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Setting Up a Company in India as a Foreign Entity or Individual: A Step-by-Step Guide

India’s expanding market, skilled talent base, and pro-business reforms make it an increasingly attractive destination for foreign entrepreneurs and global companies. Whether you're a non-resident individual or a foreign business looking to establish an Indian presence, this guide will walk you through the legal, financial, and procedural steps to get started.

 

Step 1: Choose the Right Business Structure

Foreign entities and individuals can choose from several structures:

Wholly-Owned Subsidiary (WOS)

• Most preferred structure for foreign companies
• 100% FDI is allowed under the automatic route in most sectors

This is the most preferred method, and we have helped many clients in achieving this status.

 Joint Venture with Indian Partner

• Ideal when local expertise or market access is needed
• Common in sectors where FDI limits apply

This is the most preferred method if you want to do business inside India and find it difficult to understand the business environment, we suggest businesses which are lot depend on government approvals and controls explore this route. 

 Liaison Office / Branch Office

• For limited activity like market research or technical support
• Must get RBI approval and follow FEMA regulations

This is the most preferred method if you want to do business inside India in a limited way, for marketing and sale and purchase activities with limited scope.

 Limited Liability Partnership (LLP)

• FDI allowed under the automatic route (non-agricultural sectors)
• Simpler compliance than a private limited company

Note: Foreign individuals usually form a Private Limited Company as it offers limited liability, a clear legal identity, and is eligible for foreign investment. But if you want to do business in Indian under a JV with an Indian partner we suggest you to explore this option.

 

Step 2: Obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC)

To incorporate a company in India, at least one director must have a DIN and DSC.

• DSC is required for signing online forms
• DIN is issued by the Ministry of Corporate Affairs (MCA)
• Foreign nationals must submit notarized/apostilled identity and address proof

 

Step 3: Reserve Company Name via RUN (MCA Portal)

Use the RUN (Reserve Unique Name) service to check and reserve your preferred company name.

Tips:

• Ensure the name complies with naming guidelines
• Add appropriate suffix: "Private Limited"

 

Step 4: File for Incorporation using SPICe+ Form

SPICe+ is an integrated online form that allows:

• Company incorporation
• PAN & TAN application
• EPFO & ESIC registration
• GST registration
• Bank account setup (via select banks)

Documents required from foreign nationals/entities:

• Identity and address proof (notarized/apostilled)
• Board resolution (if a corporate shareholder)
• Proof of registered office in India (rental agreement, NOC, utility bill)

Timeframe: Typically 10–20 working days depending on document verification.

Note: Digital signature and software requirements are given in the Ministry of Corproate Affairs, https://www.mca.gov.in/content/mca/global/en/help-faq/e-filing-help-kits/company-efilings/incorporation-services.html

 

Step 5: Apply for RBI Approval (If Required)

For setting up Liaison, Branch, or Project Offices, approval from Reserve Bank of India (RBI) is mandatory.

• Submit Form FNC through AD Category I bank
• Track application status via RBI's FIRMS portal

Note: Incorporation of WOS/JVs in sectors with 100% FDI under automatic route does not require RBI approval. But post receiving the capital Form FCGPR needs to be filed. For more informaiton please refer the Reserve Bank of India, Master ciruclar on Master Circular on Foreign Investment in India, https://www.rbi.org.in/scripts/BS_ViewMasterCirculars.aspx?Id=3630

 

Step 6: Open a Business Bank Account in India

To receive capital infusion, your company must have a local current account.

• Choose a bank with good international banking support
• Submit Certificate of Incorporation, PAN, and address proof
• For FDI receipt, comply with FC-GPR filing via RBI

 

Step 7: Comply with FEMA and FDI Regulations

All foreign investments must follow Foreign Exchange Management Act (FEMA) guidelines.

Key steps:

• Report inward remittance within 30 days
• File FC-GPR form within 30 days of share allotment
• Maintain proper shareholding and cap tables

 

Step 8: Obtain Licenses and Tax Registrations

Depending on your business activity and state of operation:

• GST Registration (mandatory above INR 20/40 lakh turnover or interstate trade)
• Shops & Establishments License
• Professional Tax (in applicable states)
• Import Export Code (IEC) for cross-border trade

 

Step 9: Establish Accounting & Compliance Processes

Hire a local accountant or firm to ensure:

• Monthly GST filings
• TDS compliance
• ROC annual filings (AOC-4, MGT-7)
• Annual financial statement preparation and audits

 

Step 10: Set Up Operational Infrastructure

You’ll need:

• Physical or virtual office space
• Local staff or directors (at least one Indian resident director is mandatory)
• Contracts for employees, vendors, and service providers

Summary Checklist

Task                            Responsible                                      Timeframe

Decide Structure         Founders                                            1–2 days

Get DSC & DIN          A2 Consultants / Director                     3-5  days

Name Approval          A2consultants                                       5-7 days

*File Spice Forms        A2consultants/Founder                        10-15 days  

Bank Account             A2consultants/Founder                         5-7 days

FDI Compliance         A2consultants                                      Ongoing 

* depending on Apostolisation and Notarisation time may vary.

How A2 Consultants Can Assist Foreign Founders

• Entity structuring for FDI-compliant companies
• Incorporation & MCA filings
• RBI liaison and FC-GPR reporting
• Legal document drafting & registered office setup
• Ongoing tax and regulatory compliance

Take the hassle out of Indian market entry. Let A2 Consultants be your trusted advisor on the ground.

For more technical information on the process of setting up of company please read the Guides available at www.a2consultants.in/guides

Book a free consultation now to discuss your market entry strategy.

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