India Entry Guide

Every foreign company that decides to operate in India eventually asks the same question in a different order: should we set up a subsidiary, open a branch office, use a liaison office to test the market first, or hire through an Employer of Record and skip entity registration entirely? The answer changes the cost, the timeline, the tax treatment, and how much operational control you have from day one — and it is genuinely difficult to reverse once you have made it. This guide walks through the real decision, the real steps, and the real cost and timeline ranges, using A2 Consultants' own published data rather than generic advice.

Why the entry structure decision matters more than it looks

On paper, "set up a company in India" sounds like a single task. In practice it is four or five separate decisions bundled together: legal structure, registered office arrangement, initial capitalization and FDI route, resident director appointment, and the compliance calendar that starts the moment incorporation completes. Get the structure wrong and you are not just paying twice — you are often locked into obligations (a resident director's statutory duties, a registered office lease, ROC filings) that are expensive and slow to unwind.

The starting point is almost always one of four structures, and each is genuinely appropriate for a different stage of market entry.

The four entry structures compared

1. Wholly-owned subsidiary (Private Limited Company)

This is the default recommendation for any foreign company planning a real, long-term India operation — hiring locally, contracting with Indian customers or vendors, and building a P&L that eventually stands on its own. A subsidiary gives you full operational control, limited liability, and the ability to raise capital, issue ESOPs, and enter into contracts in its own name. It is also the structure every other India-facing function — GST registration, payroll, statutory audit, transfer pricing — is built around, so most guidance elsewhere on this site assumes a subsidiary unless stated otherwise.

The tradeoff is time and ongoing obligation: a subsidiary needs a resident director (someone who has stayed in India at least 182 days in the previous financial year), a registered office with proof of right to use it, and a full compliance calendar starting from day one — ROC annual filings, statutory audit regardless of size, and the FDI reporting obligations covered in our FDI India guide if the initial capital came in as foreign direct investment.

2. Branch office

A branch office lets a foreign company conduct specific permitted activities in India — export/import, consultancy, research — without incorporating a separate Indian legal entity. It requires RBI approval, is more restricted in what it can actually do commercially than a subsidiary, and its income is typically taxed at the higher foreign-company corporate tax rate rather than the domestic company rate. Branch offices tend to suit specific mandates (a liaison function that has outgrown the liaison office's restrictions, or a defined services contract) rather than general market entry.

3. Liaison office

A liaison office is explicitly restricted to non-commercial activities — representing the parent company, exploring the market, coordinating with Indian counterparties — and cannot invoice or generate revenue in India at all. It is the lowest-commitment way to establish a legal presence while you validate demand, but that restriction is absolute: the moment you need to sell anything or take on employees doing revenue-generating work, a liaison office is the wrong structure and you need to either upgrade to a branch/subsidiary or start operating through an EOR instead.

4. Employer of Record (EOR) — no entity at all

An EOR lets you hire employees in India under an already-incorporated local entity that isn't yours, without registering anything yourself. It is dramatically faster to operational — often 1-2 weeks to a first hire, versus the multi-week entity incorporation and payroll registration process for a subsidiary — and it avoids the resident director and registered office requirements entirely. The tradeoff is per-employee cost that is higher than running payroll through your own entity once headcount grows, and an EOR cannot give you a local entity for contracting with Indian customers, owning IP, or holding the business licenses some sectors require. See our Employer of Record services page and the EOR in India: Complete Guide for the detail on when this crosses over to not being the cheaper option anymore.

For a direct side-by-side on the first three structures specifically, see our blog post Liaison Office vs Branch Office vs Subsidiary in India.

The incorporation process, step by step

Once a subsidiary is the chosen route, the sequence is fairly fixed, and it's worth knowing where the real bottlenecks sit before you commit to a go-live date internally.

Digital Signature Certificate and DIN. Incorporation cannot start until every proposed director has a Digital Signature Certificate and a Director Identification Number. This is frequently the first delay foreign parent companies hit, because it is often only started after someone has already asked "when can we have an incorporation timeline" — see our note on why this overlooked first step matters.

