Starting a Business in India: An Expat’s Guide

Published on October 3, 2025 and written by Cyril Jarnias

Establishing a business in India means embarking on an entrepreneurial journey that is as captivating as it is complex. With its booming market and dynamic population, India offers exceptional opportunities for investors ready to adapt to a unique economic environment.

However, challenges related to culture, bureaucracy, and regulation can appear daunting for expatriates, requiring thorough preparation and a deep understanding of the local business landscape.

This guide aims to illuminate each step of the process, from initial planning to success in the Indian market, providing you with essential tools to turn your vision into reality.

Understanding Legal Structures in India for Expatriate Businesses

Legal Structure	Description	Advantages	Disadvantages
Private Limited Company (Pvt Ltd)	Limited liability company, 2 to 50 shareholders, min. capital 100,000 INR	Limited liability, credibility, easier access to foreign investment, flexible structure	Complex registration process, increased compliance obligations, mandatory annual audit
Sole Proprietorship	Business owned and managed by a single person	Simple procedure, low management costs, total control	Unlimited liability, difficulty raising funds, less professional image
Partnership Firm	Partnership of persons, 2 to 20 partners	Simple formation, contractual flexibility, collective management	Unlimited and joint liability, potential disputes between partners, limited funding
Limited Liability Partnership (LLP)	Partnership variant, limited liability for partners	Limited liability, flexible management, reduced obligations	Less recognized by some investors, sectoral restrictions for foreign investment
Wholly Owned Subsidiary (WOS)	Subsidiary 100% owned by a foreign company	Full control by parent company, asset protection, access to Indian market	Strict regulation, reporting obligations, sectoral restrictions depending on activity

Registration Procedures and Required Documents

• Private Limited Company (Pvt Ltd)
  • Obtaining a Digital Signature Certificate (DSC) for each director
  • Obtaining a Director Identification Number (DIN)
  • Reserving the company name with the Registrar of Companies (RoC)
  • Drafting the Memorandum of Association (MoA) and Articles of Association (AoA)
  • Filing documents on the MCA (Ministry of Corporate Affairs) portal
  • Timeframe: 10 to 20 business days
• Sole Proprietorship
  • No formal registration obligation, but in practice:
    • Registration with local authorities (Shop and Establishment Act)
    • Opening a business bank account
    • Obtaining specific licenses depending on the sector
  • Timeframe: a few days to two weeks
• Partnership Firm
  • Drafting a partnership agreement
  • Optional registration with the Registrar of Firms (recommended)
  • Providing partner ID documents, proof of registered office address
  • Timeframe: 7 to 14 days
• LLP
  • Procedure similar to Pvt Ltd (DSC, DIN, name reservation, filing of statutes)
  • Timeframe: 15 to 20 days
• Wholly Owned Subsidiary
  • Creating a Pvt Ltd 100% owned by the foreign company
  • Steps identical to Pvt Ltd, plus specific approvals depending on the sector
  • Timeframe: 15 to 30 days depending on complexity and sector

Tax Implications for Expatriate Companies

• Private Limited Company / WOS
  • Taxed at a rate of 40% on profits (foreign companies)
  • Surcharge of 2% beyond 10,000,000 INR profits, additional 5% beyond 100,000,000 INR
  • VAT (GST) between 12% and 15% depending on State and sector
• Sole Proprietorship
  • Taxed at the marginal personal income tax rate (up to 30%)
  • Less tax optimization possible
• Partnership
  • Fixed tax rate of 30% on profits
  • Possible surcharges depending on net income
• LLP
  • Tax rate of 30%
  • No dividends, direct distribution of profits

Criteria and Local Regulations for Foreign Ownership

• Foreign Ownership
  • Pvt Ltd companies and LLPs can host foreign investors subject to Foreign Direct Investment (FDI) rules
  • Certain sectors (defense, media, insurance, etc.) are subject to restrictions or foreign ownership caps
  • Prior approval from the Indian government may be required in some cases
• Prohibited or Restricted Structures
  • Sole Proprietorships and ordinary Partnerships cannot be directly owned by foreigners
  • Creating a subsidiary or liaison/project office may require approval from the Reserve Bank of India (RBI)

Practical Tips and Useful Resources

• Engage a local law firm: essential to navigate administrative complexity and avoid costly errors
• Consult Franco-Indian Chambers of Commerce and economic development agencies for sector-specific information and qualified contacts
• Use the Ministry of Corporate Affairs (MCA) portal for online procedures and consultation of official forms
• Consider the regulatory diversity of Indian States (licenses, local taxes, specific permits)
• Plan for administrative and tax support from the incorporation phase

Challenges and Opportunities for Expatriate Entrepreneurs

• Challenges: administrative complexity, linguistic and cultural diversity, incorporation timelines, fluctuating sectoral regulation
• Opportunities: rapidly growing market, promising sectors (technology, services, industry), tax incentives in some States, easier access to venture capital for structured companies

Being supported by local experts and anticipating sectoral and tax constraints constitutes a key success factor for any expatriate entrepreneurial project in India.

