INDIA MARKET ENTRY GUIDE 2026
Expand Your Business to India: The 2026 Guide for Foreign Companies
Choose the entity, incorporate it through SPICe+, fund it under FEMA and run the compliance calendar from day one. This guide covers the structure, timeline, costs and filings for a foreign company entering India.
Prepared by the Krystal7 Consultants team · Sources checked 24 Sep 2026
Expanding to India at a glance
Most foreign companies enter India through a wholly owned Private Limited subsidiary. It can hire, invoice and sign contracts in its own name, and it keeps the parent's exposure inside the Indian company.
| Question | Short answer |
|---|---|
| Usual structure | A wholly owned Private Limited company |
| Foreign ownership | Up to 100 percent under the automatic route in most sectors |
| Time to incorporate | About two weeks once apostilled documents arrive; bank account and GST take a further 2 to 3 weeks |
| Land border countries | Press Note 3 approval adds about six months |
| Corporate tax | 25 percent for most new companies, plus surcharge and cess |
| First RBI filing | FC-GPR within 30 days of allotting shares to the parent |
Why foreign companies expand to India
| Reason | What it means for your company |
|---|---|
| Engineering talent | One of the largest pools of engineering graduates in the world. Google and Microsoft both run large engineering teams here. |
| Market size | More than 1.4 billion people and fast digital adoption. |
| Open FDI policy | 100 percent foreign investment is allowed under the automatic route in most sectors, with no prior government approval. |
| English as the business language | Contracts, accounts and regulatory filings are in English, which makes running the company from the US, UK or the Middle East easier. |
| Time zones | IST overlaps with the US morning and evening and with the full working day in the Gulf and Singapore. |
| Tax treaties | India has double taxation avoidance agreements with more than 90 countries, which lower withholding tax on dividends, royalties and fees. |
India market entry: which structure to use
Four structures are open to a foreign company. The right one depends on what you will actually do in India.
| Structure | Can earn revenue? | Tax | Approval | Best for |
|---|---|---|---|---|
| Wholly owned subsidiary (Private Limited) | Yes | 25 percent for most companies | Automatic route in most sectors | Hiring, selling and scaling in India |
| LLP | Yes | 30 percent paid by the LLP; partners pay no tax on their share | Automatic route only in some sectors | Smaller services businesses that will not raise equity |
| Branch office | Yes, in permitted activities | 35 percent plus surcharge and cess | AD bank approval, RBI in some cases | Specific activities where the parent must contract directly |
| Liaison office | No | No business income, since it cannot trade | AD bank approval, RBI in some cases; three year initial term | Market research and representation only |
A subsidiary needs at least two directors and two shareholders, and one director must meet the 182 day residence test. For most foreign founders it is the right choice. Our foreign subsidiary registration service covers the setup, and the branch office vs subsidiary guide compares the two in detail.
How long it takes to set up a company in India
| Step | Time | What happens |
|---|---|---|
| Name reservation | 2 to 3 working days | Two name options go to MCA through SPICe+ Part A |
| Document drafting | 2 working days | MOA, AOA, director consents and declarations |
| Apostille or legalisation | Depends on your country | Parent and director documents certified at home; consular legalisation where the country is outside the Apostille Convention |
| Incorporation filing | 2 working days | SPICe+ Part B filed once the certified documents arrive; DSCs and DINs for up to three directors come through the same filing |
| Certificate of incorporation | 2 to 3 working days | Certificate issued with CIN, PAN and TAN |
| Bank account and GST | 2 to 3 weeks | Account opened after bank KYC; GST registration completed |
| FC-GPR | Within 30 days of allotment | Shares issued to the parent reported to the RBI |
| State registrations | Once the office is set | Professional tax and shops and establishments registration where the state requires them |
If the investor or its owners are from a country that shares a land border with India, Press Note 3 approval adds about six months before incorporation can go ahead.
What expanding to India costs
Government fees are small. Most of the budget goes on professional work: a clean setup, correct FEMA reporting and a transfer pricing position that holds from the first invoice.
| Cost item | Typical range |
|---|---|
| Government charges (name, filing, stamp duty, PAN, TAN) | INR 3,000 to 15,000 |
| Digital signature certificate, per director | INR 1,500 to 3,000 |
| Notarisation and apostille in your home country, per document | USD 60 to 200 equivalent |
| Krystal7 Consultants' fee for cross border incorporation | USD 1,200 to 1,700 (about INR 1,15,000 to 1,63,000) |
| Compliance retainer for year one (accounting, secretarial, FEMA) | From USD 300 a month (about INR 29,000) |
Plan your own numbers with the India business setup budget planner, or see our published fee bands.
Seven mistakes that cost foreign founders the most
- Choosing a branch office because it sounds simpler. It pays 35 percent tax plus surcharge and cess, is limited to approved activities and exposes the parent to Indian liability.
- Skipping transfer pricing documentation. Every charge between the parent and the Indian company must be at arm's length and documented. A documentation failure can cost 2 percent of the transaction value.
- Missing the FC-GPR window. A late filing within three years needs the RBI late submission fee; beyond three years it needs compounding. It also slows dividends and later funding rounds.
