Ways for a foreign company to set up in India

The three routes in brief

A foreign company can be present in India through a separate Indian company that it owns, or through an office of the foreign company itself. The route you pick decides what you may do, how you are taxed and which approvals you need.

Which route suits whom?

Choose a wholly owned subsidiary if you will sign contracts, invoice Indian customers, hire a team or open a delivery centre. It is a separate legal entity with its own compliance calendar.

Choose a branch office if your company already meets the eligibility tests and wants to carry out a permitted activity, such as consultancy or IT services, in its own name.

Choose a liaison office if you want a presence to promote your business, collect market information and liaise with Indian counterparts, and you are not ready to trade.

Which sectors and owners need extra checks?

Start with your sector. Most sectors allow 100% foreign investment under the automatic route, but some are prohibited, capped or need government approval. If any of your ultimate owners comes from a country that shares a land border with India, additional rules apply, though Press Note 2 of 2026 has relaxed them (see below).

What has changed recently?

Three changes matter to a foreign company setting up now. Press Note 2 of 2026 relaxed the land-border rules: investors with non-controlling beneficial ownership from such a country of up to 10% can use the automatic route, with reporting to DPIIT. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, so forms and references have changed, for example Form 48 for transfer pricing. And directors now complete DIN KYC once every three financial years, as we understand the rule in force from 31 March 2026. For a side-by-side view, see the entity types comparison. For the filing sequence for a subsidiary, see the incorporation process.

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.