How to Set Up a Company in India as a Foreigner (2026)

India's FDI framework

India operates a Foreign Direct Investment (FDI) policy that categorises business activities as:

• Automatic Route: FDI permitted up to 100% without government approval in most sectors (manufacturing, IT, e-commerce, food processing, many services)
• Government Route: FDI above certain thresholds or in specific sectors requires government approval (defence, aviation, media, banking, etc.)
• Prohibited sectors: Certain sectors are closed to foreign investment (lottery, gambling, multi-level marketing schemes, atomic energy, etc.)

Most business activities fall under the Automatic Route — no prior approval needed.

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Step 1: Choose your structure

Private Limited Company (Pvt Ltd): Most common for foreign investors. 100% foreign ownership permitted under Automatic Route for most sectors. Minimum 2 directors (at least 1 must be an Indian resident). Minimum 2 shareholders. No minimum paid-up capital requirement (practical minimum INR 100,000).

Wholly Owned Subsidiary (WOS): A 100% foreign-owned Pvt Ltd. The parent company is the sole shareholder.

Liaison Office: Permitted only for specific purposes — market research, promotions, liaison activities. Cannot generate revenue or conduct business. Requires RBI (Reserve Bank of India) approval. For market-testing only.

Branch Office: An extension of the foreign company. Can conduct limited activities (dependent on RBI approval). Parent is fully liable.

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Step 2: Form the company via MCA21

India's Ministry of Corporate Affairs operates the MCA21 portal (mca.gov.in).

Process: 1. DSC (Digital Signature Certificate): All directors must obtain a DSC — apply via certified agencies (eMudhra, Sify, etc.) 2. DIN (Director Identification Number): Each director applies for a DIN via SPICe+ form 3. Name reservation: Apply for company name via RUN (Reserve Unique Name) — name must not be identical or similar to existing companies 4. SPICe+ form submission: Incorporation form submitted via MCA21 with all required documents, INC-33 (eMOA) and INC-34 (eAOA) filed simultaneously 5. PAN and TAN: Allocated automatically with SPICe+ form

Timeline: 5–10 business days Government fee: Varies by authorised capital; minimum ~INR 2,000–5,000

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Critical ongoing compliance (why India is complex)

Unlike UK or Singapore where annual compliance is manageable, India requires significantly more ongoing filings:

GST (Goods and Services Tax): If turnover exceeds INR 20 lakh (INR 2 million) for goods or INR 10 lakh for services (INR 1 million — lower threshold for specific states), mandatory GST registration. GST returns filed monthly (GSTR-1, GSTR-3B), quarterly (under QRMP scheme), and annually. GST rates: 0%, 5%, 12%, 18%, 28% depending on goods/services.

TDS (Tax Deducted at Source): On payments to contractors, employees, rent, professional fees — companies must deduct TDS at applicable rates, deposit with government, and file quarterly TDS returns. One of the most administratively intensive aspects of Indian compliance.

ROC filings (Registrar of Companies): Annual return (MGT-7) and financial statements (AOC-4) filed with MCA annually. Significant penalties for late or non-filing.

Annual Audit: Mandatory for all Indian companies — even small ones — by a Chartered Accountant (CA) registered with ICAI.

Transfer Pricing: If the Indian company transacts with a foreign related party (parent, subsidiaries), Transfer Pricing audit report (Form 3CEB) from a CA is required.

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Real cost (Year 1)