- Using US employment terms. Indian law sets its own rules on notice, termination, provident fund, gratuity and leave. At will contracts do not work here.
- Picking the wrong resident director. The resident director carries real legal duties. Appoint someone you trust through a formal arrangement, not whoever the filing agent suggests.
- Mixing parent and subsidiary books. Cost sharing needs an intercompany agreement, a benefit analysis and arm's length pricing. Informal recharges fail the first transfer pricing review.
- Hiring a generic CA for cross border work. FEMA, transfer pricing and CbCR sit outside routine domestic compliance. The first audit or repatriation usually exposes the gap.
Your first year compliance calendar
| When | Filing | What it covers |
|---|---|---|
| Within 30 days of allotment | FC-GPR | Shares issued to the foreign investor, reported to the RBI |
| Monthly | GSTR-1 and GSTR-3B | GST returns, due by the 11th and 20th |
| Monthly and quarterly | TDS, provident fund and ESIC | Tax deducted on salaries, contractors and rent, and employee contributions |
| 15 Jun, 15 Sep, 15 Dec, 15 Mar | Advance tax | 15, 45, 75 and 100 percent of the year's tax |
| 15 July | FLA return | Foreign liabilities and assets, reported to the RBI |
| 30 September | Tax audit report | Due 31 October for a company that must also file a transfer pricing report |
| 31 October | Transfer pricing report | Form 3CEB for FY 2025-26; Form 48 under the Income-tax Act, 2025 from tax year 2026-27 |
| 30 October | AOC-4 | Financial statements, 30 days after an AGM held on 30 September |
| 30 November | Income tax return (ITR-6) | For a company with international transactions; 31 October for others |
| 29 November | MGT-7 or MGT-7A | Annual return, 60 days after an AGM held on 30 September |
| Every three years | DIR-3 KYC | Director KYC by 30 June after the block; a missed filing deactivates the DIN |
For FY 2025-26, not filing Form 3CEB can attract a penalty of INR 1 lakh under section 271BA. From tax year 2026-27, a late Form 48 draws a fee under section 428 of the 2025 Act. The fee is INR 50,000 for up to one month and INR 1 lakh after that.
Specialist partner or do it yourself?
| Doing it yourself or with a generic CA | With a cross border adviser |
|---|---|
| FC-GPR deadlines easily missed | RBI, FEMA and transfer pricing work built into the plan |
| Transfer pricing documentation thin or missing | Records ready for audit from the first invoice |
| FEMA gaps found at audit | Problems flagged before they become defaults |
| Replies delayed across time zones | Working hours that overlap with the US, Gulf and Europe |
| A new person on every call | One named team and direct partner access |
Our 90 day India expansion package
Three phases take you from deciding on India to an operating, compliant company.
| Phase | Days | What we deliver |
|---|---|---|
| Setup and incorporation | 1 to 30 | Entity choice, incorporation, bank account, first FEMA filings and the compliance setup |
| Operational readiness | 31 to 60 | Transfer pricing framework, employment agreements, first payroll, remaining registrations and intercompany agreements |
| Ongoing support | 61 to 90 | Handover to your named team, compliance calendar live, first month's books closed and a quarterly review booked |
Want the full detail offline? Request the Expanding to India Playbook 2026, a 28 page PDF with entity checklists, cost breakdowns and the compliance calendar.
Country guides for expanding to India
Each guide covers the local document steps, treaty rates and questions to settle before the Indian filing.
Expanding to India questions
Do I need a resident Indian director?
Yes. Every Private Limited company needs at least one director who stayed in India for 182 days or more in the financial year, applied proportionately for a new company. Most foreign founders appoint a trusted professional through a formal arrangement.
Can I set up an Indian subsidiary without visiting India?
Incorporation can be done remotely with apostilled documents. Bank account opening usually needs in person verification by one director or video KYC, depending on the bank. Plan a short visit if you can.
What is the minimum capital for an Indian subsidiary?
There is no prescribed minimum for a Private Limited company. In practice most foreign subsidiaries start with enough paid up capital to cover the first months of costs. Regulated sectors such as NBFCs and insurance have their own minimums.
How do I pay my India team from the parent company?
The parent funds the Indian subsidiary with equity or a loan, the subsidiary employs the team on Indian contracts and pays salaries from its Indian bank account. Paying Indian staff directly from abroad creates tax, permanent establishment and FEMA problems.
What is the corporate tax rate for an Indian subsidiary?
Most new companies pay 25 percent plus surcharge and cess. A 22 percent concessional regime is available if certain exemptions are given up. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered the sections.
How do profits go back to the parent?
Through dividends, royalties or service fees, or a buyback or capital reduction. Dividends carry withholding tax at 20 percent plus surcharge and cess, or the lower treaty rate. Each route has its own FEMA and transfer pricing requirements.
Can I hire in India without a subsidiary?
Yes, through an employer of record. It is quick to start but costs more as the team grows and gives you less control. For a team you plan to keep and grow, a subsidiary usually works out cheaper.
How is Krystal7 Consultants different from a Big 4 firm?
Big 4 firms are built for large multinational groups and priced for them. We work with foreign founders and their finance teams: cross border specialists, direct partner access and published fee bands.
Plan your India entry
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