Set Up a Project Office in India from France

How to Set Up a Project Office in India from France

France is India's 11th-largest foreign investor, with cumulative FDI equity inflows of USD 11.75 billion from April 2000 to March 2025. Over 1,000 French establishments operate in India, and the India-France Special Global Strategic Partnership has catalysed major project-based collaborations across defence, aerospace, nuclear energy, smart cities, and urban transport. Bilateral trade reached USD 15.21 billion in FY 2024-25, with services trade exceeding EUR 8 billion.

For French engineering firms, defence contractors, infrastructure groups, and technology companies that secure project contracts in India, a Project Office provides a purpose-built structure to execute a specific project. Major French companies across sectors — from nuclear energy (following the Jaitapur project framework) to urban transport (metro projects) to defence (submarine and aircraft programmes) — have used this structure effectively.

A Project Office (PO) is a temporary establishment set up by a foreign company in India specifically to execute a particular project. Unlike a Private Limited Company or Branch Office, a Project Office exists only for the duration of the project and must be wound up upon completion. This makes it ideal for French companies with defined project contracts that do not require a permanent Indian presence.

FDI Route and Regulatory Requirements

The establishment of a Project Office in India is governed by the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India's regulations. A key advantage of a Project Office over a Liaison Office or Branch Office is the availability of a general permission route that avoids the need for prior RBI approval in many cases.

General Permission Route (No Prior RBI Approval)

The RBI has granted a general permission for foreign companies to set up a Project Office in India without prior approval, provided the project meets any one of these conditions:

• The project is funded directly by inward remittance from the French parent company abroad
• The project is funded by a bilateral or multilateral international finance agency (e.g., Agence Francaise de Developpement, World Bank, ADB, AIIB)
• The project has been cleared by an appropriate authority in India
• The Indian company awarding the contract has been granted a term loan by a public financial institution or bank in India for the project

Under the general permission route, the French company can directly approach an AD Category-I bank to open the Project Office without waiting for RBI approval — significantly faster than the alternative.

Specific Approval Route

If none of the general permission conditions are met, the French company must apply for specific RBI approval through an AD Category-I bank by submitting Form FNC. This follows the same framework as Branch Office approvals and adds 2-4 weeks to the timeline.

Defence and Strategic Sector Considerations

France is a major defence partner for India, with projects ranging from Rafale aircraft to Scorpene submarines. French companies in defence, telecom, private security, or information broadcasting sectors may require additional sectoral clearance even under the general permission route. However, if the relevant ministry or regulator has already granted approval or a licence for the project, separate RBI security clearance is not required.

Press Note 3 Exemption

French companies are not subject to Press Note 3 restrictions. The additional security screening for countries sharing a land border with India does not apply to France.

Scope of Permitted Activities

A Project Office can carry out any activity related to the execution of the specific project for which it was established. This includes procurement, hiring local labour, sub-contracting, site management, technical supervision, and project-related consultancy. The PO cannot undertake activities outside the scope of the contracted project.

DTAA Benefits for French Project Offices

The India-France DTAA, originally signed in 1994 and recently revised with changes effective from 2025, is particularly relevant for French companies operating through a Project Office in India.

Construction PE Threshold

Under Article 5 of the India-France DTAA, a building site, construction, or assembly project (including supervisory activities) constitutes a Permanent Establishment only if it lasts for more than 6 months. French companies executing short-duration projects (under 6 months) may be able to avoid PE status and limit their Indian tax exposure. However, the Project Office registration itself may create a fixed place of business PE, so careful tax planning is essential.

Revised Withholding Tax Rates (2025 Treaty Update)

The recently revised India-France DTAA introduces important changes:

• Dividends (10%+ stake): Reduced to 5% of the gross amount (previously 10%)
• Dividends (below 10% stake): Increased to 15% (previously 10%)
• Interest: 10% of the gross amount
• Royalties: 10% of the gross payment
• Fees for Technical Services: Scope narrowed to transfers of technical know-how only — routine consultancy, advisory, and engineering support services are now expected to fall outside source-based taxation

The narrowed scope of FTS is particularly beneficial for French engineering and consultancy firms operating through Project Offices, as routine project management and technical support services may no longer be subject to Indian withholding tax.

Profit Remittance

Upon project completion, the Project Office's profits (after payment of Indian taxes) can be remitted to France through the AD bank. The French parent can claim a foreign tax credit in France (credit d'impot) for the Indian tax paid, effectively avoiding double taxation. A Tax Residency Certificate (TRC) from the French tax authorities (Direction Generale des Finances Publiques) and Form 10F are required.

Document Requirements and Authentication

Both India and France are members of the Hague Apostille Convention, so document authentication follows the simplified apostille process rather than embassy attestation.

