How to Open a Branch Office in India from South Korea
South Korea is India's 13th largest FDI source, with cumulative investments of USD 6.69 billion. As bilateral trade surpassed USD 26.89 billion in FY25 and both countries target USD 50 billion before 2030 under the upgraded Comprehensive Economic Partnership Agreement (CEPA), a growing number of South Korean companies are establishing a direct presence in India through Branch Offices.
A branch office allows a South Korean parent company to extend its operations into India without incorporating a separate legal entity. The branch operates under the parent company's legal identity, making it ideal for companies that want to provide professional services, promote technical collaborations, conduct research, or act as a buying/selling agent in the Indian market — without the compliance overhead of a full company incorporation.
South Korean companies enjoy significant advantages when setting up a branch office in India. Unlike investors from China or Pakistan who face the Press Note 3 government approval requirement, South Korean companies go through a streamlined RBI approval process handled largely by the Authorized Dealer (AD) bank. Combined with the simplified apostille process for document authentication, a South Korean branch office can typically be operational within 4-8 weeks.
Branch Office vs. Other Entity Types
A branch office is best suited for South Korean companies that want to test the Indian market, provide services linked to the parent company, or act as a commercial liaison. It cannot engage in manufacturing, processing, or retail trading. For South Korean manufacturers seeking to produce goods in India, a Private Limited Company, Wholly Owned Subsidiary, or LLP would be more appropriate.
FDI Route & Regulatory Requirements
South Korean companies benefit from the automatic route for establishing a branch office in India. There is no Press Note 3 requirement, no government security clearance, and no DPIIT filing needed.
RBI Approval Framework
Branch office establishment requires RBI approval, which is obtained through an Authorized Dealer (AD) bank using Form FNC. Under the current regulatory framework (FEMA Establishment Regulations, 2016), the parent company must meet:
- A profit-making track record for the immediately preceding 5 financial years
- A net worth of not less than USD 100,000 (or equivalent in KRW)
Note: The RBI's draft Foreign Exchange Management (Establishment in India of a Branch or Office) Regulations, 2025, proposes to remove these minimum net worth and profit track record requirements. Once notified (expected FY 2026-27), this will make it easier for smaller South Korean companies to establish branch offices.
General Permission vs. Specific Permission
For South Korean companies operating in standard sectors, the AD bank can process the application under general permission from RBI, which is faster (2-3 weeks). Applications that involve restricted sectors or special circumstances are forwarded to the RBI regional office for specific permission, which takes longer (4-6 weeks).
Permitted Activities
A branch office in India can undertake the following activities:
- Export and import of goods
- Provision of professional or consultancy services
- Research work in areas where the parent company is engaged
- Promoting technical or financial collaborations between Indian companies and the parent company
- Representing the parent company in India and acting as a buying/selling agent
- Provision of IT services and software development
- Providing technical support for products supplied by the parent company
Restricted Activities
Branch offices cannot engage in:
- Manufacturing or processing
- Retail trading
- Legal consultancy (law firms cannot operate as branch offices)
DTAA Benefits for South Korean Companies
The India-South Korea Double Taxation Avoidance Agreement, revised on 18 May 2015 and in force since 12 September 2016, has specific implications for branch offices.
Permanent Establishment Implications
A branch office constitutes a Permanent Establishment (PE) of the South Korean head office under Article 5 of the DTAA. This means the branch office's income attributable to Indian operations is taxable in India. However, the South Korean parent can claim a foreign tax credit in South Korea for taxes paid in India, preventing double taxation.
Key Withholding Tax Rates Under the Revised DTAA
| Income Type | Domestic Rate | DTAA Rate | Savings |
|---|---|---|---|
| Dividends | 20% | 15% | 5% |
| Interest | 20% | 10% | 10% |
| Royalties | 20% | 10% | 10% |
| Fees for Technical Services | 20% | 10% | 10% |
The revised DTAA significantly reduced withholding rates on interest, royalties, and fees for technical services from 15% to 10%. For branch offices that pay fees for technical services or royalties to the Korean head office, this translates to meaningful savings.
Branch Profit Tax Considerations
Branch offices of foreign companies are taxed at the corporate rate for foreign companies — 35% plus surcharge and cess (effective rate approximately 38.22%). This is higher than the 22-25% rate available to Indian-incorporated companies. South Korean companies with substantial Indian operations should evaluate whether a Pvt Ltd company or LLP would be more tax-efficient.
