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Entrepreneurship: 5 Things A Foreign Business Owner Should Know When Looking To Start A Private Limited Company In India


If you own a business outside of India and are looking to expand into the country, then this is a definitely a good time.

The government is pro-business and the Indian economy is poised for a huge growth in the coming decades. And if you are particularly interested in starting a private limited company in India, then you should definitely know about the following.

100% FDI Automatic Route: While earlier, the FDI investments were restricted by the government, things are now much easier for foreign businesses. In fact, you can now set up a private limited company in India with 100% FDI through the automatic route.

As such, no permission from the government is required. This is a much better option than trying to set up a branch office in the country since it will require the approval from the government. One more thing to remember is that if you are a foreign national, then you can’t set up a branch office in India. This can only be done by foreign businesses.

Office: You must have an office in India, which will act as the registered office of the new company where all communications will be sent. Generally, it is better to set up the registered office in Tier 1 cities like Bangalore, Delhi, Mumbai and such. The office is only required for matters of communication. As such, you don’t have to get yourself a big office. However, it should be a real physical location. Post boxes are generally not considered valid addresses.

Director’s Documents: When filing a private limited company registration onlineor offline, the foreign directors of the proposed company must submit an identification proof. This can be a passport together with a proof of address. The copies of these documents have to be notarized, either by a recognized notary or the Indian embassy of the director’s country.  The foreign director does not have to be present in India while submitting the documents or during incorporation.

Company Structure: At least two people are required to start a private limited company in India since the law requires at least two shareholders and two directors for incorporation. Plus, one of the directors must be an Indian citizen. Now, if you wish to own 100% of the company, but are concerned about the rule to have one Indian citizen as a director, you have nothing to worry about. The director need not have any shares. Your company can hold 100% of the shares and just get one qualified Indian citizen as a director. That’s it.

FDI Reporting: After the incorporation of the company, you will have to file an FDI report to the country’s central bank, the RBI. Once the filing is complete and the RBI is satisfied with the report, your company is deemed to be in full compliance with the country’s business laws. And now, the company can start its operations.

Author’s Bio: Nikki is an independent blogger who has penned columns for remowned publishing houses. She often unites with Outreach firms like Submitcore.com to share her wisdom via posts.


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