How to Set Up a Company in India as a Foreign Business

The structure decides your liability, your tax position and the compliance you carry for years. Most overseas groups choose a private limited company, usually as a wholly owned subsidiary, because it is a separate legal entity, can hire staff, invoice customers and earn revenue in India. A limited liability partnership is lighter on governance and suits professional and some service businesses. Liaison, branch and project offices are extensions of the parent and are allowed only for defined activities with RBI permission.

If you want a deeper comparison, read our overview of the options to start a business in India, then match them to your revenue plans and exit strategy.

Foreign direct investment is governed by the consolidated FDI policy and the Foreign Exchange Management Act. Many sectors are open to 100 percent foreign ownership under the automatic route, meaning no prior government approval. Others carry ownership caps, conditions on pricing or licensing, or require approval. Retail trading, defence, telecom, insurance and some media activities are typical examples where conditions apply. Confirm the position for your exact activity first, because it can change both the structure and the timeline.

The standard path for a private limited company is: obtain digital signature certificates for the proposed directors, apply for director identification numbers, reserve the company name, and file the integrated incorporation form (SPICe+) with the Ministry of Corporate Affairs along with the memorandum and articles of association. The same filing can request the company PAN, TAN and tax registrations. Once the certificate of incorporation is issued, you hold board meetings, issue share certificates and file the first auditor appointment.

Foreign directors and shareholders typically provide passports, address proofs and, for corporate shareholders, board resolutions and incorporation papers that are notarised and apostilled in the home country.

Incorporation can be quick, often a matter of days to a few weeks depending on name approval and document readiness. The overall timeline is longer because the bank account, the remittance of share capital and the regulatory reporting come after. Costs include government fees, stamp duty that varies by state, professional fees and the ongoing cost of running a registered office, accounting and audits. Budget for compliance as a recurring cost rather than a one-time fee, and see our India company setup pricing page for how packages are structured.

Open a current account in the company name and remit the foreign investment through authorised banking channels. The bank issues the foreign inward remittance certificate and the KYC details needed for reporting. Share allotment against foreign funds must be reported to the RBI through the Foreign Currency Gross Provisional Return within the stipulated time, and companies with foreign investment file an annual return on foreign liabilities and assets. Late reporting attracts compounding fees, so build these dates into your calendar from day one.

The most frequent problems are choosing a structure before checking sector rules, appointing directors without a resident director in place, and delaying the bank account because documents are not apostilled correctly. Others are underestimating GST and transfer pricing obligations and treating FEMA filings as optional. A short pre-incorporation review usually avoids weeks of rework.

An experienced India partner coordinates the legal, tax, banking and regulatory steps in the right order, supplies a registered office and resident director where needed, and keeps the compliance calendar running after setup. That lets your team focus on customers and hiring rather than paperwork. If you are ready to move, you can speak to our team about company setup in India and get a plan matched to your sector.