Mumbai: Foreign companies have been permitted by Reserve Bank of India (RBI) to establish branch offices or units in Special Economic Zones (SEZs) to undertake manufacturing and service activities subject to fulfilling certain conditions.

RBI has decided to grant a general permission if such units function in those sectors where 100 per cent FDI (Foreign Direct Investment) is permitted, provided they comply with part XI of Companies Act and function on a "stand-alone" basis, the Central Bank said in a notification in Mumbai today (Jan 18, 2004).

In the event of winding-up of business and for remittance of such proceeds, the branch or unit should approach an authorised dealer with documents prescribed under the FEMA (Foreign Exchange Management Act), it said.

The auditor's certificate should indicate the manner in which the remittable amount has been arrived, supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets, it said.

It should confirm that all liabilities in India including arrears of gratuity and other benefits to employees of the branch office have been either fully met or adequately provided for and that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to the country.