Name approval and entity selection. This is where the structure decision above gets formalized — our entity selection advisory service exists specifically because the "obvious" choice (usually a Private Limited Company) isn't always right once ESOP plans, capital-raising plans, or a joint venture partner are in the picture.

Registered office. A registered office needs a physical address and documented proof of the right to use it. A virtual office or even a director's personal residence can work, but the documentation requirements — a No Objection Certificate from the property owner, a recent utility bill, the right lease language — catch first-time filers off guard often enough that we wrote a dedicated note on what foreign companies get wrong on registered office requirements. Our registered office and secretarial services handles this end to end if you don't already have an India address.

Incorporation filing and certificate. Once documents are in order, the Ministry of Corporate Affairs filing itself is comparatively fast. Our incorporation advisory service manages this filing directly.

The first 90 days. Incorporation is the visible milestone, but it is not the finish line. PAN, TAN, opening a bank account, the FDI reporting obligations covered in our FDI India guide if capital came in from abroad, GST registration, and the first board meeting all carry their own deadlines inside the first 90 days. We've laid these out in full in our post-incorporation compliance checklist, and our post-incorporation service handles the filings directly rather than leaving you to track them manually.

What it actually costs

Incorporation fees themselves are a small part of the real number. The costs that catch foreign parents out are the ones that don't appear on a basic registration quote: the resident director arrangement if you don't already have someone who qualifies, the registered office, and the first year of statutory compliance layered on top of incorporation — see our breakdown of what it actually costs to set up a company in India. Entity choice affects the ongoing number too: a Private Limited Company costs more to set up and maintain than an LLP, but for a foreign-owned subsidiary planning to raise capital or issue ESOPs, the LLP's lower running cost is usually a false economy — the comparison is in Private Limited vs LLP: Which Costs Less to Run Long-Term.

Rather than working from generic ranges, use the calculator tagged at the bottom of this page — it accounts for entity structure, FDI route, and hiring plan, and gives an indicative cost and timeline range in EUR, USD, or INR without requiring a form or a callback.

Where this connects to FDI and tax

Two decisions made during entry cascade directly into obligations covered elsewhere on this site. If your initial capital is coming in from a foreign parent, that is a foreign direct investment event with its own RBI reporting timeline (FCGPR filing within 30 days of share allotment) — covered in full in our FDI India guide. And how you price any intercompany transactions from day one — management fees, cost allocations, intercompany loans — sets up your transfer pricing position for every year after, which is covered in our International Tax India guide. Structuring these three decisions together, rather than sequentially and separately, is where most of the avoidable cost and rework actually comes from.

Common mistakes we see repeatedly

The resident director requirement is misunderstood more often than any other single item — companies assume any director will do, then discover the 182-day residency test late in the process and scramble for a qualifying candidate. Registered office documentation is the second most common holdup, usually because the property owner's NOC wasn't obtained in the specific form the ROC expects. And the third is structural: choosing a Private Limited Company or an LLP based on setup cost alone, without considering the capital-raising, ESOP, or exit plans that make the "cheaper" choice more expensive within two or three years.

Timeline: what to expect, stage by stage

Foreign parents planning an India go-live date consistently underestimate one thing: the stages are mostly sequential, not parallel, because each depends on documents produced in the one before it. Digital Signature Certificates and DINs for proposed directors typically come first and can usually be arranged in parallel with entity-selection discussions, so this stage rarely needs to block anything else if started early. Name approval and drafting the incorporation documents (MOA, AOA) follow once the structure is settled, and registered office documentation — the NOC, utility bill, lease — should be gathered in parallel with this stage rather than after, since it is the single most common cause of filing rejection and resubmission delay. The incorporation filing itself, once documents are complete and correctly formatted, is the fastest single step in the sequence. What consistently takes longer than founders expect is everything downstream of the certificate of incorporation: opening a corporate bank account (banks run their own KYC process independent of the ROC timeline), PAN and TAN issuance, and GST registration if applicable from day one. A realistic go-live date accounts for all of this as one continuous sequence, not a single "incorporation" milestone with everything else assumed to follow automatically and quickly.

