Company Formation in India From Japan: A Simple 2026 Guide for Japanese Businesses

• Company formation / Compliances
• ||
• June 10, 2026

For Japanese businesses, India is no longer just an option — it is the top choice. In the latest JBIC survey, India was ranked the No.1 most promising country for Japanese companies over the medium term for the fourth year in a row, with 61.8% of firms naming it. India has now overtaken China as the biggest destination for Japanese FDI, as more companies follow the “China Plus One” strategy and look for a large, stable market to grow in. If you run a business in Japan and you are thinking about company formation in India, this simple guide explains everything you need to know.

We at Mercurius help Japanese businesses set up in India from start to finish. We even have an office in Tokyo, so we understand both sides (basically both languages). Let’s begin.

Why Japanese Companies Are Choosing India in 2026

The timing is very good. Here is why so many businesses in Japan are looking at India right now:

• Big and growing market. India is the world’s 5th largest economy with over 1.4 billion people and steady GDP growth.
• Strong Japan–India ties. After Prime Minister Modi’s visit to Japan in August 2025, both countries agreed on a “Joint Vision for the Next Decade.” Japan has set a private investment target of JPY 10 trillion into India.
• A trade agreement is already in place. The Japan–India Comprehensive Economic Partnership Agreement (CEPA) makes trade and investment smoother.
• Government support. Programs like Make in India and a single-window clearance system make entry easier than before.
• Skilled, English-speaking talent at competitive cost — useful for manufacturing, IT, and services.

In short: the door is open, the cost is reasonable, and the support is there.

India’s Cost, Talent, and Technology Advantage for Japanese Companies

India offers Japanese companies a powerful combination of cost efficiency, skilled talent, AI and technology expertise, strong industrial resources, and long-term growth opportunities. As a result, it is rapidly becoming a preferred destination for business expansion, innovation, and manufacturing. Let’s understand in detail:

Lower Operating Costs

The cost of operating a business in India can be 30%–70% lower than in many developed economies. Office rentals, manufacturing facilities, administrative functions, and professional services are generally much more affordable, helping companies improve margins and reduce setup costs.

Access to a Massive Skilled Workforce

India produces more than 1.5 million engineering graduates every year, along with millions of graduates in business, finance, science, and technology. This gives Japanese companies access to one of the world’s largest talent pools for manufacturing, engineering, IT, R&D, and business support functions.

Competitive Labour Costs

Hiring skilled professionals in India can often cost 40%–80% less than in Japan. This cost advantage enables companies to build larger teams, expand operations faster, and maintain global competitiveness without compromising on quality.

AI, Technology, and Digital Innovation Hub

India has become one of the world’s leading destinations for Artificial Intelligence (AI), software development, data analytics, cybersecurity, cloud computing, and Global Capability Centres (GCCs). The country has over 5 million technology professionals, making it one of the largest tech talent pools globally. Many multinational companies now use India not only for cost savings but also for innovation, product development, AI research, and digital transformation projects.

Abundant Natural and Industrial Resources

India has access to a wide range of natural and industrial resources that support manufacturing and industrial growth. The country is among the world’s leading producers of iron ore, coal, steel, aluminium, pharmaceuticals, and renewable energy components, while also offering a strong ecosystem of suppliers, manufacturers, logistics providers, and industrial parks.

Strong Manufacturing and Supply Chain Ecosystem

India has developed major industrial and manufacturing hubs across sectors such as automotive, electronics, machinery, chemicals, renewable energy, semiconductors, and consumer goods. Companies benefit from established supplier networks, industrial corridors, and modern logistics infrastructure that help reduce production costs and improve efficiency.

Step-by-Step Guide for Japanese Businesses Entering India

Here is a step-by-step guide for Japanese businesses interested in expanding or growing their operations in India:

Step 1: Choose the Right Business Structure

Before company formation in India from Japan, you must pick the right structure. Each one has different rules, control levels, and tax treatment. Here are the main options.

1. Wholly-Owned Subsidiary (Private Limited Company) — Most Popular

This is a separate Indian company where your Japanese parent company can own up to 100% of the shares (allowed in most sectors). It gives you full control and limits your risk to the money you invest. For about 90% of Japanese businesses entering India, this is the best choice.