Documents Required from the French Side

• Board resolution (proces-verbal du conseil d'administration) of the French parent company authorising establishment of a Project Office in India (apostilled)
• Extrait Kbis (certificate of registration from the Greffe du Tribunal de Commerce) of the French company (apostilled)
• Project contract or award letter from the Indian counterparty (critical document — must clearly specify scope, duration, value, and funding source)
• Audited financial statements (bilan and compte de resultat) of the French parent (apostilled)
• Statuts (Articles of Association) of the French entity (apostilled)
• Company profile, details of directors (gerants/administrateurs), and principal business activities
• Power of Attorney (procuration) in favour of the authorised representative in India (apostilled and notarised)
• Details of the project: scope, duration, value, and funding source
• Bankers' report from the French parent's principal bank

Documents Required in India

• Application in Form FNC (if specific approval route) or notification to AD bank (if general permission route)
• Proof of registered office address of the Project Office in India (rental agreement or ownership deed)
• NOC from the property owner
• Identity and address proof of the authorised representative in India

Apostille Process for French Documents

French documents are apostilled by the Procureur de la Republique at the Tribunal Judiciaire or the Cour d'Appel in the relevant jurisdiction. Apostille in France typically takes 5-10 working days and costs are minimal (often free or a nominal fee). Documents must first be notarised by a French notaire before apostille. All French-language documents should be translated by a traducteur assermente (sworn translator) for the AD bank and Indian authorities.

Step-by-Step Registration Process

Setting up a Project Office in India from France involves the following steps:

Step 1: Secure the Project Contract

The foundation of a Project Office is the project contract. The French company must have a signed contract or award letter from an Indian company, government authority, or public sector entity. For defence projects, the appropriate government-to-government agreement or Letter of Offer and Acceptance serves this purpose.

Step 2: Determine the Approval Route

Assess whether the project qualifies under the general permission route (funded by inward remittance, international finance agency, government clearance, or Indian bank term loan). If yes, no prior RBI approval is needed. If not, prepare for the specific approval route via Form FNC.

Step 3: Prepare, Translate, and Apostille Documents

Gather all required French parent company documents, have them translated by a traducteur assermente where needed, notarised by a notaire, and obtain apostille from the relevant Tribunal Judiciaire or Cour d'Appel. This step typically takes 2-3 weeks.

Step 4: Approach AD Category-I Bank

For the general permission route: Submit all documents to the AD bank, which will process the Project Office registration directly. For the specific approval route: The AD bank will forward the Form FNC application to the RBI for approval (2-4 weeks).

Step 5: ROC Registration (Form FC-1)

Within 30 days of establishing the Project Office, file Form FC-1 with the Registrar of Companies (ROC) under Section 380 of the Companies Act, 2013. Obtain PAN, TAN, and GST registration as applicable.

Step 6: Open Project Bank Account

Open a dedicated bank account for the Project Office with the AD bank. All project-related transactions — contract receipts, payments to vendors, salary disbursements, and eventual profit remittance — will flow through this account.

Step 7: Commence Project Execution

Begin project execution within the stipulated timeline. Maintain separate books of accounts for the Project Office from day one. If the French company has multiple projects in India, it can operate multiple Project Offices with a nodal PO coordinating compliance.

Timeline and Costs

The typical timeline for setting up a Project Office in India from France is 4-8 weeks, depending on the approval route:

Cost Breakdown

• RBI application processing: No government fee (processed by AD bank)
• ROC filing fee (Form FC-1): INR 5,000-10,000
• Professional fees (CA/CS for application and registration): INR 50,000-1,50,000
• AD bank charges: Variable (typically INR 10,000-25,000)
• Apostille charges (France): Minimal or free at Tribunal Judiciaire
• French notaire fees: EUR 50-200 per document
• Sworn translation fees: EUR 30-60 per page
• Total estimated setup cost: INR 1,00,000-3,50,000 (approximately EUR 1,080-3,780)

Annual compliance costs typically range from INR 1,00,000 to INR 3,00,000 depending on project complexity and turnover. French companies should factor in the additional translation costs for ongoing compliance documentation.