Document Requirements & Authentication
Both India and South Korea are members of the Hague Apostille Convention, making document authentication straightforward. South Korean documents only need to be apostilled by the Ministry of Foreign Affairs of the Republic of Korea — no embassy attestation is required.
Documents Required for RBI Application (Form FNC)
- Board resolution of the South Korean parent company authorizing establishment of a branch office in India, specifying proposed activities and the person responsible for the branch
- Certificate of business registration (Saeop-ja Deungrokjeung) of the Korean parent company — apostilled
- Certificate of incorporation or equivalent registration document — apostilled
- Audited financial statements for the preceding 5 financial years (current requirement)
- Banker's certificate from the parent company's Korean bank confirming good financial standing
- Power of Attorney in favour of the Indian representative — apostilled
- Details of proposed activities, projected turnover, and employee strength
- Passport copy of the person heading the branch office
Post-Approval Documents for ROC Registration
- Form FC-1 (registration of foreign company) with the Registrar of Companies within 30 days of establishing the branch
- Proof of Indian office address (lease agreement + NOC from landlord)
- List of directors of the South Korean parent company
- Copies of the parent company's charter/constitution documents (apostilled)
Korean-Language Documents
Documents in Korean must be translated into English by a certified translator. The translation should be notarized and submitted alongside the original apostilled document. Many CA/CS firms in India have experience handling Korean documentation and can coordinate the translation process.
Step-by-Step Registration Process
Step 1: Prepare and Apostille Documents in South Korea (1-2 Weeks)
Prepare all required documents, have them apostilled by the Korean Ministry of Foreign Affairs, and arrange certified English translations for any Korean-language documents.
Step 2: Engage an Authorized Dealer Bank in India (1-2 Days)
Select an AD bank in India that will process the branch office application. Banks with experience in Korean investments — such as SBI, ICICI Bank, or banks with Korean correspondent relationships — are recommended.
Step 3: File Form FNC with the AD Bank (2-3 Weeks for General Permission)
Submit the complete application in Form FNC to the AD bank. For standard applications from South Korean companies in non-restricted sectors, the AD bank can process the application under general permission from RBI. The typical processing time is 2-3 weeks.
Step 4: Receive RBI Approval Letter
RBI issues an approval letter through the AD bank, specifying the permitted activities and validity period of the branch office.
Step 5: Register with Registrar of Companies (Within 30 Days)
File Form FC-1 with the ROC within 30 days of establishing the branch office. The ROC registers the South Korean parent as a "foreign company" under the Companies Act, 2013, and issues a Foreign Company Registration Number (FCRN).
Step 6: Open Bank Account & Begin Operations
Open a bank account with the AD bank. The South Korean head office remits initial operating funds to this account. The branch office can then commence permitted activities.
Step 7: Obtain PAN, TAN, and GST Registration
Apply for Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) for the branch office. If the branch provides taxable services, register for GST as well.
Timeline & Costs
Realistic Timeline from South Korea
| Stage | Duration |
|---|---|
| Document apostille in South Korea | 1-2 weeks |
| Form FNC filing & RBI approval | 2-3 weeks (general permission) |
| ROC registration (Form FC-1) | 1 week |
| Bank account opening | 1-2 weeks |
| PAN, TAN, GST registration | 1 week |
| Total estimated timeline | 4-8 weeks |
Cost Breakdown
| Expense | Approximate Cost |
|---|---|
| ROC filing fees (Form FC-1) | ₹6,000-₹10,000 |
| Document apostille in South Korea | ₹5,000-₹15,000 |
| Professional fees (CA/CS/legal) | ₹30,000-₹1,00,000 |
| Registered office deposit & rent | Varies by city |
| Annual compliance costs | ₹20,000-₹50,000 |
The total setup cost for a South Korean branch office is substantially lower than for Chinese companies, due to the simpler apostille process and absence of government security clearance requirements.