2. Branch Office

An extension of your Japanese company is called a foreign company in India. It can do business and earn income in India but needs Reserve Bank of India (RBI) approval. Good for established companies that want to trade directly under their own name.

3. Liaison Office (Representative Office)

A “communication only” office. It cannot earn income in India — it can only do market research, build contacts, and promote the parent company. Also needs RBI approval. Good for testing the market first.

4. Project Office

Set up for a specific project (common in construction or infrastructure). It closes when the project ends.

5. Limited Liability Partnership (LLP)

A flexible option with lower compliance, but with some FDI restrictions. Less common for Japanese groups that want a clean subsidiary structure.

Our tip: Most Japanese clients start with a Wholly-Owned Subsidiary (Private Limited Company) because it offers control, limited liability, and 100% ownership.

Step 2: Know the Key Requirements

Although the document requirements may vary depending on the type of business structure you choose, as each entity has its own compliance and registration requirements, the following is a general checklist of documents that are commonly required for most company registrations in India.

• Minimum directors or authorised representatives. Most structures require at least one or two appointed persons to manage operations, and typically at least one resident of India among them.
• Registered office address in India. Every entity needs a valid local address for official communication and registration.
• Director Identification Number (DIN) and Digital Signature Certificate (DSC). These are needed for the people who will sign and file official documents electronically.
• Tax and statutory registrations. This includes a Permanent Account Number (PAN), Tax Deduction Account Number (TAN), and Goods and Services Tax (GST) registration, depending on the nature and volume of business.
• Regulatory and FDI compliance. Foreign investment must follow the rules set by the Reserve Bank of India (RBI) and FEMA. Most sectors allow investment through the automatic route, while a few require prior government approval.
• Sector-specific licences and approvals. Manufacturing, financial services, food, pharmaceuticals, and similar regulated sectors may need additional permits before operations can begin.
• Bank account and capital documentation. A local corporate bank account is required, along with proper documentation of any capital brought into the country.

Getting these basics right early makes the entire setup process faster, smoother, and fully compliant — regardless of the entity type you choose.

Step 3: Follow The Company Registration Process in India (Step by Step)

The whole process of company registration in India is now mostly online through the Ministry of Corporate Affairs (MCA) portal. Here is the simple order:

1. Get a Digital Signature Certificate (DSC). This is the online signature for your directors. It is needed to file all forms.
2. Get a Director Identification Number (DIN). A unique ID for each director. Foreign directors can apply using their passport details.
3. Reserve your company name. Use the MCA’s “RUN” (Reserve Unique Name) service to check and lock your name.
4. File the SPICe+ form (INC-32). This is one combined form that handles incorporation, PAN, TAN, EPFO, ESIC, GST, and even bank account opening together. You also submit the MOA (Memorandum of Association) and AOA (Articles of Association).
5. Get your Certificate of Incorporation (COI). Once the Registrar of Companies (ROC) approves, your company officially exists.
6. Open a bank account using your COI and PAN.
7. Report your foreign investment to the RBI. After your Japanese parent puts in money and shares are issued, you must file Form FC-GPR within 30 days. This is a very important step — do not miss it.

For branch, liaison, or project offices, the order is different: you get RBI approval first (through an authorised bank), then register with the ROC by filing Form FC-1 within 30 days.

Step 4: Documents You Will Need

Most documents come from your Japanese parent company and directors. The main ones:

• Passport copies of foreign directors and shareholders
• Address proof (utility bill, bank statement)
• Photographs
• Board resolution from the Japanese parent company
• MOA and AOA
• Proof of the registered office in India (rent agreement + owner’s NOC + utility bill)

Important point for Japanese companies: documents signed in Japan must be notarised and apostilled (Japan is part of the Hague Apostille Convention, so this is accepted in India). Most delays for foreign founders happen at this stage — not at the MCA filing stage — so prepare these papers carefully and correctly.

Step 5: Cost and Timeline

Every case is different, but here is a rough idea:

• Timeline: A Private Limited Company can be registered in about 3 to 5 weeks once all documents are ready. Branch and liaison offices take longer because of RBI approval.
• Cost: Government and professional fees vary by structure and capital. The biggest “hidden” cost is usually getting documents apostilled in Japan and meeting the resident director requirement — which is why expert help saves time and money.

