India continues to attract foreign founders who want to access one of the fastest-growing consumer markets in the world. With its tech-savvy population, expanding middle class, and improving ease of doing business, India has become a preferred destination for foreign investors looking to set up operations. But starting a company here as a non-resident isn’t without challenges.
International entrepreneurs often face uncertainty about regulatory frameworks, licensing requirements, and compliance timelines. There are also concerns about the repatriation of profits, choosing the right business structure, and sector-specific restrictions. Despite these concerns, the potential for growth is too large to ignore. For any founder asking how to start a company in India, the key lies in understanding the legal process, entry routes, and regulatory obligations.
This blog outlines the step-by-step process for setting up a business in India as a foreign national in 2025. It will also explain key decision points and highlight risks you can avoid with early planning.
Understanding Your Entry Options As A Foreign Founder
Foreign entrepreneurs have several legal structures to choose from when starting a business in India. Each option has different operational scopes, compliance obligations, and restrictions under the Foreign Exchange Management Act (FEMA).
- Wholly Owned Subsidiary (WOS): This is a private limited company in India, fully owned by a foreign entity or individual. It is treated as a domestic company for tax purposes and offers limited liability protection.
- Joint Venture (JV): A JV involves partnering with an Indian company. It is ideal when local expertise, network access, or market credibility is necessary.
- Limited Liability Partnership (LLP): Foreign nationals can form an LLP if at least one partner is a resident of India. LLPs have fewer compliance obligations but come with FDI limitations in certain sectors.
- Liaison Office: Used for communication, market research, or promotion, a liaison office cannot earn revenue or conduct business in India. RBI approval is mandatory.
- Branch Office: Suitable for foreign companies that want to offer consultancy, services, or export/import. Approval from the Reserve Bank of India (RBI) is required, and activities are limited.
Before choosing a structure, check if your sector falls under the automatic route or government route for Foreign Direct Investment (FDI). Manufacturing, fintech, e-commerce, and education all have different restrictions or conditions.
Wholly Owned Subsidiary Vs. Joint Venture: Which To Choose?
A wholly owned subsidiary gives full control to foreign investors. It is best for founders who want independence and are ready to manage compliance in-house or with advisors. It works well in tech, SaaS, R&D, and manufacturing sectors.
Joint ventures, on the other hand, help mitigate risk in unfamiliar markets. They’re useful where government contracts, local distribution, or partnerships are essential. A JV might suit industries like infrastructure, telecom, or healthcare, where regulatory familiarity matters.
Foreign founders must consider long-term control, IP protection, exit strategy, and tax implications before choosing.
Step-by-step registration process: How to start a company in India
Below is a step-by-step guide to help you navigate the entire company registration process in India, from securing digital signatures to meeting post-incorporation requirements.
Step 1: Obtain a Digital Signature Certificate (DSC)
All directors must sign incorporation documents digitally. A Digital Signature Certificate is mandatory and can be obtained from licensed agencies in India.
Foreign directors need to submit notarized and apostilled copies of their passport, photo, and address proof. This step often causes delays if documentation is incomplete.
Step 2: Apply for Director Identification Number (DIN)
DIN is a unique ID required under Indian company law for anyone planning to be a director. Foreign nationals can apply during incorporation via the SPICe+ form. Keep passport and ID documents ready.
Step 3: Reserve your company name
Use the Ministry of Corporate Affairs’ RUN (Reserve Unique Name) service. The proposed name must follow naming guidelines and not be similar to existing companies. Adding a descriptor such as “technologies,” “solutions,” or “consulting” helps with approval.
Step 4: Draft legal documents
MOA defines the scope of the business, while AOA outlines internal rules. These documents must be prepared carefully and signed by all shareholders. Legal experts can help ensure your MOA matches the FDI-permitted activity.
Step 5: File for incorporation with SPICe+ form
SPICe+ is an integrated form that includes company incorporation, PAN/TAN application, and GST registration (if applicable). Foreign shareholders must submit notarized/apostilled ID and address proof.
Step 6: Obtain a Certificate of Incorporation (COI)
Once the Registrar of Companies (RoC) verifies all details, the COI is issued. This marks the legal birth of your company in India.
Step 7: Open a business bank account
You must open a current account in an Indian bank to inject capital and manage operations. Most banks require the COI, PAN, AOA, MOA, and proof of registered address.
Choose banks with dedicated services for foreign-owned companies. Some offer remote onboarding for foreign directors.
Step 8: Post-incorporation compliance
- Apply for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number).
- Register for GST if your turnover exceeds the threshold or if you’re dealing in e-commerce.
- Appoint a statutory auditor within 30 days of incorporation.
- Keep up with annual filings, board meetings, and other MCA obligations.
Special considerations for foreign founders
From obtaining RBI and FDI approvals to managing taxation, compliance, and local hiring norms, foreign entrepreneurs must navigate specific requirements to stay aligned with Indian laws. Below are key areas that need special attention:
RBI and FDI approvals
If you set up a liaison, branch, or project office, prior RBI approval is mandatory. WOS and JVs usually qualify under the automatic route, but some sectors require government route approval.
File the Advance Reporting Form (ARF) within 30 days of receiving foreign investment. Submit the Foreign Investment Reporting (FIRMS) forms timely to avoid penalties.
Taxation and regulatory compliance
Foreign-owned companies are taxed at the same rate as domestic companies. India currently applies a base corporate tax rate of 22% (15% for new manufacturing units).
Ensure compliance with transfer pricing rules if your company transacts with related foreign entities. Withholding tax applies to royalties, technical fees, or dividends paid abroad. Repatriation of profits is allowed but subject to documentation and RBI filings.
Hiring and local operations
At least one director must be a resident of India (staying over 182 days in a financial year). You can appoint professionals or advisors to fulfill this role initially.
Hiring locally helps ease compliance and offers better market understanding. HR, finance, and compliance teams must be familiar with Indian labor laws, PF/ESI obligations, and payroll rules.
Common pitfalls and how to avoid them
- Incomplete documentation: Apostille and notarization requirements often delay the process. Get documents verified early.
- Rejected company names: Use a professional service to do a preliminary name search and avoid generic or restricted words.
- Non-compliance with filings: Missing deadlines for statutory filings (FIRMS, ARF, annual returns) can attract heavy fines.
- Ignoring tax structuring: Improper transfer pricing or repatriation planning can create unnecessary tax exposure.
Use experienced consultants who understand cross-border structuring, local regulations, and RBI compliance to avoid these issues.
Conclusion
India continues to simplify its regulatory process for foreign investors in 2025. Whether you are setting up a wholly owned subsidiary or partnering with a local company, the country offers strong growth potential across sectors.
By understanding each step clearly and staying compliant, you can enter the Indian market with confidence. For those wondering how to start a company in India, careful planning, the right legal guidance, and early attention to compliance will ease your journey into one of Asia’s most promising markets.