Administrative Procedures for Creating Your Business in India

Basic Legal Requirements to Create a Business in India:

• Hold a valid business visa for foreigners.
• Obtain a digital signature for each director.
• Apply for a DIN (Director Identification Number) for all directors.
• Define the legal address of the registered office.
• Prepare the Memorandum of Association (MoA) and the company’s Articles of Association (AoA).
• Obtain a PAN (Permanent Account Number) and a TAN (Tax Account Number).

Main Types of Available Legal Structures:

Legal Structure	Description	Minimum number of partners/directors	Minimum capital required
Sole Proprietorship	Simplest form, no separation between the business and its owner	1	No minimum capital
Partnership	Two or more persons, unlimited liability	2	No minimum capital
LLP (Limited Liability Partnership)	Limited liability, hybrid between partnership and company	2 partners	No minimum capital
Private Limited Company	Limited liability for shareholders	2 to 50 shareholders	Approx. 100,000 INR (~1,400 €)
Public Limited Company	Company open to the public, increased regulatory requirements	Minimum 7 shareholders	Approx. 500,000 INR (~7,100 €)

Steps to Follow to Register a Business:

1. Choose the type of legal structure suited to your project
2. Select and get the name approved via the SPICe+ form
3. Gather all necessary documents:
   • Digital signature of directors
   • DIN of directors
   • MoA & AoA
4. Submit the application to the Registrar of Companies
5. Receive the official Certificate of Incorporation
6. Apply for PAN & TAN with the Income Tax Department
7. Open a local bank account in the company’s name
8. Complete tax registration according to the concerned state:
   • Professional tax
   • TDS (Tax Deducted at Source)
9. Register with local authorities:
   • Shop Establishment Certificate

Useful Government Online Platforms:

• MCA Portal (“Ministry of Corporate Affairs”) — SPICe+ procedure, document filing, application tracking
• NSDL/TIN — online application for PAN/TAN
• GST Portal — GST tax registration
• EPFO/ESIC Portals — social/employer management

Typical Timeframes & Potential Costs:

Full validation: generally between 4 and 12 weeks

Variable administrative cost depending on structure:

• Pvt Ltd Company: approx. ₹20,000–₹50,000
• LLP: often less expensive than Pvt Ltd or Public Ltd
• Additional fees possible for professional advice or document translation

Practical Tips on Engaging Local Experts:

• Engaging specialized consultants or Indian lawyers allows:
  • Ensuring compliance with all local tax, social, and commercial laws,
  • Facilitating the correct drafting of statutes/MoA/AoA,
  • Speeding up administrative procedures thanks to their practical experience,
  • Minimizing any legal risk related to Indian regional specificities.

Key Takeaways:

Procedures may seem complex but are largely facilitated by official online platforms as well as local professional support; this ensures legal security and full compliance with current Indian regulations.

International Tax Considerations for Expatriate Entrepreneurs in India

Expatriate entrepreneurs in India are subject to complex taxation that depends on their residency status, the type of business, and international agreements. Here are the main regimes and obligations:

Tax Status and Income Taxation

• An expatriate is considered an Indian tax resident if they stay in India for at least 182 days during the fiscal year (April 1 to March 31). Residents are taxed on their worldwide income; non-residents only on Indian income.
• The PAN (Permanent Account Number) is essential for any tax declaration or opening a professional bank account.
• Personal income tax varies according to progressive brackets; various deductions are provided:

Type of Deduction	Maximum Deductible Amount	Eligible Examples
Life insurance, pension	150,000 INR/year	Premiums, pension fund contributions
Tuition fees	Included in the limit	Annual fees for children
Housing loan interest	200,000 INR/year	Loan for primary residence
Medical expenses	According to section 80D	Health premiums, major medical expenses

VAT and Other Local Taxes

• The Value Added Tax (VAT) varies between 12% and 15%, depending on the Indian States.
• VAT/GST registration is mandatory as soon as the activity involves the sale of taxable goods or services.

Corporate Tax

Foreign companies are taxed at a standard rate of 40% on their profits earned in India.

• Additional surcharge: +2% if income exceeds ₹10 million; +5% beyond ₹100 million.

