India is one of the fastest-growing economies in the world, and many foreign companies are looking to set up their presence here. But not all foreign businesses are ready to start a full-fledged company in India immediately. Some just want to test the market, manage a project, or coordinate with Indian clients or partners. For such needs, there are two important options available: Liaison Office and Project Office.

Both types of offices allow foreign companies to establish a limited presence in India without forming a full Indian company. However, they serve different purposes and have different rules. Let’s understand the difference between a Liaison Office and a Project Office in India in simple words.

What is a Liaison Office?

A Liaison Office is also known as a Representative Office. It acts as a communication channel between the foreign company and parties in India. The purpose of this office is limited to coordination, promotion, and information gathering.

It cannot carry out any commercial, trading, or manufacturing activities. In short, it cannot earn any income in India.

Main Activities Allowed:

• Representing the foreign company in India

• Promoting export or import between India and the home country

• Promoting financial or technical collaborations

• Acting as a communication channel between the parent company and Indian customers or suppliers

Ideal for:

• Foreign companies wanting to understand the Indian market

• Companies looking to explore future business opportunities in India

• Businesses interested in early discussions before launching a subsidiary

What is a Project Office?

A Project Office is a temporary setup in India by a foreign company to execute a specific project. This is useful for companies that have secured a contract in India and need a presence to manage the project.

Unlike a liaison office, a project office can carry out commercial activities related to the project.

Main Activities Allowed:

• Only those activities that are directly related to the project

• Execution of the contract awarded to the foreign company

Ideal for:

• Foreign construction companies, engineering firms, or energy firms working on specific projects in India

• Businesses involved in infrastructure, power, roads, green hydrogen plant setup, etc.

Key Differences Between Liaison Office and Project Office

Liaison Office Registration in India

To set up a liaison office in India, a foreign company must apply to the Reserve Bank of India (RBI) through an Authorized Dealer (AD) Bank. Some of the basic requirements include:

Key Requirements:

• The foreign company must have a profit-making track record for the past 3 years

• Minimum net worth of USD 50,000

• Detailed business plan

• Approval from RBI

Documents Needed:

• Parent company’s certificate of incorporation

• Board resolution

• Letter of authority

• Audited financial statements

• Details of the office in India

The liaison office registration in India process takes around 6 to 8 weeks, depending on document verification and approvals.

Project Office Registration in India

Foreign companies that have secured a contract from an Indian company or government body can apply for a Project Office Registration. This can be done through the RBI or directly via the Authorized Dealer Bank, provided certain conditions are met.

Eligibility Conditions:

• The project is funded by an inward remittance from abroad

• The project is funded by a bilateral or multilateral international financing agency

• The project is cleared by an appropriate authority

• The project is awarded to the foreign company by an Indian company backed by a bank guarantee

Documents Needed:

• Copy of the project contract

• Certificate of incorporation of the foreign company

• Board resolution

• Details of the Indian project and timeline

Project office registration is generally faster if all conditions are met and the AD bank approves the request.

Indian Subsidiary Company – Another Option

While Liaison and Project Offices are useful for limited purposes, many foreign companies eventually decide to go for Indian subsidiary company registration. This allows the foreign business to:

• Run full operations in India

• Earn revenue and profits

• Hire employees freely

• Engage in any lawful business activities

If your goal is to operate long-term in India with full rights, a Private Limited Company as a wholly owned subsidiary is the best option.

Real Example: Green Hydrogen Plant Setup

Let’s say a German company is setting up a Green Hydrogen Plant in Gujarat.

• In the early stage, they may open a Liaison Office to explore the Indian market, meet potential partners, and understand government policies.

• Once they get a contract for plant setup, they can open a Project Office to execute the setup.

• After success, they may decide to go for Indian subsidiary company registration to manage the plant, supply hydrogen locally, and expand operations.

This flow helps them manage risk, stay compliant, and gradually build their presence in India.

Conclusion

Choosing between a Liaison Office and a Project Office in India depends on your business goal. If you only want to study the market or stay in touch with partners, go for a Liaison Office. If you have a contract and need to work on a project, choose a Project Office.

For long-term operations and business freedom, Indian subsidiary company registration is the most powerful option.

Whichever route you choose, proper registration and compliance with Indian laws is essential. Consulting with legal and compliance experts like Corpbiz can help you complete the process smoothly.

Need Help?

At Corpbiz, we help foreign companies with:
✅ Liaison Office Registration India
✅ Project Office Registration
✅ Indian Subsidiary Company Registration
✅ Assistance for Green Hydrogen Plant Setup

Frequently Asked Questions (FAQs)

1. Can a Liaison Office earn revenue in India?

No, a Liaison Office is not allowed to earn any income in India. It can only carry out non-commercial activities like coordination, market research, and promoting the parent company’s business.

2. Who can set up a Project Office in India?

A foreign company that has secured a contract from an Indian company or government body can set up a Project Office. The contract must meet specific RBI criteria, such as being funded through inward remittance or cleared by a government authority.

3. How long can a Project Office remain operational in India?

A Project Office remains active until the completion of the specific project. Once the project is completed, the office must be closed, and any remaining funds repatriated as per RBI rules.

4. What is the difference between a Liaison Office and an Indian Subsidiary?

A Liaison Office is for non-commercial presence and cannot carry out business activities. An Indian Subsidiary is a registered company in India that can run full operations, earn revenue, and enter into contracts independently.

5. Do I need RBI approval for both Liaison and Project Office registrations?

Yes, both typically require approval from the RBI, although in some cases, Project Offices can be approved directly by Authorized Dealer (AD) Banks if specific conditions are met.

Author Profile

Atul Shukla
Legal & Business Advisor, Corpbiz

Atul Shukla is a legal expert specializing in business registrations and foreign company setups in India. With over a decade of experience in corporate compliance, he has helped numerous international businesses establish their presence through Liaison Offices, Project Offices, and Indian Subsidiaries. Atul is especially known for his work with infrastructure and green energy projects, including green hydrogen plant setup advisory. At Corpbiz, he provides strategic support to ensure clients meet regulatory requirements smoothly and expand their footprint in India with confidence.

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