In short: most foreign businesses enter India through a wholly owned subsidiary (a private limited company), which in most sectors needs no government approval under the FDI automatic route. A liaison office can only represent and promote; a branch office can do limited business. Both need RBI approval through a bank. Every investment must be reported under FEMA on time.
Ways to enter India
| Option | What it can do | Approval |
|---|---|---|
| Wholly owned subsidiary (private limited company) | Full business, separate legal entity, limited liability | Automatic route in most sectors; government approval in some |
| Joint venture with an Indian partner | Full business, shared ownership | As for FDI in that sector |
| LLP | Full business, lighter compliance | Only in sectors with 100% automatic-route FDI and no conditions |
| Liaison office | Representation, promotion, communication only; no earning | RBI through an authorised dealer bank |
| Branch office | Export, import, consultancy, research and similar listed activities | RBI through an authorised dealer bank |
| Project office | Executing a specific contract in India | Through an authorised dealer bank, if conditions are met |
FDI rules in brief
- Automatic route: no prior approval; most sectors, often up to 100%.
- Government route: prior approval, for sectors such as defence above certain limits, print media and others in the FDI policy.
- Prohibited: sectors such as lottery, gambling, chit funds and real estate business (trading in land).
- Investors from countries sharing a land border with India need government approval for any FDI.
Key filings and compliance
- FC-GPR on the RBI FIRMS portal within 30 days of allotting shares to the foreign investor;
- the annual return on foreign liabilities and assets (FLA) by 15 July;
- transfer pricing documentation for dealings with the parent company;
- regular company law, tax and GST compliance. See ROC compliance.
Questions people ask
How can a foreign company start a business in India?
Usually by forming a wholly owned subsidiary as a private limited company under the FDI automatic route, or through a joint venture, a branch or a liaison office depending on the activity.
Can a foreigner own 100% of a company in India?
Yes, in most sectors under the automatic route. Some sectors have caps or need approval, and some are prohibited.
Can an NRI start a company in India?
Yes. NRIs can be directors and shareholders. Investment on a non-repatriation basis is treated like domestic investment; on a repatriation basis it follows FDI rules.
What is the difference between a liaison office and a branch office?
A liaison office can only represent the parent and cannot earn income in India. A branch office can carry on specified business activities and earn income, and is taxed in India.
Need help with your company?
PKS Legal advocates have practised since 1980. We are based in Kolkata and advise clients from across India by phone and video call. Tell us about your matter and an advocate will get back to you.
Become a ClientCall +91 81001 21141This guide gives general information about the law in India as on 11 November 2026. It is not legal advice for your situation, and reading it does not create a lawyer-client relationship. Rules and limits change; please take advice on your own facts.