This is precisely why the EOR route exists as a bridge option: if your commercial plan needs a person working in India before the entity is fully operational, hiring through an Employer of Record lets that happen in parallel with incorporation rather than waiting for it, then transitioning the employee onto your own payroll once the entity and its registrations are live.

Sector-specific considerations

The generic incorporation sequence above is the floor, not the whole picture, for several sectors. Manufacturing entities typically need factory licensing, pollution control clearances, and labour law registrations layered on top of standard incorporation before production can legally start, and the lead time on environmental clearances specifically is often the real constraint on a factory go-live date, not the company registration itself. Technology and SaaS companies usually have lighter physical infrastructure needs but face their own registered-office and GST questions once cross-border digital services and NRTP/OIDAR registration enter the picture — worth reading alongside our International Tax India guide if you're selling digital services into India. Regulated sectors — financial services, insurance, and anything requiring an NBFC or similar license — carry their own separate approval process from the relevant regulator (RBI, IRDAI, SEBI depending on activity) that runs alongside, not instead of, standard company incorporation, and that regulatory approval is very often the longer of the two timelines.

City choice also matters more than founders often assume at the entity-formation stage, even though it isn't a legal requirement tied to incorporation itself. Registered office location doesn't have to match where you actually operate, but state-level compliance — professional tax, Shops & Establishments registration, and certain labour law variations — is genuinely state legislation, not central, meaning a multi-state footprint from early on means coordinating multiple separate compliance regimes rather than one.

Frequently asked questions

Can a foreign national be the sole director of an Indian subsidiary? No — Indian company law requires at least one director who meets the resident-in-India test (broadly, present in India for a specified minimum number of days in the previous financial year). A wholly foreign-director board is not permitted for a Private Limited Company, which is why resident director arrangements are a real, budgeted line item for most first-time entrants rather than a formality.

Do I need an Indian bank account before incorporation completes? No — the bank account is opened after incorporation, using the certificate of incorporation and PAN as part of the KYC documentation banks require. This is one reason the "first 90 days" period, not the incorporation date itself, is the more realistic marker for when the entity is actually operational.

Can a liaison office be converted into a subsidiary later? Not directly — a liaison office is a registration, not a legal entity, so "converting" it in practice means separately incorporating a subsidiary and winding down the liaison office registration once it's no longer needed, rather than any formal conversion process between the two.

Is there a minimum capital requirement to incorporate? India abolished minimum paid-up capital requirements for Private Limited Companies some years ago, so the practical capital question isn't a regulatory minimum — it's whether your planned capital is enough to cover the resident director, registered office, and first-year compliance costs covered above, plus working capital for actual operations.

Can I use a virtual office as my registered office address? Often yes, provided the documentation — proof of the provider's right to sublet the space and a compliant NOC — meets ROC requirements, which is exactly the detail that trips up first-time filers using a virtual office provider unfamiliar with Indian company law specifics rather than a generic serviced-office product.

A practical checklist before you start

Before engaging a service provider or filing anything, it's worth having clear answers to: which of the four structures above actually fits your commercial plan, not just your budget; who your resident director will be and whether they meet the residency test today; whether your registered office documentation is lease or ownership, and whether that owner will cooperate with an NOC; whether initial capital is debt, equity, or a mix, since that changes both the FDI reporting path and the tax treatment; and whether you're hiring before or after incorporation completes, since that decides whether an EOR bridge makes sense for the gap.

A2 Consultants handles the full sequence above — entity selection, incorporation filing, registered office, and the first 90 days of post-incorporation compliance — as one engagement rather than requiring you to coordinate separate vendors for each step.