Step 6: Taxes You Should Know

India’s tax rates for companies are competitive:

• Standard corporate tax: 22% (effective around 17% with surcharge and cess).
• New manufacturing companies: 15% (effective around 16%) — a big benefit if you are setting up a factory.
• GST (Goods and Services Tax): applies on sales of goods and services.

India and Japan also have a tax treaty (DTAA) that protects you from being taxed twice. We explain this benefit in its own section below.

Step 7: Compliance After You Set Up

Setting up the company is only the start. Every Indian company must follow yearly rules, such as:

• Annual return (Form MGT-7) and financial statements (Form AOC-4)
• Income tax return (ITR-6)
• Director KYC (DIR-3 KYC) every year
• At least 4 board meetings a year and one Annual General Meeting
• FEMA and RBI reporting for foreign investment

Missing these can lead to penalties or your company being marked “non-compliant.” A good local partner keeps you safe here.

Note: This is a general list of key compliances that  businesses always need to follow in India. However, the exact compliance requirements can vary depending on the type of entity you choose, your business activities, industry-specific regulations, and the state in which you operate. Certain additional registrations, licenses, and ongoing compliances may also apply. Therefore, it is always advisable to consult a qualified professional in India before setting up your business.

DTAA Benefits in India for Japanese Investors

One of the biggest advantages of doing business in India is the India–Japan Double Taxation Avoidance Agreement (DTAA). In simple words, this treaty makes sure your company is not taxed twice on the same income — once in India and again in Japan.

Here is why this matters so much for Japanese investors:

• No double tax on profits. Tax you pay in India can be set off against tax in Japan, so the same income is not taxed two times.
• Lower tax on dividends, interest, and royalties. When your Indian company sends money back to the Japanese parent, the DTAA caps the tax rate at a reduced level instead of the full rate.
• Clear rules, fewer disputes. The treaty clearly says which country can tax what. This gives you certainty and makes planning easier.
• Better cash flow. Less tax leakage means more money stays in your group.

To enjoy these benefits, your Indian company normally needs a Tax Residency Certificate (TRC) and must file the correct forms. This is exactly the kind of detail where expert support saves you money — and where Mercurius helps Japanese clients every day.

How Mercurius Can Help Japanese Businesses Set Up in India

This is where we help. Mercurius is a professional led  firm, having peofessbuilt for cross-border business, and we work with Japanese clients every day.

• We have a Tokyo office — so you can talk to us locally, then we handle everything in India.
• End-to-end company formation: structure advice, incorporation, FDI/FEMA reporting, SEZ setup, and more.
• Full support after setup: accounting, tax, GST, payroll, audit, and Virtual CFO services.
• Trusted credentials: PCAOB registered (USA) since 2009, ISO 9001:2015 certified, and a member of TIAG (290+ firms across 110 countries).
• 400+ professionals, 750+ clients, 30+ global locations — including New Delhi, Noida, Gurugram, Dubai, the USA, and Tokyo.

From your first question in Japan to your first sale in India, we stay with you.

Frequently Asked Questions (FAQ)

1. Can a Japanese company own 100% of an Indian company?
Yes. In most sectors, 100% foreign ownership is allowed under the “automatic route,” which means no prior government approval is needed.

2. Do I need to travel to India to register my company?
 No. The process is mostly online and can be done remotely. But you must appoint at least one India-resident director.

3. How long does company formation in India from Japan take?
A Private Limited Company usually takes about 2 to 4 weeks once all documents are ready and apostilled.

What is the best structure for a Japanese business?

For most companies, a Wholly-Owned Subsidiary (Private Limited Company) is the best — full control, limited liability, and 100% ownership.

4. Will I be taxed twice — in India and Japan?
 No. Thanks to the India–Japan DTAA, you are protected from double taxation.

Ready to Start Your Company in India?

India is open, the timing is right, and the path is clear. With the correct structure and the right partner, company formation in India from Japan can be smooth and fast.

Talk to Mercurius  today. With our Tokyo office and our India teams, we make your India entry simple from day one.

👉 Visit masllp.com to book a free consultation.

Driving Excellence. Delivering Growth.

https://www.jbic.go.jp/en/information/press/press-2025/press_00128.html