How to Set Up a Company in India as a Foreigner – Complete Guide
India is one of the fastest-growing economies in the world and offers immense opportunities for foreign entrepreneurs and companies. With liberalized FDI norms, strong digital infrastructure, and a large consumer base, setting up a company in India as a foreigner has become simpler—but it still requires proper structuring, legal compliance, and tax planning.
This guide explains how a foreigner or foreign company can set up a business in India, step by step.
1️⃣ Can a Foreigner Set Up a Company in India?
Yes.
A foreign national or foreign company can legally set up and operate a business in India under the Foreign Direct Investment (FDI) policy, subject to sector-specific conditions.
Foreigners can:
- Incorporate a Private Limited Company
- Set up a Wholly Owned Subsidiary
- Open a Branch Office / Liaison Office / Project Office
- Invest under the FDI route (Automatic or Approval)
2️⃣ Best Business Structure for Foreigners in India
Choosing the right structure is crucial.
🔹 Private Limited Company (Most Preferred)
- Can be 100% foreign-owned (in most sectors)
- Limited liability
- Separate legal entity
- Easy fundraising & scalability
👉 Best for: Long-term business, startups, subsidiaries
🔹 Wholly Owned Subsidiary
- A Private Limited Company fully owned by a foreign parent
- Allowed under automatic FDI route in many sectors
🔹 Branch Office
- Extension of the foreign parent company
- RBI approval required
- Restricted activities
🔹 Liaison Office
- No commercial activities allowed
- Only for market research & liaison
📌 Most foreign investors choose a Private Limited Company or Wholly Owned Subsidiary.
3️⃣ Key Requirements to Set Up a Company in India as a Foreigner
✅ Minimum Directors & Shareholders
- At least 2 directors (for Pvt Ltd)
- One director must be a resident of India
- Foreign nationals can be directors & shareholders
✅ Director Identification Number (DIN)
- Mandatory for all directors
✅ Digital Signature Certificate (DSC)
- Required for online filings in India
✅ Registered Office Address in India
- Physical address required (can be rented)
4️⃣ Step-by-Step Process to Register a Company in India
Step 1: Obtain DSC & DIN
Digital signatures and director identification for proposed directors.
Step 2: Name Approval
Apply for company name approval with the Ministry of Corporate Affairs (MCA).
Step 3: Incorporation Filing
File incorporation forms with:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Identity & address proofs
Step 4: Certificate of Incorporation
Issued by MCA along with:
- Company PAN
- Company TAN
⏱ Timeline: 7–12 working days (subject to documentation)
5️⃣ Post-Incorporation Compliances (Very Important)
After incorporation, the following registrations are required:
- Bank Account Opening
- GST Registration (if applicable)
- FDI Reporting with RBI (Form FC-GPR)
- Shops & Establishment Registration
- Professional Tax (state-specific)
6️⃣ Taxation of Foreign-Owned Companies in India
- Corporate tax as applicable to domestic companies
- GST compliance if taxable supplies are made
- Transfer pricing provisions may apply
- Withholding tax on cross-border payments
- Double Taxation Avoidance Agreement (DTAA) benefits available
📌 Proper tax planning is essential to avoid penalties and double taxation.
7️⃣ FEMA & RBI Compliance
Foreign investment in India is governed by FEMA (Foreign Exchange Management Act).
Key FEMA compliances include:
- Reporting foreign investment
- Valuation of shares
- Timely RBI filings
- Repatriation of profits
Non-compliance can attract heavy penalties.
8️⃣ Common Questions Foreigners Ask
Do foreign directors need to visit India?
👉 No, incorporation can be done remotely.
Is minimum capital required?
👉 No statutory minimum capital.
Can profits be repatriated?
👉 Yes, subject to tax and FEMA compliance.
9️⃣ Why Professional CA Assistance Is Crucial
Setting up a company in India involves:
- Company law
- Taxation
- FEMA & RBI regulations
- Ongoing compliance
A Chartered Accountant ensures:
- Correct entity selection
- Tax-efficient structure
- End-to-end compliance
- Peace of mind for foreign investors
10️⃣ Get Expert Help for Setting Up Your Company in India
We provide end-to-end assistance to foreign companies and entrepreneurs for setting up business in India, including company incorporation, GST registration, taxation, FEMA compliance, accounting, audit, and ongoing regulatory support.
📞 Contact us today for a free consultation on India entry strategy.