How to Set Up a Branch Office in India from New Zealand
A Branch Office (BO) in India is an extension of the New Zealand parent company rather than a separate legal entity. Unlike a Private Limited Company or Wholly Owned Subsidiary, a branch office does not have its own corporate identity under Indian law. Instead, it operates as a registered presence of the foreign parent, carrying out specific permitted activities on behalf of the New Zealand company in India.
With bilateral trade between India and New Zealand reaching USD 2.4 billion in 2024 (goods and services combined) and the India-New Zealand Free Trade Agreement concluded in December 2025, many New Zealand companies are looking to establish an operational presence in India. A branch office is particularly suitable for New Zealand companies that want to represent their parent company, provide professional or consultancy services, promote technical collaborations, or handle import-export activities without incorporating a separate Indian entity.
However, a branch office comes with significant restrictions. It cannot engage in manufacturing or processing activities in India (unless located in a Special Economic Zone), cannot carry out retail trading, and requires prior approval from the Reserve Bank of India (RBI). All expenses of the branch must be met by remittances from the head office or from income generated through permitted activities in India.
FDI Route and Regulatory Requirements
Unlike a Pvt Ltd or LLP, establishing a branch office in India requires prior approval from the Reserve Bank of India. This is not an automatic route process. The New Zealand parent company must apply through an Authorized Dealer Category I (AD Cat I) bank in India using Form FNC (Application for Establishment of Branch/Liaison/Project Office in India).
The RBI evaluates the application based on several criteria:
- Track record: The New Zealand parent must have a profit-making track record for the immediately preceding five financial years
- Net worth: Minimum net worth of USD 100,000 or its equivalent
- Activity assessment: The proposed activities must fall within the permitted categories
New Zealand is not a land-border country, so Press Note 3 (2020) does not apply. The key regulatory frameworks governing branch offices are FEMA (Foreign Exchange Management Act), the Companies Act 2013 (Section 380-393 for foreign companies), and the RBI Master Direction on Establishment of Branch/Liaison/Project Offices in India.
Permitted Activities for a Branch Office
A branch office in India can undertake the following activities:
- Export and import of goods
- Rendering professional or consultancy services
- Carrying out research work in the area of the parent company's business
- Promoting technical or financial collaborations between Indian companies and the parent
- Representing the parent company in India and acting as a buying or selling agent
- Rendering IT services and developing software in India
- Providing technical support for products supplied by the parent company
A branch office is expressly prohibited from carrying out manufacturing or processing activities in India (unless in an SEZ), retail trading activities, or any activity not listed in the RBI approval.
DTAA Benefits for New Zealand Investors
The India-New Zealand DTAA, active since 1986 and amended in 1996, 1999, and 2016, contains specific provisions relevant to branch offices. Under the treaty, a branch office typically constitutes a Permanent Establishment (PE) of the New Zealand parent in India, which has implications for how the branch's profits are taxed:
- Business profits: Only profits attributable to the branch office's activities in India are taxable in India. The branch is taxed on its India-sourced income, while the parent's worldwide income remains taxable in New Zealand.
- Interest: 10% withholding tax on interest remittances from India to the parent
- Royalties: 10% withholding tax on royalty payments
- Fees for Technical Services: 10% under the treaty
Branch offices are also subject to the branch profit remittance tax. Under Indian domestic law, profits remitted by a branch to its head office abroad are not subject to additional withholding tax on remittance (unlike dividends from a subsidiary). However, the branch's income is taxed at 35% corporate tax rate (applicable to foreign companies) plus surcharge and cess, resulting in an effective rate of approximately 38.22%. The New Zealand parent must furnish a valid TRC from Inland Revenue New Zealand and Form 10F to claim treaty benefits.
Document Requirements and Authentication
Both New Zealand and India are members of the Hague Apostille Convention (New Zealand joined in 2001). The MFAT Authentication Unit in Wellington handles apostille certification.
Documents required for branch office registration:
- Form FNC: Application for establishment of Branch Office, submitted to the AD Cat I bank
- Certificate of incorporation of the New Zealand parent company (certified and apostilled)
- Memorandum and Articles of Association (or equivalent constitutional documents) of the parent (apostilled)
- Latest audited financial statements of the parent for the preceding five years (certified by a New Zealand Chartered Accountant and apostilled)
- Board resolution of the parent authorizing the establishment of the Indian branch office (notarized and apostilled)
- Power of Attorney in favour of an authorized representative in India (notarized and apostilled)
- Passport copies and address proofs of the authorized representative and persons authorized to operate the branch
- Banker's certificate from the parent company's bank in New Zealand confirming the company's financial standing
The apostille process through MFAT takes 5-10 business days at NZD 32 per document. Documents must be notarized by a New Zealand notary public before submission for apostille.
Step-by-Step Registration Process
Branch office registration involves RBI approval followed by registration with the Registrar of Companies:
- Prepare documents: Gather and apostille all required documents from New Zealand, including five years of audited financials. Timeline: 2-3 weeks.
- Submit Form FNC: File the application through an AD Category I bank in India. The bank reviews the application and forwards it to the RBI. Timeline: 1-2 weeks for bank processing.
- RBI approval: The RBI evaluates the application, verifying the parent's financial standing, proposed activities, and eligibility criteria. Timeline: 4-6 weeks (can vary based on completeness of documentation).
- Registration with ROC: Upon receiving RBI approval, register the branch office with the Registrar of Companies under Section 380 of the Companies Act 2013. File Form FC-1 (registration of foreign company) within 30 days of establishment. Timeline: 1-2 weeks.
