Introduction

India has become one of the most attractive destinations for global expansion, especially for UK and European companies looking to execute large infrastructure, technology, or service-based projects. Many foreign companies prefer project office setup in India because it allows them to operate legally while managing project-specific activities without establishing a full subsidiary.

A project office serves as a temporary operational base that helps international businesses deliver contracts awarded by Indian entities. With structured regulatory frameworks and increasing foreign investment opportunities, setting up a project office is now a practical market entry strategy. Stratrich supports overseas companies in establishing compliant and efficient project offices in India.

What is a Project Office in India?

A project office is a business establishment created by a foreign company to execute a specific project in India. It is approved by the Reserve Bank of India (RBI) and must operate strictly within the scope of the assigned project.

This structure is ideal for companies involved in sectors such as:

• Construction and infrastructure
• Engineering and technical consultancy
• Renewable energy projects
• IT implementation and system integration
• Manufacturing installation or turnkey contracts

Once the project is completed, the office is usually closed after regulatory formalities are fulfilled.

Why UK and European Companies Choose Project Offices in India

Foreign companies often prefer project offices because they provide operational flexibility while reducing long-term compliance burdens.

✔ Direct Project Execution

Companies can manage and execute contracts awarded by Indian clients without establishing a permanent entity.

✔ Cost-Effective Expansion

Setting up a project office requires fewer resources compared to establishing a wholly owned subsidiary.

✔ Regulatory Clarity

Indian government policies clearly define eligibility and operational guidelines, making the structure transparent for foreign investors.

✔ Simplified Tax Structure

A project office is taxed only on income generated from project activities within India.

Eligibility Criteria for Project Office Setup in India

To establish a project office, foreign companies must satisfy specific regulatory requirements. Generally, approval is granted when:

• The company has secured a contract from an Indian entity.
• The project is funded through inward remittance from overseas.
• The project is financed by international financial institutions.
• The contract is supported by an Indian company or government authority.

These conditions ensure that project offices operate within authorised project parameters.

Step-by-Step Process for Project Office Setup in India

1. Contract Finalisation

The foreign company must first secure a legally valid project contract from an Indian client.

2. RBI Approval

Approval from the Reserve Bank of India is required. In certain cases, authorised banks can grant permission under automatic routes.

3. Registration with Authorities

After RBI approval, companies must:

• Register with the Registrar of Companies
• Obtain Permanent Account Number (PAN)
• Apply for Tax Deduction Account Number (TAN)
• Register for Goods and Services Tax (GST), if applicable

4. Bank Account Opening

A project office must open an Indian bank account to manage project-related transactions.

5. Operational Setup

This includes office location registration, employee hiring, and compliance management.

Permitted Activities of Project Offices

A project office can conduct activities directly related to project execution, including:

• Project management and supervision
• Import and procurement of equipment
• Technical consultancy services
• Coordination with Indian contractors
• Quality assurance and monitoring

However, the office cannot engage in unrelated commercial or trading activities.

Compliance Requirements

Foreign companies must maintain strict regulatory compliance after establishing a project office.

Annual Reporting

Companies must submit annual financial statements and activity reports to Indian regulatory authorities.

Tax Compliance

Proper filing of corporate taxes, GST returns, and employee-related taxes is mandatory.

Audit Requirements

Financial audits must be conducted according to Indian accounting standards.

Closure Compliance

Once the project ends, companies must complete regulatory procedures to close the project office.

Common Challenges Faced by Foreign Companies

Despite the advantages, foreign companies often face operational challenges such as:

• Understanding RBI regulations and FEMA compliance
• Managing tax reporting obligations
• Handling documentation and approvals
• Navigating local labour and operational laws

Professional consultancy support helps businesses avoid delays and compliance risks.

How Stratrich Supports Project Office Setup in India

Stratrich specialises in assisting UK and European businesses with seamless India market entry solutions. Our services include:

• RBI approval and documentation support
• Regulatory registration and licensing
• Tax and compliance advisory
• End-to-end project office setup management
• Ongoing compliance and operational support

Our expertise ensures businesses can focus on project execution while we manage regulatory requirements.

Conclusion

A project office setup in India provides UK and European companies with a practical and efficient way to execute Indian contracts. With favourable government policies and strong economic growth, India continues to offer significant expansion opportunities for international businesses.

However, regulatory compliance and documentation requirements require expert guidance. Partnering with experienced consultants like Stratrich ensures smooth establishment, compliance, and successful project delivery.