A Liaison Office or a Representative Office can undertake only liaison activities, which means that it can act as a channel of communication between the Head Office (out of India) and parties in India. It is not allowed to undertake any commercial activity in India. As there is no income of Liaison Office of its own, its expenses are to be met entirely through inward remittances from the parent company outside India received in Convertible Foreign Exchange.
The relevant information for setting up a liaison office in India can be found in here.
A location, other than the main office, where business is conducted. Most branch offices are comprised of smaller divisions of different aspects of the company such as human resources, marketing, accounting, etc. A branch office will typically have a branch manager who will report directly to, and take orders from, a management member of the main office. Branch offices are useful in that it allows the administrative aspect of the business to be conducted in locations around the globe.
All the relevant information regarding the legal aspects of setting up a branch in India can be found here.
Entities incorporated outside India planning to execute specific projects in India can set up temporary project/site offices in India. Reserve Bank of India has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project.
Generally, companies engaged in turnkey projects or installation projects, set up Project Offices. All expenses of Project Offices must be met through inward foreign currency remittances if the rupee component of the contract, if any, is not sufficient to meet the said expenses.
All the relevant forms and documents that will need to be submitted related to FDI can be found here.
More information regarding the liaison office, branch office and project office can be found here.