- Obtain PAN and TAN: Apply for Permanent Account Number and Tax Deduction Account Number for the branch office. Timeline: 1-2 weeks.
- Open Indian bank account: Open a bank account in the branch office's name with the AD Cat I bank that processed the application. Timeline: 1-2 weeks.
- GST registration: Apply for GST registration if the branch will be providing taxable services or importing goods. Timeline: 3-5 business days.
Timeline and Costs
The end-to-end timeline for establishing a branch office is typically 8-12 weeks, significantly longer than a Pvt Ltd or LLP due to the RBI approval requirement:
| Step | Timeline |
|---|---|
| Document preparation and apostille (New Zealand) | 2-3 weeks |
| Form FNC submission and bank processing | 1-2 weeks |
| RBI approval | 4-6 weeks |
| ROC registration (Form FC-1) | 1-2 weeks |
| PAN, TAN, and bank account | 1-2 weeks |
Estimated costs:
- RBI application fee: No government fee for the application itself
- ROC registration fee: INR 5,000-10,000
- Professional fees: INR 50,000-1,50,000 for a CA/CS firm handling the full process
- Apostille fees (New Zealand): NZD 32 per document (typically 8-12 documents)
- Bank charges: Varies by bank for processing Form FNC
Post-Registration Compliance
Branch offices have specific compliance obligations that differ from Indian companies:
- Annual Activity Certificate (AAC): Must be submitted annually to the AD Cat I bank, certified by a Chartered Accountant, confirming the branch has engaged only in permitted activities
- Financial statements filing: File Form FC-3 (annual accounts) and Form FC-4 (annual return) with the ROC within 60 days of the close of the financial year of the parent company
- Income tax return: Due by October 31 or November 30, depending on audit requirements. Branch offices are taxed at 35% (foreign company rate) plus surcharge and cess
- GST returns: Monthly or quarterly if GST-registered
- RBI annual reporting: Submit annual performance report in the prescribed format to the RBI through the AD bank
- Transfer pricing documentation: Required for transactions between the branch and head office
- Renewal/closure: Branch office approval does not have a fixed validity period (unlike liaison offices), but the RBI can review the branch's activities periodically
For a comprehensive compliance calendar, see our Compliance Calendar and Annual Compliance guide.
Common Challenges for New Zealand Companies
- Longer setup timeline: The RBI approval process adds 4-6 weeks compared to a Pvt Ltd or LLP. New Zealand companies should factor in this timeline when planning their India entry and ensure all documents are complete and accurate before filing to avoid queries and delays.
- Activity restrictions: Branch offices are limited to permitted activities. If the New Zealand company's India operations require manufacturing, retail trading, or activities beyond the permitted list, a Pvt Ltd or WOS is more appropriate.
- Higher tax rate: Branch offices are taxed at 35% (foreign company rate) compared to 22-25% for Indian companies. However, there is no additional dividend distribution tax on profit remittances, which partially offsets this difference.
- Five-year profitability requirement: The New Zealand parent must demonstrate five consecutive years of profitability. Startups or recently formed companies may not meet this criterion and should consider alternative structures.
- Parent company liability: Unlike a Pvt Ltd or WOS, the New Zealand parent company bears unlimited liability for the branch office's operations in India. Any legal claims, debts, or regulatory penalties of the branch extend to the parent company.
- Closing a branch office: Winding down a branch office requires RBI approval and can take 6-12 months, involving settlement of all tax liabilities, employee dues, and regulatory obligations before the RBI grants closure permission.
Frequently Asked Questions
Can a New Zealand branch office manufacture products in India?
No. Branch offices are prohibited from engaging in manufacturing or processing activities in India, unless the branch is located in a Special Economic Zone (SEZ). For manufacturing operations, New Zealand companies should incorporate a Pvt Ltd or WOS instead.
What is the minimum net worth requirement for establishing a branch office?
The New Zealand parent company must have a net worth of at least USD 100,000 (or equivalent in NZD). Additionally, the parent must demonstrate a profit-making track record for the five financial years immediately preceding the application.
How long does RBI approval take for a branch office?
RBI approval typically takes 4-6 weeks from the date the AD bank forwards the application. However, if the RBI raises queries or requires additional documents, the timeline can extend to 8-10 weeks. Complete and accurate documentation at the time of filing is essential to avoid delays.
Can a branch office remit profits to the New Zealand parent?
Yes. After paying applicable Indian taxes (35% corporate tax rate plus surcharge and cess), the branch can remit net profits to the New Zealand head office through the AD bank. No additional branch profit remittance tax applies under current Indian tax law, but proper documentation and CA certification are required for each remittance.
What is the difference between a branch office and a liaison office?
A liaison office can only undertake representational and communication activities and cannot earn any income in India. A branch office can engage in commercial activities (within the permitted list) and earn revenue in India. A liaison office has a fixed validity period (initially 3 years, renewable), while a branch office approval does not expire. See our Branch Office vs. Liaison Office comparison for details.
Does a branch office need to be audited?
Yes. Branch offices must prepare financial statements in accordance with Indian accounting standards and have them audited by a practicing Chartered Accountant. The audited statements are filed with the ROC annually and form the basis of the Annual Activity Certificate submitted to the RBI.
Can a branch office be converted to a subsidiary later?
A branch office cannot be directly converted to a subsidiary. The New Zealand company would need to incorporate a new Pvt Ltd or WOS separately and then transfer relevant contracts, employees, and assets from the branch to the new entity. The branch office would then be closed through the RBI closure process.