Guide on registering a foreign company in India

India has a market of over 1.4 billion people¹, a growing middle class, and a government that has actively worked to improve the ease of doing business over the past decade. For foreign companies that want to expand, it is worth a serious look.

Entry is not simple, though. You will deal with several regulators, layers of approval, and compliance rules that shift depending on how you structure your operations. This guide gives foreign company decision-makers a clear picture of what to expect: how India defines a foreign company, what structures are open to you, what you need to register, what you will pay in tax, and what the process looks like from start to finish.

What is meant by a foreign company in India

Under the Companies Act², section 2(42), a foreign company is a company incorporated outside India that has a place of business in India and conducts business activity in India. A place of business may include a physical office, an agent, or certain electronic modes of operation.

Once a foreign entity meets these conditions, it must follow Indian compliance rules that apply to foreign companies operating within the country.

Difference between an Indian company and a foreign company

An Indian company is formed in India under the Companies Act, 2013. It is treated as a local company. A foreign company is formed in another country and then operates in India. Because of this, it must follow additional rules set by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999³.

Indian companies can run a wider range of business activities with fewer limits. Foreign companies that operate branch or liaison offices face restrictions. A branch office, for example, cannot do retail trading or manufacturing⁴. Go through the official RBI website to understand more about rules and regulations, foreign companies must adhere to.

On tax, foreign companies pay a higher corporate rate than domestic ones⁵. Foreign companies hiring in India must follow Indian labour laws set by both the central and state governments. Key laws include the Industrial Disputes Act, the Employees’ Provident Fund Act, the Minimum Wages Act, and the Shops and Establishments Act. These rules cover wages, social security, working hours, safety, leave, and dispute resolution⁶. Foreign employers are not exempt from these laws simply because they are incorporated outside India.

In practice, many foreign investors choose to incorporate an Indian subsidiary because it creates a separate legal entity with operational flexibility. Others prefer a branch or liaison office if their activities are limited.

Things to know before registering a foreign company in India

Before moving ahead with foreign company registration in India, decision-makers should review structure, documents, regulatory obligations, and tax impact.

1. Types of legal structures available to foreign companies

You have five main options. Each suits a different level of commitment and type of activity.

Wholly-Owned Subsidiary (WOS)

A separate Indian company fully owned by the foreign parent. It can operate fully under Indian law and is the most common structure for a full business presence.

Joint Venture (JV)

A partnership between a foreign company and an Indian partner. Both share ownership and risk, often used when local expertise or networks are needed.

Branch Office

An extension of the foreign parent, not a separate company. It can provide services like import/export and consultancy but cannot do manufacturing or retail. RBI approval⁷ is required, and the parent has full liability.

Liaison Office

A representative office that promotes business and builds contacts in India. It cannot earn income and must be funded by the parent company. RBI approval is required. Suitable for market research and building business contacts without earning income.

Project Office

A temporary office set up to complete a specific project in India. RBI approval applies depending on funding conditions. Works for companies looking to execute a specific project or contract in India.

2. Documents and requirements

For foreign company registration in India⁸, authorities may typically ask for:

3. Legal considerations

The FDI policy explains how much foreign ownership is allowed in different sectors. FDI is allowed through two routes⁹:

• Automatic Route: No prior government or RBI approval required (most sectors).
• overnment Route: Prior approval required for certain sectors like defence, media, insurance, and banking.

You must confirm which route applies to your business sector before investing.

4. Corporate tax rate for foreign companies in India

The following table outlines the applicable corporate tax rates¹⁰ for foreign companies in India for AY 2026–27 (FY 2025–26):

5. Other regulations and compliance areas

Beyond core incorporation and tax, foreign investors should consider:

• GST registration where taxable supplies arise
• Import Export Code (IEC) for international trade
• Employment law compliance if hiring staff
• Transfer pricing regulations for intercompany transactions
• Annual audit requirements in general

Ignoring these areas can delay operations or increase exposure to penalties.

Process to setup a foreign company in India

Setting up a foreign company in India follows a set sequence. Each stage builds on the last. Here is an overview of what that process looks like.

Choosing a business structure: A foreign company can set up a subsidiary, joint venture, branch office, liaison office, or project office. The structure affects ownership limits, allowed activities, reporting rules, and tax treatment. A subsidiary is a separate Indian company. A branch or liaison office is an extension of the foreign parent and is regulated by the RBI.

DSC and DIN registration: Directors must get a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) through the MCA portal to file documents online.

Company name reservation: The company name is reserved online through the MCA portal using the SPICe+ form, following MCA naming rules.

Approvals and registrations: Foreign investment may fall under the automatic or government route. If approval is needed, it is processed through the FIFP portal. Branch and liaison offices need RBI approval under FEMA. Subsidiaries and joint ventures are registered with the Registrar of Companies. PAN and TAN are issued for tax purposes.

Licences and permits: Some businesses need special licences, such as an Import Export Code or FSSAI registration. GST, Shop and Establishment registration, and local licences may also apply.

Banking setup: A company needs a bank account in India to receive capital and pay expenses. Banks require incorporation documents, PAN, and authorised signatory details.

Hiring employees: Hiring staff also involves following Indian labour laws, including EPF, ESI, and minimum wage rules. This depends on the number of employees and salary levels.

Advantages to foreign companies setting up in India

Here are some of the key benefits for foreign companies planning to set up a company in India:

• Large market: India has a wide and growing consumer base.
• Skilled talent: Access to professionals in technology, finance, manufacturing, and services.
• Flexible structures: Options include subsidiary, branch, liaison, or project office.
• Clear legal system: Entry governed by the Companies Act, FEMA, and FDI policy.
• Global trade links: Strong presence in international trade networks.
• Startup and SEZ benefits: Eligible businesses may receive tax and compliance incentives.

Managing cross-border payments with Wise Business

Once your Indian operations are running, you will regularly receive funds from your overseas parent or holding company. Wise Business makes this straightforward, your foreign entity can send money directly to your Indian bank account in INR, converting from multiple currencies at transparent, low-cost exchange rates.

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FAQs

1. How long does registration take?
   A wholly-owned subsidiary usually takes 2 to 4 weeks once documents are ready. If government FDI approval is required, it may take longer. RBI approval for branch or liaison offices can also extend timelines.

2. Can a foreign company own 100% of an Indian subsidiary?
   Yes, in sectors that allow 100% FDI under the automatic route. Some sectors have caps or require government approval.

3. How are profits sent back to the parent company?
   Branch offices can remit profits after paying taxes. Subsidiaries can distribute dividends after withholding tax. All transfers must comply with FEMA and go through an authorised dealer bank.

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Sources:

1. India population 2026
2. Companies Act
3. FEMA
4. Branch office and retail trading
5. Tax: Domestic vs foreign
6. Labour laws
7. RBI approval
8. Document checklist
9. Routes
10. Tax - Foreign companies