What are the ways to start a business in India as a foreign company?
A foreign company can enter India through a wholly owned subsidiary, a joint venture with an Indian partner, a limited liability partnership, or an RBI-approved liaison, branch or project office. The right option depends on whether you will earn revenue, how much control you need and how long you plan to stay.
Key takeaways
- Subsidiaries and LLPs can earn revenue; liaison offices cannot
- Joint ventures help when you need local licences, land or distribution
- Branch and project offices need RBI permission and are tied to the parent
- Pick the structure around your activity, not the other way round
There is no single best way to enter India. The right route depends on what you plan to do, who you will sell to and how much control and capital you want to commit. This guide compares the main options so you can shortlist two or three before speaking to an adviser.
1. Wholly owned subsidiary
A wholly owned subsidiary is a private limited company held entirely by the foreign parent, where the sector allows it. It is a separate legal entity, which limits the parent liability to the capital invested, and it can hire staff, sign contracts, own assets and issue invoices. It is the default choice for manufacturing, software, services and sales operations. Read more about the wholly owned subsidiary route if control and revenue matter to you.
2. Joint venture with an Indian partner
A joint venture combines your technology or brand with a local partner who brings market access, licences, land, distribution or regulatory experience. It is common in sectors with foreign ownership limits and in businesses that depend on relationships. The shareholder agreement is the heart of the structure: it should cover governance, reserved matters, funding, deadlock and exit. See how a joint venture with an Indian partner is typically structured.
3. Limited liability partnership
An LLP offers limited liability with lighter governance than a company, and foreign investment is permitted in sectors that allow 100 percent FDI under the automatic route without performance-linked conditions. It suits professional services and some operating businesses, though it is not suited to every sector and cannot raise equity the way a company can.
4. Liaison office
A liaison office is a representative presence that can promote the parent business, collect market information and act as a communication channel. It cannot earn income or conduct commercial activity, and its expenses are met by funds remitted from abroad. It needs RBI permission through an authorised dealer bank and is often used as a low-commitment first step.
5. Branch office
A branch office may carry out specified activities such as exporting and importing goods, rendering professional or consultancy services, and representing the parent in India. It is not a separate legal entity, so the parent is directly liable, and profits are taxed at rates applicable to foreign companies. RBI permission is required, and some activities, such as retail trading, are not allowed.
6. Project office
A project office exists to execute a specific project awarded to a foreign company, such as construction or supply contracts. It is time-bound and closes when the project ends. Approvals depend on the contract and its funding, and certain cases may proceed without prior RBI approval where the conditions are met.
7. How to decide
Start with three questions: will you invoice customers in India, do you need a partner, and how long is your horizon? If you will earn revenue, shortlist a subsidiary or LLP. If you need access you do not have, consider a joint venture. If you are testing demand, an office can be a first step. Compare setup cost, tax, compliance and exit before choosing, and then review setup pricing to budget. Our team can map your plan to the right structure and handle the filings end to end.
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Learn moreFrequently asked questions
Which structure is best for a first entry into India?
If you plan to sell and invoice in India, a private limited subsidiary is the usual choice. If you only want to explore the market, a liaison office or a small subsidiary can work, depending on your goals.
Can a liaison office earn income in India?
No. A liaison office is limited to representational and liaison activities and cannot carry out commercial or trading business or earn income in India.
Is a joint venture better than a wholly owned company?
A joint venture gives you local knowledge and sometimes licences or assets, but you share control and profits. A wholly owned company gives full control where the sector permits it.
Can I change structure later?
Yes, many companies start with an office or a joint venture and convert or restructure later, though conversions carry tax, FEMA and procedural steps that should be planned in advance.
This guide is for general information only and is not legal, tax or financial advice. Rules and fees change; confirm current requirements with a qualified professional before acting.
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