How can foreign companies expand into India without setting up a subsidiary?

Foreign companies can expand into India using an Employer of Record (EOR) model which handles payroll, compliance, and regulatory requirements.

What is the most efficient way to enter the Indian market?

Companies can enter India through a subsidiary, EOR model, or GCC setup depending on speed, cost, and long-term strategy.

What are key compliance requirements for foreign companies in India?

Key requirements include GST registration, corporate tax compliance, transfer pricing documentation, and adherence to FEMA and RBI regulations.

What is a Global Capability Center (GCC) in India?

A GCC is a captive offshore unit that supports global operations such as finance, IT, and analytics with cost efficiency and scalability.

How can profits be repatriated from India?

Profits can be repatriated via dividends, royalties, or intercompany transactions subject to tax and FEMA regulations.

Employment Linked Incentive (ELI) 2025

Regulatory and Corporate Compliance — Overview

Regulatory and Corporate Compliance
Sep 19, 2025

EMPLOYMENT LINKED INCENTIVES (2025)

By Nagavarapu Sudheer, M.Com, F.C.S., L.L.B., Partner, A2 Consultants

WHAT IS ELP (2025)

It is a nationwide programme to directly reward new formal job creation, with benefits for first-time employees and employers. It applies to jobs created from Aug 1, 2025 to Jul 31, 2027. It includes two beneficiaries in two parts,

Part A – Employees (first-time EPFO entrants): Get one month’s EPF wage (up to INR 15,000), paid in two instalments—after 6 and 12 months of service (the second after completing a financial-literacy module). Salary eligibility up to INR 1,00,000/month.

Part B – Employers (net new hires): Incentive up to INR 3,000 per additional employee per month for 2 years (tiered: INR 1,000/INR 2,000/INR 3,000 by wage slab up to INR 1,00,000).

First-Time Employees

Refers to new entrants into the formal workforce, i.e., individuals joining the EPFO (Employees’ Provident Fund Organisation) system for the first time. Conditions:

Not previously registered under EPFO.

Salary eligible up to INR 1,00,000 per month.

First-Time Employers

Refers to establishments newly registering with EPFO (i.e., becoming formal-sector employers covered under the Employees’ Provident Fund & Miscellaneous Provisions Act for the first time). Such employers are brought under the scheme to encourage formalisation of jobs.

Who qualifies

EPFO-registered establishment.

Net job addition maintained ≥ 6 months (at least 2 new employees if <50 workers, or 5 if ≥50).

New hires’ monthly salary ≤ INR 1,00,000.

Payout & process

Employees (Part A): Paid via Direct benefit transfer (Aadhar based payment system) to their bank, with a portion locked briefly in a savings instrument.

Employers (Part B): Paid to PAN-linked accounts; claims measured against EPFO filings.

Retention

Under Part A (employees), the scheme only releases the incentive if the new employee stays continuously employed for a minimum period:

6 months → first instalment of the government benefit.

12 months (plus completing a financial literacy module) → second instalment.

Under Part B (employers), the company must maintain net job additions for the duration of the benefit period (2 years, or up to 4 years for manufacturing). If employees leave, the employer needs to replace them to keep the headcount above the threshold.

Thus, with a Government outlay of about INR 99,446 crore, aiming for 3.5+ crore jobs in 2 years; and further providing a special push for manufacturing, this scheme follows the pandemic-era ABRY (EPF subsidy) which supported 60.49 lakh employees with INR 10,188.5 crore disbursed up to Mar 31, 2024 to further contribute to the incentives to encourage employment.

Consult with A2consultants to explore our indepth knowledge and insight on GST 2.0

For detailed insights and practical guidance, visit our Knowledge Center and access our curated guides on India market entry: https://www.a2consultants.in/guides/international-taxation-in-india-for-foreign-companies

Nagavarapu Sudheer is a veteran tax and regulatory consultant at A2 Consultants with over 24 years of experience. A fellow member of the Institute of Company Secretaries of India (F.C.S) with a background in Law (L.L.B) and Commerce (M.Com), he has specialized in FDI structuring and group corporate restructuring for Fortune 500 companies and global startups alike. https://in.linkedin.com/in/sudheer-nagavarapu-4225334b

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