How to Begin a Business in India as a Foreign Entity?

With a population of over 1.2 billion people, India has one of the world's largest markets and one of the fastest expanding economies. Foreign Direct Investment (FDI) inflows into India have grown steadily over the past several years as a result of a growing number of foreign enterprises setting up businesses in the country. Organizations like American Chambers of Commerce, can help the companies in streamlining the process.


Strategy for Foreign Companies to Enter India


Foreign enterprises can enter India in one of two ways, by registering a corporation or by opening a branch/liaison office. For foreign nationals and international businesses, a private limited company is the quickest and easiest way to enter India. The automatic method allows foreign direct investment of up to 100% in a private limited business or limited corporation without the need for government approval. Hence, the quickest, easiest and least expensive way for international corporations and individuals to enter India is by setting up an Indian private limited company. Regulating a Branch Office, Liaison Office, or Project Office necessitates clearance from both the RBI and/or Government. 


Creating a Business in India Has Its Challenges



It need a minimum of two people and a physical address in India to form a corporation in India. It is necessary for an Indian private limited company to have a minimum of 2 directors, as well as a minimum of 2 shareholders. A company's director must be an Indian citizen and a permanent resident of India in order to be incorporated.
The registered office of the company must be located in India. Additionally, the location of the company's registered office determines the jurisdiction over which it will be subject. Major Indian cities such as Delhi, Mumbai, Bangalore, Hyderabad, and Chennai are the most common locations for foreign corporations to open a branch office in India.


Submission of documents


Foreign nationals who will act as the company's directors must present a copy of their passport and proof of address as part of the registration process. An Indian Embassy or a Notary in the home country must authenticate a copy of the original paperwork, which must be notarized.


Any foreign corporation interested in becoming a shareholder in the Indian Company must have a Board Resolution allowing their purchase.  No foreign directors are required to be in India during the incorporation procedure. This means that foreigners can open and run a business in India without having to travel there.


What it costs to set up an Indian company


A business registration in India is relatively cheap. An Indian company's registration can be completed in a matter of weeks, making it an ideal location to launch a new business venture.


After-Incorporation Procedures


After the company is registered in India, the Indian Director can assist with the opening of an Indian bank account. FDI reporting must be completed once the company has opened a bank account with the Reserve Bank of India. India has a simple process for reporting foreign direct investment (FDI) inflows into a company, which may be completed by a legal or accounting professional. Once the FDI reporting has been completed, the company will be in full compliance with all Indian rules and ready to begin operations. Organizations like Amcham India can assist the companies in setting up the business in India.