Blog

Company Formation in India for Foreign Nationals: Legal, Tax & FDI Guide

Company Formation in India

India has become one of the most attractive destinations for global entrepreneurs. With a large consumer market, skilled workforce, and startup-friendly ecosystem, many foreign founders are exploring company formation in India.

This guide explains how foreign nationals can register a company in India, the legal structures available, FDI rules, tax implications, and post-incorporation compliance — in simple, practical language.

Can Foreign Nationals Register a Company in India?

Yes. Foreign individuals and foreign companies can legally do company registration in India under the Foreign Direct Investment (FDI) framework, subject to sector-specific rules.

Foreign nationals can:

  • Hold shares in Indian companies
  • Be directors (with DIN & DSC)
  • Own up to 100% equity in many sectors

The most common route is foreign company registration in India through a subsidiary.

Best Business Structures for Foreign Company Formation in India

Choosing the right structure is critical for tax efficiency, compliance, and future expansion.

1. Wholly Owned Subsidiary (Most Preferred)

A wholly owned subsidiary allows 100% foreign ownership, subject to FDI policy.

Best for:

  • Foreign startups entering India
  • Global companies expanding operations
  • Long-term business presence

 Foreign company registration in India (Subsidiary setup)
https://thestartuplab.in/subsidiary-company-registration-in-india-for-foreign-companies/

2. Private Limited Company with Foreign Shareholding

Foreign nationals can also opt for private limited company registration in India with Indian or foreign shareholders.

Why preferred:

  • Investor-friendly structure
  • Easy fundraising & ESOP issuance
  • Clear ownership and governance

 Private limited company registration in India
https://thestartuplab.in/pvt-ltd-company-registration/

3. Limited Liability Partnership (LLP) with FDI

FDI in LLPs is allowed only in sectors where:

  • 100% FDI is permitted
  • No FDI performance conditions exist

 LLP registration in India
https://thestartuplab.in/llp-registration-in-india-learn-the-process-benefits-documents/

Step-by-Step Process: Company Formation in India for Foreign Nationals

Step 1: Obtain DSC & DIN

Foreign directors must obtain:

  • Digital Signature Certificate (DSC)
  • Director Identification Number (DIN)

Documents must be apostilled or notarised in the home country.

Step 2: Name Approval

The company name must:

  • Be unique
  • Comply with MCA naming rules
  • Match business activity

Step 3: File SPICe+ Incorporation Form

This is the core form for online company registration in India, covering:

  • Shareholding structure
  • Director details
  • Registered office address

Step 4: Certificate of Incorporation

Once approved, the Ministry of Corporate Affairs issues the Certificate of Incorporation, and the company becomes legally active.

Documents Required for Foreign Nationals

Individual Foreign Shareholders / Directors

  • Passport (apostilled/notarised)
  • Address proof
  • Email & mobile number

Foreign Company (If Parent Entity)

  • Certificate of Incorporation
  • Board resolution
  • Charter documents

Registered Office in India

  • Utility bill
  • Rent agreement / ownership proof

FDI Rules for Company Formation in India

Foreign investment in India is governed by FEMA and RBI regulations.

Key FDI Points:

  • 100% FDI allowed in most sectors under automatic route
  • Some sectors require government approval
  • Reporting to RBI is mandatory

Foreign-funded companies must also comply with annual FDI filings.

FLA Filing in India (Mandatory for Foreign-Owned Companies)

Every company with foreign investment must file FLA filing in India annually with the RBI.

  • Covers foreign liabilities & assets
  • Mandatory even if no transaction occurred

 FLA filing & foreign compliance services
https://thestartuplab.in/sft-filings-in-india/

Taxation for Foreign-Owned Companies in India

Corporate Tax

  • 22% (new regime, subject to conditions)
  • 25%–30% in other cases

Other Applicable Taxes

  • GST (if applicable)
  • Withholding tax on payments
  • Transfer pricing compliance (for parent-subsidiary transactions)

 GST registration in India
https://thestartuplab.in/gst-registration-in-india/

Post-Incorporation Registrations & Compliance

After company formation in India, foreign-owned companies must complete:

Country-Specific Company Registration Support

Foreign founders frequently search for:

  • Company registration in India from USA
  • Company registration in India from Japan
  • Company registration in India from China
  • Company registration in India from Korea
  • Company registration in India from Russia

India also supports outbound setups like:

FAQs: Company Formation in India for Foreign Nationals

Can a foreigner be a director in an Indian company?

Yes. Foreign nationals can be directors after obtaining DIN and DSC.

Is physical presence required in India?

No. Company registration in India can be completed remotely with proper documentation.

Which structure is best for foreign companies?

A wholly owned subsidiary as a private limited company is the most preferred option.

Is FLA filing mandatory?

Yes. Every foreign-funded company must complete FLA filing in India annually.

How long does registration take?

10–15 working days, depending on document readiness.

Final Thoughts

Company formation in India for foreign nationals offers massive growth opportunities — but only if done correctly. Choosing the right structure, complying with FDI rules, and managing ongoing filings are critical for long-term success.

With professional support, foreign founders can enter India smoothly, stay compliant, and scale confidently.