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Questions foreign companies ask about setting up in India

Last reviewed by ProLead: 31 August 2026

Frequently asked questions

Which entity should a foreign company use to operate in India?
Most foreign companies that will hire, sign contracts and invoice in India use a wholly owned private limited company. A branch office suits some export, consultancy and IT-services activities, and a liaison office suits representation only, because it cannot earn income in India.
Can a foreign company own 100% of an Indian company?
Yes, in most sectors. The Consolidated FDI Policy 2020 allows up to 100% foreign investment under the automatic route in sectors that are not capped or restricted. A few sectors are prohibited, such as lotteries, gambling, chit funds and Nidhi companies, and others have caps or need approval. Investors linked to countries that share a land border with India face additional conditions.
Do I need a resident director?
Yes. At least one director must have stayed in India for at least 182 days in the financial year. A private company also needs at least two directors. If nobody in your group is in India, a nominee director service is one option.
Is there a minimum capital requirement?
No minimum paid-up capital applies to a private company. When shares are issued later to a non-resident, they must be priced at or above fair value, supported by a valuation certificate that is not more than 90 days old at the date of investment. A valuation certificate is not required for the subscriber shares issued at incorporation.
How long does it take to set up a subsidiary?
The industry standard for a foreign-parent structure runs 8 to 12 weeks. ProLead completed one engagement in under three weeks, including opening the bank account. A reserved company name is valid for 20 days from approval.
What drives the cost?
Authorised capital sets the MCA fee and influences state stamp duty, which varies by state. Document authentication in your home country, the valuation certificate, and the ongoing accounting, payroll and secretarial services you choose also drive cost. ProLead gives a written quote after a free consultation.
How does the bank account work for a foreign-owned company?
You open a current account after incorporation and use it to receive the capital. Banks apply KYC to foreign directors and shareholders, so this is often the slowest step. Apostilled or otherwise correctly authenticated documents help.
Which FEMA filings does the subsidiary have to make?
For a fresh allotment of shares, they must be allotted within 60 days of receiving the money, or it is refunded; this does not apply to the subscriber shares issued at incorporation, which are already committed in the Memorandum of Association. The FC-GPR is due within 30 days of allotment on the RBI FIRMS portal. The annual FLA return is due by 15 July.
What is an Employer of Record, and when does it make sense?
An Employer of Record legally employs your staff in India while you direct their work. It suits a market test or the first few hires. It does not remove permanent establishment risk by itself, and a subsidiary suits a growing team or one that signs contracts.
Can I set up a global capability centre through an Indian subsidiary?
Yes. Companies usually choose between a captive centre in their own wholly owned subsidiary and a build-operate-transfer arrangement with a partner. The operating vehicle is normally a wholly owned Indian subsidiary. Nasscom-Zinnov estimate 2,117 GCCs in India in FY26.
What compliance does the subsidiary face after incorporation?
The first board meeting and first auditor are due within 30 days, the commencement declaration within 180 days, and annual general meetings, annual filings, tax returns and the FLA return follow each year. Director KYC is due by 30 June once every three financial years. A transfer-pricing report, Form 48, applies where there are transactions with the parent.
Is ProLead a law firm?
No. ProLead Business Consulting is a professional services firm of chartered accountants and advisers, and it does not give legal opinions. Filings that need a practising Company Secretary, Chartered Accountant or lawyer are handled with ProLead's professionals.

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The questions above are the ones foreign buyers ask most often. Every other page on this site carries its own set of questions specific to that topic, 149 in total. Pick a topic below to jump straight to its questions.

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The answers above are short and self-contained. Each is general information about the rules as we understand them at the date of the last review. Where a point is unconfirmed or a proposal is pending, the answer says so.

Where to read more

Start with can a foreign company own 100 percent of an Indian company if you are choosing a route.

For planning, read how long it takes and what it costs. For money and reporting, read the guides on the bank account and capital remittance and FEMA filings.

What this page cannot answer

Sector rules, tax planning for your group and legal structuring depend on facts we do not have yet. Rules and forms also change, and several proposals are pending. A practising professional should confirm any point before you act on it.

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Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.

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General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.

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