Can a foreign company own 100% of an Indian company?

What does 100% foreign ownership mean in practice?

For most activities, a foreign company can hold all of the shares in an Indian company. The Consolidated FDI Policy 2020 states that sectors not listed as capped or restricted permit FDI up to 100% under the automatic route, subject to applicable laws. Many service, software and consulting businesses, including capability centres, are likely to fall into this group, but you should confirm your own activity.

Full ownership does not remove the company-law minimums. A private limited company needs at least two members, so your parent normally holds all but one share and a group entity or nominee holds the last. See directors, shareholders and capital.

Automatic route or government route?

The route is set by the sector and by who the investor is. Both can change with a Press Note, so check DPIIT for notes issued after the October 2020 policy. Investment through a limited liability partnership follows narrower rules, so a company is the usual vehicle for a foreign parent.

Which sectors are prohibited?

Paragraph 5.1 of the policy prohibits foreign investment in:

• lottery, gambling and betting, including casinos
• chit funds
• Nidhi companies
• trading in Transferable Development Rights
• real estate business or farm-house construction, with exceptions for township, construction-development and REIT activity
• manufacture of cigars, cheroots, cigarillos and cigarettes
• activities closed to the private sector, such as atomic energy and railway operations, with limited exceptions

If your activity sits near one of these lines, particularly real estate, ask for a written view before you incorporate. A holding company or a captive services centre that only serves group entities is usually far from these lines, but the description of the activity in your incorporation documents still matters, because it is the description regulators and banks will read.

Which sectors have caps or need approval?

Some sectors allow foreign investment only up to a limit, or only with government approval. Examples include multi-brand retail, certain print media and news broadcasting, satellite, private-sector banking beyond the automatic limits, defence above the automatic limit, mining of titanium-bearing minerals and food retail trading. The list is not exhaustive, and some sectors are partly automatic and partly approval-based.

We do not quote individual percentages here, because they change and must come from the DPIIT table. Sector-specific caps and routes apply.

Insurance is an example of a moving position. Parliament passed an amendment in December 2025 that raises the ceiling for foreign investment in insurers to 100%, and older pages that show a lower figure are out of date.

What is the rule for land-border countries?

Press Note 3 of 2020 required government approval where the investor, or its beneficial owner, is an entity of or a citizen of a country sharing a land border with India. Press Note 2 of 2026, approved by the Cabinet in March 2026 and made operative through the FEMA NDI Amendment Rules 2026, relaxed this. Investors with non-controlling beneficial ownership from such a country of up to 10% can use the automatic route, with reporting to DPIIT. Proposals in specified manufacturing sectors (capital goods, electronic components, polysilicon and ingot-wafer manufacturing) get a 60-day approval timeline, with majority shareholding and control staying with resident Indian citizens. Sectoral caps and other restrictions remain.

This matters even if your parent sits in Singapore, the USA, the UK, Europe or the UAE. If your ownership chain includes a beneficial owner from a land-border country, disclose it early.

What must you do after investing?

Automatic route does not mean unreported. Your Indian company allots shares within 60 days of receiving the money, files Form FC-GPR within 30 days of allotment, and prices the shares at or above fair value. Our guide to FEMA filings for a foreign-owned Indian subsidiary sets these out.

For a view on your sector and ownership chain, book a free consultation. If you are comparing structures, start with wholly owned subsidiary.

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.

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.