India company formation for non-residents

Why foreign companies set up in India

Most foreign founders come to India for people or for customers. A private limited company lets you employ engineers and support staff directly, sign local contracts, register for GST and invoice in rupees.

It is a compliance-heavy jurisdiction. Every company is audited, foreign investment is reported to the Reserve Bank of India (RBI), and deadlines carry late fees. Plan for an accountant from the start.

Foreign ownership and FDI routes

Foreign direct investment follows the Consolidated FDI Policy of the Department for Promotion of Industry and Internal Trade (DPIIT). Most sectors allow 100% foreign ownership under the automatic route, where no prior approval is needed.

Some sectors have caps or need government approval, such as defence, print and broadcast media, and multi-brand retail. A few are closed, including lottery, gambling and real estate business in the narrow sense of trading land.

Country of origin also matters. Since Press Note 3 of 2020, an investor from a country sharing a land border with India, such as China, can invest only with government approval. The same applies where a citizen of such a country is the beneficial owner. Press Note 2 of 2026, issued in March 2026, sets a 10% beneficial ownership threshold and a control test for these investors. Check how it applies to your group before you start (confirm with your specialist).

• Automatic route: most sectors, up to 100%, report to the RBI after the investment
• Government route: capped or sensitive sectors, and all land-border-country investors
• Prohibited: a short list including lottery, gambling and certain real estate activity

Directors, shareholders and capital

A private limited company needs at least two directors and two shareholders. At least one director must have stayed in India for 182 days or more in the financial year. A foreign parent company can be a shareholder, with a second shareholder holding a small stake.

Every director needs a director identification number (DIN) and a digital signature certificate. Foreign directors' identity and address documents must be notarised and apostilled, or consularised, in their home country.

There is no minimum share capital. Foreign capital must arrive through banking channels, and shares are issued within the RBI's time limits.

The company needs a registered office in India from the date of incorporation. If the address is not verified in the SPICe+ filing, it is confirmed to the Registrar within 30 days.

How incorporation works

We check the sector cap, the approval route and the resident director first. Directors then obtain digital signatures, and we prepare the memorandum and articles of association.

Everything is filed through SPICe+, the MCA's combined form. It covers name approval, incorporation, director numbers, PAN and TAN, and can also cover GST, employee insurance and provident fund registration.

The Registrar issues the certificate of incorporation with the company's CIN. Once the foreign capital arrives and shares are issued, the company reports the issue to the RBI on form FC-GPR within 30 days. The standard process takes 2–4 weeks after KYC approval.

The most common delay is the resident director. Founders plan the ownership and leave the resident director to the end, which stops the SPICe+ filing. Identify this person first.

The second is paperwork for foreign directors. Passports and address proofs must be notarised and apostilled, and names must match exactly across documents. A small spelling difference can send the filing back.

The third is late RBI reporting. Foreign capital must be matched by a share allotment and an FC-GPR filing within the time limits, and late filings need a compounding or late fee process. We track these dates from the day the capital lands.

Corporate tax and the new Income-tax Act

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. The tax year runs from April to March.

A domestic company can choose a concessional regime at a 22% base rate. With the 10% surcharge and 4% cess, the effective rate is about 25.17%. The company gives up most deductions and exemptions in exchange, and the choice cannot be reversed.

GST applies to most supplies of goods and services. Related-party transactions with a foreign parent fall under transfer pricing rules and need a yearly report from an accountant.

Audit and annual filings

Every Indian company must be audited each year by a chartered accountant, whatever its size. The board appoints the first auditor within 30 days of incorporation.

The company holds its annual general meeting within 6 months of year-end; the first one can be within 9 months. It then files financial statements (AOC-4) within 30 days of the meeting and the annual return within 60 days.

Since 31 March 2026, each director files the DIR-3 KYC with the MCA once every three financial years instead of every year, and reports a change of phone, email or address within 30 days (Companies (Appointment and Qualification of Directors) Amendment Rules, 2025). Companies with foreign investment file the Foreign Liabilities and Assets (FLA) return with the RBI each year. The company also files a declaration of commencement of business within 180 days of incorporation.

The board holds its first meeting within 30 days of incorporation and then at least four meetings a year, with no more than 120 days between them. Small companies can meet less often, at least once in each half of the year.

What OCC handles and what it costs

Our India package starts at US$1,299 for year 1 with MCA fees and standard stamp duty included, and US$858 from year 2. It covers the FDI check, digital signatures, SPICe+ filing and the first RBI report.

The statutory audit, bookkeeping, GST returns and resident director arrangements are quoted separately. OCC is licensed in Hong Kong as a trust or company service provider (TCSP TC001305) and works with Indian chartered accountants and company secretaries for filings that Indian law reserves to them. Banks decide on accounts; we introduce you and prepare the application.