- Most sectors allow 100% foreign ownership under the automatic route; only reporting to RBI is needed.
- Since Press Note 2 (2026 Series), land-border-country investors with non-controlling beneficial ownership of up to 10% can use the automatic route.
- An Indian subsidiary can opt for a 22% base tax rate (about 25.17% all-in); a branch pays 35% plus surcharge and cess.
Five ways to enter India
| Option | Can earn revenue? | Best for |
|---|---|---|
| Employer of record | No (you contract from abroad) | First 1–10 hires while you test the market |
| Liaison office | No | Representation and market research only |
| Branch / project office | Yes, within permitted activities | Same legal entity as the parent; specific contracts |
| Private limited subsidiary | Yes | Most foreign companies — sales, engineering, GCCs |
| LLP | Yes | Services in sectors open to 100% automatic-route FDI |
Not sure? Try the India entry structure chooser or read liaison, branch or project office.
Foreign investment rules
- Most sectors allow 100% FDI under the automatic route — no prior approval, just reporting (FC-GPR within 30 days of issuing shares).
- Some sectors have caps or need government approval.
- Land-border countries (including China): since Press Note 2 (2026 Series), investors with non-controlling beneficial ownership of up to 10% can use the automatic route; above that, or with control, government approval is still needed.
Tax in brief
- India’s Income-tax Act, 2025 applies from 1 April 2026; the tax year runs April–March.
- Subsidiary: 22% base rate option (about 25.17% all-in). Branch: 35% plus surcharge and cess.
- Payments abroad (dividends, royalties, technical fees, interest) carry withholding, reduced by treaties — see repatriating profits.
- Transfer pricing applies to every intercompany charge; GST at 18% on most services, with exports zero-rated.
Hiring
India’s four Labour Codes have applied since 21 November 2025. Payroll includes provident fund, gratuity and professional tax; contractors who work like employees create both labour and permanent establishment risk.
Annual compliance
Audit, AGM, MCA filings, income-tax and transfer-pricing returns, the FLA return to RBI by 15 July, and monthly GST, TDS and payroll filings. What that looks like in practice: Indian subsidiary compliance.
Checking partners and targets
India’s public registries are unusually open — private companies’ accounts are on file with the government. Start with how to verify an Indian company; for investments use a due diligence checklist.
Sources
- Business Standard — DPIIT amends Press Note 3 (Mar 2026)
- RBI Master Direction — establishment of branch, liaison or project offices
Quick answers: India for NRIs and foreigners — questions answered.
Frequently asked questions
Can a foreign company own 100% of an Indian company?
What is the easiest way for a foreign company to start in India?
How is a foreign company taxed in India?
How long does it take to set up a company in India?
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.