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Microlesson · 5-min read

Section 2(v) - Person Resident in India (Artificial Persons)

# Section 2(v): Person Resident in India — Artificial Persons

For artificial persons (companies, firms, branches, agencies, offices), the test is based on location of registration/incorporation OR location plus ownership/control.

## Rule 1: Entities Registered/Incorporated in India

> Any person, body corporate registered or incorporated in India is a PRI.

Example: Tata Motors Ltd. — incorporated in India → PRI.

## Rule 2: Branch / Office / Agency LOCATED in India

A branch, office or agency in India is PRI if owned OR controlled by a Person Resident OUTSIDE India (PROI).

Example: Tesla Mumbai — the Indian branch of Tesla USA (a PROI). Since it is located in India and owned/controlled by a PROI, it is PRI.

Key insight: Even though the parent is PROI, its Indian branch is PRI for FEMA purposes.

## Rule 3: Branch / Office / Agency LOCATED OUTSIDE India

A branch, office or agency outside India is PRI if owned OR controlled by a Person Resident in India (PRI).

Example: Tata Motors Dubai Branch — located outside India but owned/controlled by Tata Motors (a PRI). Hence the Dubai branch itself is PRI.

## Consolidated Summary Table

EntityLocationOwnership/ControlStatus
Tata MotorsIndia (incorporated)PRI
Tesla Mumbai (branch)IndiaOwned by Tesla US (PROI)PRI
Tata Motors Dubai (branch)Outside IndiaOwned by Tata Motors (PRI)PRI
Tesla USA (parent)Outside IndiaPROI

## Why This Matters

This structure ensures that Indian operations of foreign companies AND foreign branches of Indian companies BOTH come within FEMA's residential scope. The Act doesn't allow a PRI to escape regulation by routing transactions through a foreign branch, and doesn't let a foreign company's Indian branch escape by claiming foreign ownership.

Worked example

### Example 1

Example 1: Tata Motors (incorporated in India) — PRI (incorporated in India test).

### Example 2

Example 2: Tesla Mumbai is a branch in India of Tesla USA (PROI). Since located in India and owned/controlled by a PROI, Tesla Mumbai is treated as PRI. Transactions between Tesla Mumbai and Tesla USA will be governed as PRI–PROI transactions.

### Example 3

Example 3: Tata Motors Dubai Branch — located outside India, owned by Tata Motors (PRI). Hence the Dubai branch is itself PRI. Even though geographically in Dubai, FEMA reaches this branch.

### Example 4

Example 4: A liaison office of a UK company in India — controlled by PROI, located in India → PRI.

⚠️ Common exam mistakes

  • Assuming a foreign company's Indian branch is PROI — it is PRI because it is located in India and the foreign parent (PROI) owns/controls it.
  • Assuming an Indian company's foreign branch is PROI just because it is abroad — it is PRI because it is owned/controlled by a PRI parent.
  • Forgetting the dual test for branches: (a) location, AND (b) ownership/control of the relevant kind.
  • Mixing up the test direction — branches in India need PROI ownership; branches abroad need PRI ownership for both to be PRI.
Bare-Act text Section 2(v)(ii), (iii) & (iv) · Foreign Exchange Management Act, 1999 · click to expand
"Person resident in India" means— (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India.
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