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Sunday, Jan 18, 2004

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Foreign cos can set up subsidiaries in SEZs

Our Bureau

Mumbai , Jan. 17

THE Reserve Bank of India has granted general permission to foreign companies to establish branch offices/subsidiaries in special economic zones (SEZs). These companies may undertake manufacturing and service activities, subject to certain conditions.

The foreign company has to function on a `stand alone basis.'

This means that such branch offices would be isolated and restricted to SEZ alone and no business activity/transaction will be allowed outside these zones in India, which includes branches/subsidiaries of its parent office in India, said a notification from RBI.

It has also been specified that such units must function only in those sectors where 100 per cent FDI is permitted, must comply with part XI of the Companies Act (Section 592 to Section 602) and in the event of winding-up of business and for remittance of winding-up proceeds, the branch/unit should approach an authorised dealer with necessary documents.

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