Double Taxation Avoidance Agreements

India has signed several agreements to avoid double taxation with European countries (including France), thus facilitating:

• Taking into account taxes already paid in the country of origin
• Compensation via tax credits
• Specific rules for determining the source of income

Tax Incentives for Foreign Investors

• Main incentives include:

• Full tax exemption for the first five years after establishment in certain zones or priority sectors.
• Progressive reduction thereafter up to ten years according to local schemes.

Advantages in Special Economic Zones (SEZs):

SEZ Advantage	Description
Corporate tax exemption	Up to five years
Reduced rate in following years	Progressive application

These measures aim to attract foreign direct investment and promote local innovation.

Timeframes & Administrative Tax Procedures

Main annual obligations:

• Mandatory accounting closure on March 31
• Publication of the annual financial statement
• Mandatory external audit each year

Simplified declaration procedure:

1. Apply for PAN online before any tax procedure
2. Register with the official “Income Tax Department” portal
3. Electronic submission of declarations before the official deadline

The deadline varies by status but is generally between July and September following the closed fiscal year.

Available Specialized Resources

To optimize international tax management:

• International accounting firms present in Mumbai, Delhi, or Bangalore specialized in cross-border taxation
• Certified local advisors capable of supporting administrative procedures
• Official portals (“Income Tax Department”) with multilingual guides

Practical key points:

• Always maintain a valid local address for administrative correspondence
• Get accompanied by an expert during the initial statutory choice (sole proprietorship/Private Limited Company/Limited Liability Partnership)
• Regularly audit your situation to remain compliant with legislative changes

Accessing Funding and Support Resources for Expatriates in India

The main funding sources available for expatriates in India include:

• Government grants: The Indian government offers financial incentives, notably through the “Make in India” and “Digital India” initiatives, which support foreign direct investment in sectors like technology, renewable energy, or pharmaceutical manufacturing. Recent budgetary reforms facilitate access to grants and simplify the regulatory process for foreign companies.
• Private investors: Angel investors now benefit from reduced taxation thanks to the abolition of the “angel tax”. Venture capital funds are also very active in major Indian cities, especially in the technology sector.
• International financial institutions: International banks present in India (HSBC, BNP Paribas), as well as organizations such as the Asian Development Bank or IFC, offer specific credit lines for projects led by foreign entrepreneurs. Furthermore, the foreign direct investment cap has been raised in several strategic sectors.

Main Support Resources for Expatriate Entrepreneurs

Business Incubators

• T-Hub (Hyderabad)
• NASSCOM Startup Warehouse (Bangalore)
• IIT Incubator Network

Coworking Spaces

• WeWork India
• Innov8
• Awfis

Entrepreneurial Networks and Mentoring

• TiE Global – international network present in India offering mentoring and access to investors.
• French Tech India – local French community dedicated to supporting French startups.

Comparative Table of Resources

Resource	Location	Services Offered
T-Hub	Hyderabad	Incubation, funding
NASSCOM Warehouse	Bangalore	Tech support
WeWork	Multiple cities	Flexible coworking
TiE Global	National/International	Mentoring, networking

Requirements and Necessary Administrative Procedures to Access Funding

• Legal constitution: Register a company as a private limited company or LLP; obtain a CIN (Corporate Identification Number).
• Opening a professional bank account in INR with KYC documents adapted to foreign status.
• Possible application for FDI authorization from the Indian Department for Promotion of Industry and Internal Trade if investment exceeds certain sectoral thresholds.
• Rigorous preparation of the business plan and presentation conforming to local standards when submitting to incubators or investors.

Simplified List of Key Procedures

• Draft a business plan adapted to the Indian context
• Verify sectoral eligibility according to the FDI scheme
• Obtain all legal documents translated/validated
• Register on national platforms dedicated to startup funding

Practical Tips to Maximize Chances During Funding Applications or Local Partnerships

1. Adapt your project to the local market through thorough study: notably consider the strong Indian commercial pragmatism and favor a collaborative approach with influential local partners.
2. Cultivate your relational network from installation via binational professional chambers, sectoral events, or recognized incubators to obtain strategic recommendations during official applications.
3. Present a complete file including strong international references but also demonstrating a real willingness for sustainable integration in India (local hiring, technology transfers…).
4. Systematically seek specialized legal advice before any administrative procedure to avoid costly errors related to Indian regulatory complexity.

Indian Contextual Specificities

The Indian entrepreneurial environment combines progressive openness to foreign capital thanks to various tax reforms while maintaining a demanding administrative framework; it clearly favors innovative collaborations but requires patience in the face of often long administrative delays as well as a strong ability to navigate between varied local institutional networks.

Concrete example: The recent successful establishment in a regional solar park illustrates how articulation between public subsidy (“Make in India”), localized technical partnership with a recognized Indian university, and support by a national incubator allowed raising several million USD quickly from international funds while securing necessary authorizations on site.