Post-Registration Compliance

Once your Project Office is operational, ongoing compliance requirements include:

• Annual Activity Certificate (AAC): Submit an AAC from a Chartered Accountant to the AD bank and Director General of Income Tax (International Taxation) by September 30 each year. For multiple POs, a combined AAC is submitted through the nodal office
• Project-wise reporting: Provide project-wise details of income, expenditure, and project progress to the AD bank periodically
• Financial statements: File annual accounts of the Project Office with the ROC (Form FC-3 and FC-4)
• Tax returns: File income tax return for the Project Office. If the PO constitutes a PE, profits attributable to Indian operations are taxable at the foreign company rate (approximately 38.22%)
• Audit: Mandatory statutory audit of Project Office accounts by an Indian Chartered Accountant
• Transfer pricing: All transactions between the Project Office and French parent must be at arm's length prices. Transfer pricing documentation and Form 3CEB are mandatory
• Closure on completion: Upon project completion, the PO must be formally wound up. Submit a closure application to the AD bank with audited financials, tax clearance certificates, and a CA certificate confirming no outstanding liabilities. Remaining profits can then be remitted to France

Common Challenges for French Companies

Project Duration Extensions and Delays

Indian infrastructure and defence projects frequently experience delays beyond the original contract timeline. French companies executing long-duration projects in sectors like nuclear energy, metro construction, or defence must plan for extensions and ensure that the Project Office registration, bank accounts, and compliance obligations are updated accordingly. Extension of the PO tenure requires notifying the AD bank and, in some cases, obtaining fresh RBI approval.

Defence Sector Complexities

France is one of India's top defence partners, and French companies frequently execute defence contracts through Project Offices. Defence projects involve additional layers of regulatory compliance — DIPP approval, Ministry of Defence clearances, and offset obligations. The Project Office structure must be carefully designed to accommodate these requirements alongside standard FEMA compliance.

Language and Documentation

French corporate documentation follows civil law conventions and is typically in French. All documents submitted to Indian authorities must be in English, requiring certified translation by a traducteur assermente. The Extrait Kbis, statuts, proces-verbal, and financial statements all require translation. This adds cost (EUR 30-60 per page) and time (1-2 weeks) to the process. French companies should maintain English-language versions of key corporate documents to streamline future compliance filings.

Tax Treatment Complexity

The interplay between Project Office taxation and the revised India-France DTAA creates complexity. A PO that constitutes a PE is taxed at approximately 38.22% on profits attributable to Indian operations. The 6-month construction PE threshold may provide relief for short-duration projects. The 2025 DTAA revision narrowing the scope of FTS is beneficial but requires careful documentation to demonstrate that services fall outside the taxable scope. French companies should engage experienced international tax advisors.

Multiple Projects, Multiple Offices

French companies that secure multiple project contracts in India may need to establish separate Project Offices for each project. The RBI allows a nodal PO to coordinate compliance, but each PO requires separate financial reporting. Managing parallel compliance for multiple POs — each potentially in different Indian states with different GST registrations — adds significant administrative overhead.

Profit Remittance Timing

Unlike a Branch Office where profits can be remitted annually, a Project Office typically remits profits upon project completion. For multi-year defence or infrastructure projects, this means profits remain locked in India until the project is wound up and all tax clearances are obtained. French companies must factor this cash-flow impact into their project financial planning and parent company reporting under French accounting standards.

Frequently Asked Questions

Can a French company set up a Project Office without prior RBI approval?

Yes, under the general permission route. If the project is funded by inward remittance from abroad, funded by a bilateral or multilateral finance agency (such as AFD), cleared by an appropriate Indian authority, or the Indian company has a term loan from a public financial institution, no prior RBI approval is needed.

What is the difference between general permission and specific approval for a Project Office?

Under general permission, the French company can set up a PO by directly approaching an AD bank without RBI approval, provided the project meets specified funding criteria. Specific approval requires submitting Form FNC to the RBI through the AD bank, which adds 2-4 weeks to the timeline.

Can a Project Office execute multiple projects?

Each Project Office is established for a specific project contract. If the French company secures multiple contracts, it should establish separate Project Offices for each. However, the RBI allows a nodal PO to coordinate compliance for all offices in India, and a combined Annual Activity Certificate can be submitted.

How does the revised India-France DTAA affect Project Office taxation?

The 2025 revision is largely beneficial. The narrowed scope of FTS means routine engineering and consultancy services provided through the PO may fall outside Indian source-based taxation. The 5% dividend rate for 10%+ stakes benefits French parent companies receiving dividends from Indian subsidiaries established alongside the PO.

Can a Project Office be converted to a Branch Office or subsidiary?

No. A Project Office is a temporary establishment and must be wound up upon project completion. If the French company wishes to maintain a permanent presence, it must separately establish a Branch Office, Private Limited Company, or other entity type. There is no direct conversion mechanism.

Do French documents need to be translated for the RBI application?

Yes. All documents submitted to the AD bank and Indian authorities must be in English. French corporate documents require certified translation by a traducteur assermente (sworn translator). This includes the Extrait Kbis, statuts, board resolutions, and financial statements.

How long does the closure process take for a Project Office?

The closure process typically takes 3-6 months after project completion. It involves obtaining income tax clearance, filing final returns, getting a CA certificate confirming no outstanding liabilities, settling all debts, and submitting closure documents to the AD bank. Delays in tax assessments can extend this timeline.