Open a Business in India as a Foreigner

If you are planning to open a business in India as a foreigner, the procedure implies following several steps. The process has been explained in various articles. As such, below we will explore what it implies to run a company, but most importantly, the costs associated with having an enterprise in this country.

Our specialists in company formation in India also cover subjects like the advantages of having a business here and offer some insight on the interaction with the authorities, so that you know what to expect.

Quick Facts
Time frame to register a business	Typically takes 10–18 working days
Composition of the business registration costs	-Registration fee, -legal and notary fees, -Articles of Association drafting.
Maintenance costs	Accounting, taxes, social contributions, virtual office/rent
Special costs/fees to consider when opening a company in India as a foreigner	Social and health contributions for employees and shareholders.
Bureaucracy	Medium level, singificant improvements are being made
Availability of online business administration services (YES/NO)	YES
Corporate Tax Rate	22% (optional regime), 25% or 30% for Indian companies, including foreign-owned subsidiaries; 35% for branches of foreign companies; plus surcharge and 4% cess
Particularities of the workforce	Low-cost workforce with a significant number of english-speaking, skilled professionals, particularly in IT and services.
Social contributions to pay as an employer	Investors who open a company as a foreigner in India pay 12% of the basic salary plus dearness allowance.
Best performing industries	IT and Services, Pharmaceuticals and Healthcare, Renewable Energy, Infrastructure
Possibility to open a business remotely in India (YES/NO)	YES, however you need at least one resident director
Restrictions on foreign investments	FDI is prohibited in a few sectors (e.g. lottery, gambling, chit funds, Nidhi companies, real estate business, tobacco manufacturing, atomic energy); caps or government approval apply in sectors such as defence, media, insurance and public sector banking; any investment from a country sharing a land border with India needs government approval (Press Note 3 of 2020).
Support in opening a business as a foreigner in India	Yes, our local agents, lawyers, and accountants provide full support.
Key business hubs	Mumbai, Delhi, Bengaluru (IT/Tech), Hyderabad (IT/pharma/biotech), and Chennai (manufacturing/automobiles)
Foreign Company Ownership	100% foreign ownership is allowed in most sectors under the automatic route (sector caps, approval requirements and Press Note 3 of 2020 apply)

Costs of maintaining a business in India

Many investors consider the costs associated with running a company when deciding to set up a business in India, especially as foreigners. These are divided into company registration, legal fees, and monthly and annual maintenance costs; however, the lines below will focus on the latter. Here is what you need to consider:

the registered address cost, which can be calculated per month (if you decide to rent office space), or per year (if you decide on a virtual office in India);
utilities, which enter the category of monthly recurrent costs;
license renewal fees for certain industries, such as tourism, food and beverages (in this case, each authority provides for the validity period);
payroll taxes, which include social security contributions that the company must pay monthly as an employer;
accounting fees, should you decide to work with external accountants in India and which is a service we also offer (our specialists can explain the benefits of outsourcing this service);
marketing costs can also be added to this list, as you will probably want to promote your business.

These are some of the general costs to consider if you open a business in India as a foreigner; however, depending on the type of entity and your needs, others may also appear.

What are the challenges to expect when you start a business in India as a foreigner?

The first hassle you may think of is probably the language. However, English is widely spoken in India, given the fact that the country was a British colony. With respect to the administrative system, it is divided into:

the central or national administration;
the state governments and union territory administrations (India has 28 states and 8 union territories);
the district and local authorities (municipalities and panchayats).

This means that when filing for specific licenses, you can obtain them from the national, regional, or local authorities. However, when dealing with the procedure, you can rely on our company registration in India to ensure the correct filing of the paperwork.

In terms of bureaucracy, even if you need to deal with various authorities, you have two options:

go in person to their local offices;
file online various documents, no matter if it is for compliance or other purposes.

Our specialists recommend the second option, as we can help you with it, and it is more time-efficient.

Why open a business in India as a foreigner?

There are several reasons you should choose India to set up a business in as a foreigner. Among them, we mention the following:

India offers access to one of the largest consumer markets in the world, as the total spending of the population here is expected to reach USD 4.3 trillion by 2030, which means you can operate your business here solely;
65% of the country’s population is under the age of 35, which means it has one of the youngest populations in the world;
moreover, 62% of the population composes India’s workforce aged 15 to 59, and a large portion of it is under 25 years of age.

Apart from these, here is how the Indian Government simplified the business registration process:

it has simplified the VAT (GST) compliance costs;
it has reduced 42,377 compliance requirements at state and centre levels;
it has created the National Single Window System through which companies can obtain various approvals and clearances;
it enabled the Permanent Account Number (PAN), which can be used to obtain all relevant permits and licenses.

If you decide to open a business in India as a foreigner, contact us.