companies, India also presents favourable trade opportunities, strong bilateral relations, and increasing digital adoption across industries.

Opening a branch office allows foreign companies to maintain direct control over their Indian operations without establishing a completely new legal entity. It also helps organisations provide services, conduct research, and build long-term market presence while keeping administrative costs relatively manageable.

What Is a Branch Office in India?

A branch office is an extension of a foreign parent company operating within India. Unlike a subsidiary, it is not treated as a separate legal entity. Instead, it represents the parent company and operates under guidelines regulated by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA).

Foreign companies typically open branch offices to provide professional services, handle import-export activities, promote technical collaborations, or support research operations. However, branch offices cannot engage in manufacturing or retail trading directly unless specifically permitted under Indian regulations.

Eligibility Criteria to Open a Branch Office in India

Before applying, foreign companies must satisfy certain financial and operational requirements established by Indian authorities.

The parent company must generally have a profitable track record in its home country for at least five years. Additionally, the company should demonstrate a strong financial standing, typically supported by minimum net worth requirements. These criteria help ensure that only credible and stable organisations are allowed to operate branch offices in India.

For UK and European firms, meeting these requirements is usually straightforward because of strong financial reporting systems and corporate governance standards.

Permitted Activities for Branch Offices

When planning to open a branch office in India, companies must understand the scope of permitted activities. The Indian government restricts branch offices to specific functions designed to support international business collaboration.

Common permitted activities include:

• Export and import of goods
• Professional or consultancy services
• Research and development initiatives
• Promoting technical or financial collaborations
• Representing the parent company in India
• Acting as a communication or liaison channel

Businesses must ensure that their planned operations align with these approved activities to avoid regulatory complications.

Step-by-Step Process to Open a Branch Office in India

1. RBI Approval

The first step involves obtaining approval from the Reserve Bank of India. Most applications are submitted through an authorised dealer bank in India. The RBI reviews the parent company’s financial credibility, business purpose, and compliance background before granting approval.

2. Company Registration with MCA

After RBI approval, the branch office must be registered with the Ministry of Corporate Affairs. This includes filing incorporation documents and receiving a Corporate Identification Number (CIN), which allows the branch office to operate legally in India.

3. PAN and Tax Registration

The branch office must obtain a Permanent Account Number (PAN) from Indian tax authorities. This number is essential for financial transactions, tax filing, and regulatory compliance.

4. Opening a Bank Account

The branch office must open an Indian bank account to manage operational expenses, employee salaries, and business transactions.

5. Compliance and Reporting Setup

Companies must maintain proper accounting records and submit annual filings to regulatory authorities. Ensuring compliance from the beginning helps avoid penalties and operational disruptions.

Taxation of Branch Offices in India

Understanding taxation is essential when deciding to open a branch office in India. Branch offices are taxed as foreign companies, and their income generated within India is subject to corporate tax regulations.

However, UK and European companies can often benefit from Double Taxation Avoidance Agreements (DTAA) between India and their home countries. These agreements help prevent businesses from paying tax on the same income in two different jurisdictions. Strategic tax planning can significantly reduce financial burdens and improve overall profitability.

Key Advantages of Opening a Branch Office in India

Strong Market Presence

A branch office allows foreign companies to establish direct operational control while maintaining global brand consistency. This helps businesses build credibility and stronger relationships with Indian clients.

Lower Setup Complexity

Compared to incorporating a subsidiary, branch offices usually involve fewer administrative procedures, making them an efficient entry strategy for businesses exploring Indian markets.

Access to Skilled Talent

India offers a highly skilled and cost-efficient workforce across industries such as IT, finance, consulting, engineering, and research. UK and European companies often benefit from this talent pool to expand service delivery.

Improved Trade Opportunities

India’s expanding trade partnerships and export infrastructure create new opportunities for global companies seeking supply chain diversification.

Compliance Requirements Foreign Companies Must Follow

Branch offices must comply with strict regulatory and reporting obligations. These include annual financial statements, tax filings, and reporting business activities to the RBI and MCA.

Foreign exchange regulations must also be followed carefully, especially when transferring funds between India and the parent company. Maintaining compliance ensures smooth operations and protects companies from legal penalties.

Working with experienced business consultants such as Stratrich can simplify these regulatory processes and help businesses maintain compliance with Indian laws.

Common Challenges Businesses May Face

While opening a branch office in India offers several benefits, companies should also prepare for operational challenges. Regulatory approvals can take time, and compliance requirements are detailed. Additionally, businesses must understand cultural and market differences when entering the Indian business ecosystem.

With proper planning and expert advisory support, most companies successfully overcome these challenges and establish profitable operations.

Why Choose Professional Support for Branch Office Setup

Setting up a branch office requires coordination with multiple regulatory authorities, financial institutions, and compliance bodies. Errors during registration or reporting can delay operations and create legal complications.

Business consulting firms like Stratrich specialise in helping UK and European companies open branch offices in India smoothly. From documentation and approvals to tax planning and compliance support, professional assistance helps businesses focus on growth rather than administrative hurdles.

Final Thoughts

India continues to attract global businesses seeking long-term growth and market diversification. Choosing to open a branch office in India offers UK and European companies a strategic way to enter one of the world’s most dynamic economies without establishing a separate corporate entity.

By understanding regulatory requirements, permitted activities, and taxation structures, foreign companies can successfully expand their operations and build strong market presence. With the right guidance and planning, a branch office in India can become a powerful gateway to South Asian and global business opportunities.