Post-Registration Compliance
Branch offices have ongoing compliance requirements across multiple regulators:
ROC Compliance (Companies Act, 2013)
- Form FC-3: Annual return of foreign company within 60 days of the close of the financial year
- Form FC-4: Annual accounts (including parent company accounts) within 6 months of the close of the parent's financial year
- Notify ROC of any changes in directors, registered office, or charter documents of the Korean parent
RBI/FEMA Compliance
- Annual Activity Certificate (AAC): Submit to the AD bank annually, certified by a Chartered Accountant, confirming the branch has engaged only in permitted activities
- FLA Return: Annual Return on Foreign Liabilities and Assets by 15 July each year
- Profit remittance: All remittances to the head office must be processed through the AD bank with Form 15CA/15CB certification
Tax Compliance
- Corporate tax: Foreign company rate of 35% plus surcharge and cess (effective ~38.22%)
- Income tax return: File ITR-6 by the due date
- GST returns: Monthly/quarterly as applicable
- TDS returns: Quarterly filing and timely deposit
- Transfer pricing: Documentation required for transactions between branch and head office exceeding ₹1 crore
Common Challenges for South Korean Companies
1. Activity Restrictions
Branch offices cannot engage in manufacturing, processing, or retail trading. Many South Korean companies — particularly in electronics, automotive, and steel sectors — need to manufacture in India. For these companies, a Pvt Ltd company or WOS is a better fit. The branch office is ideal only for services, trading, and representative functions.
2. Higher Tax Rate
The 35% corporate tax rate (effective ~38.22%) for foreign company branches is substantially higher than the 22-25% rate for Indian-incorporated companies. For South Korean companies with significant Indian revenue, incorporating a separate entity could save 15-20% on tax outflows. Conduct a thorough cost-benefit analysis with a tax advisor before choosing the branch office structure.
3. Language Barriers in Compliance
All regulatory filings, tax returns, and legal correspondence in India are in English. While many South Korean professionals are proficient in English, the specialized legal and regulatory terminology can be challenging. Engaging a CA/CS firm experienced in handling Korean clients — available in cities like Mumbai, Delhi, Chennai, and Bangalore where Korean companies have a significant presence — is strongly recommended.
4. Korean Employee Visas
South Korean employees posted to the Indian branch office require Employment Visas. The minimum salary threshold is USD 25,000 per annum. Visa applications must be sponsored by the branch office after it is registered. Processing typically takes 2-4 weeks through the Indian Embassy in Seoul or Consulate General in Busan.
5. Renewal and Expansion
Branch office approvals are granted for a specific period (typically 3-5 years) and must be renewed with the RBI through the AD bank. If the South Korean company wants to expand its activities beyond the originally approved scope, a fresh application or amendment request must be filed.
6. Closure Process
Closing a branch office requires RBI approval, a tax clearance certificate from the Income Tax Department, and filing of closure documents with the ROC. The process can take 3-6 months, as all outstanding tax and compliance obligations must be settled before the RBI grants closure permission.
Frequently Asked Questions
Does a South Korean company need government approval to open a branch office in India?
No government approval from DPIIT is needed. South Korea is not a Press Note 3 country. The branch office requires only RBI approval through an Authorized Dealer bank via Form FNC. This is processed under general permission for standard sectors, typically within 2-3 weeks.
What activities can a South Korean branch office perform in India?
Permitted activities include export/import of goods, professional and consultancy services, research, promoting technical collaborations, acting as a buying/selling agent, IT services, and technical support for parent company products. Manufacturing, processing, and retail trading are not permitted.
What document authentication method applies for South Korean companies?
Both India and South Korea are members of the Hague Apostille Convention. Documents only need to be apostilled by the Korean Ministry of Foreign Affairs. No embassy attestation is required, making the process faster and cheaper.
How long does it take to set up a branch office from South Korea?
Approximately 4-8 weeks, including document apostille (1-2 weeks), RBI approval via AD bank (2-3 weeks), ROC registration (1 week), and bank account opening (1-2 weeks). This is significantly faster than the 12-20 weeks required for Chinese companies.
Can a branch office remit profits to the South Korean head office?
Yes. Profits earned by the branch office are freely remittable to the South Korean head office after payment of applicable Indian taxes. The AD bank processes the remittance with an Annual Activity Certificate confirming permitted activities. A Chartered Accountant must certify the remittance through Form 15CA/15CB.
What is the tax rate for a South Korean branch office in India?
Branch offices of foreign companies are taxed at 35% on Indian-source income, plus applicable surcharge and cess, resulting in an effective rate of approximately 38.22%. This is higher than the 22-25% rate for Indian-incorporated entities.
Is there a minimum capital requirement for a branch office?
There is no minimum capital requirement. However, the South Korean parent must currently have a net worth of at least USD 100,000 and a profit-making track record for 5 years to qualify under current FEMA regulations. The RBI's draft 2025 regulations propose to remove these requirements.