Types of Companies Foreigners and NRIs Can Set Up in India

Are you a foreign national or NRI looking to set up a company in India but unsure which type of company suits you best? Then this guide is for you.

 

Table of Contents

Introduction:

A company in India is a separate legal entity registered under the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs, allowing it to own assets, contract, and operate independently of shareholders with limited liability protection; foreigners and NRIs can establish entities such as Private Limited Companies (most common, 2+ directors, 100% FDI in most sectors), Public Limited Companies, LLPs, or foreign structures like branch, liaison, and project offices subject to FEMA, 1999 and Reserve Bank of India regulations, while structures like sole proprietorships and OPCs are restricted; setup requires notarized/apostilled identity documents, DSC, DIN, MoA/AoA, and compliance filings; key advantages include access to a ~1.4B consumer market, lower operating costs (50–60% vs. West), strong talent pool, profit repatriation, and a growing $5T-bound economy, governed additionally by FDI policy and the Income Tax Act with corporate tax rates ~22–30% (domestic) and ~35%+ (foreign).

 

What is a Company in India?

A company in India is a legal business entity that is registered under the Companies Act, 2013, which is governed by the Ministry of Corporate Affairs (MCA).

Once registered, a company becomes a separate legal person — it can own assets, sign contracts, hire employees, open bank accounts, and even sue or be sued, all independently of its owners (shareholders).

Think of it this way: when you form a company, the business becomes its own entity with its own identity. This is very different from running a business in your own name (like a sole proprietorship), where you are personally responsible for everything.

 

Types of Companies Foreigners & NRIs Can Open in India

Under Indian laws, foreigners can set up their company in India in two main ways—either by incorporating a new company in India (such as a Private Limited Company or a Public Limited Company), or by opening a subsidiary company, which is treated as a foreign company in India (such as a branch,  project, and liaison office in India).

Let’s understand all the types in detail:

 

A Private Limited Company is the most popular and recommended business structure for NRIs and foreign nationals. It is a separate legal entity with limited liability — your personal assets are protected if the business runs into trouble.

Key Facts:

  • Minimum 2 directors and 2 shareholders required (Maximum number of directors may rise by passing a special resolution)
  • Maximum 200 shareholders allowed
  • At least 1 director must be an Indian resident (residing in India for 182+ days in the previous year)
  • 100% FDI allowed under the Automatic Route in most sectors — no government approval needed
  • Both NRIs and foreign nationals can be shareholders with no upper limit on ownership percentage

BEST FOR:

Startups, tech companies, e-commerce, service companies, manufacturing, any business seeking investment

KEEP IN MIND:

Requires one Indian resident director; annual compliance filings mandatory

 

2. Public Limited Company

A Public Limited Company is suitable for raising capital from the public, listing on stock exchanges, or having a large number of investors. It is more complex to run but allows unlimited shareholders.

Key Facts:

  • Minimum 7 shareholders and 3 directors required
  • No upper limit on number of shareholders
  • Can issue shares to the general public
  • FDI is allowed under the Automatic Route for most sectors
  • Subject to stricter compliance and governance requirements

 

3. Limited Liability Partnership (LLP)

An LLP is a hybrid between a traditional partnership and a company. Partners enjoy limited liability while the structure is less formal and more tax-efficient. Governed by the LLP Act, 2008.

Key Facts:

  • Minimum 2 partners required (at least 1 must be an Indian resident)
  • FDI allowed under Automatic Route only in sectors where 100% FDI is permitted and there are no performance-linked conditions
  • Lower compliance requirements compared to a Private Limited Company
  • No minimum capital requirement
  • Popular for professional services, consulting, and advisory firms

 

4. Liaison Office (Representative Office)

A Liaison Office is ideal for foreign companies that want to explore the Indian market before committing to full-scale investment. It acts as a communication bridge between the overseas parent company and Indian clients or partners.

IMPORTANT: A Liaison Office CANNOT earn income or engage in any commercial activity in India. All expenses must be funded by the parent company through inward remittances.

Permitted Activities:

  • Represent the parent company in India
  • Promote imports and exports
  • Promote technical or financial collaborations
  • Conduct market research and analysis
  • Attend trade fairs and events

Regulatory Requirement: RBI approval required under FEMA through an Authorized Dealer (AD) Category-I bank.

 

5. Branch Office

A Branch Office is an extension of the foreign parent company in India. Unlike a Liaison Office, a Branch Office CAN carry out business activities and generate income — but only in specific areas permitted by the RBI.

Permitted Activities Include:

  • Export and import of goods
  • Professional and consultancy services
  • Research activities
  • Technical and financial collaboration promotions
  • IT services and development

Note: A Branch Office CANNOT manufacture goods in India (except in Special Economic Zones). The parent company must have a profit track record for the preceding 5 financial years and a net worth of at least USD 100,000.

 

6. Project Office

A Project Office is a temporary setup that a foreign company establishes specifically to execute a contract awarded by an Indian company. Once the project is complete, the office is wound up.

Key Conditions:

  • The foreign company must have been formally awarded a contract from an Indian entity
  • Funding must come from the parent company or through the Indian project
  • Can only carry out activities related to that specific project
  • Must be set up within 6 months of receiving RBI permission

 

7. Wholly Owned Subsidiary (WOS)

A Wholly Owned Subsidiary is same as  Private Limited Company where the foreign parent company owns 100% of the shares. It is the preferred route for multinational corporations (MNCs) wanting full control over their India operations. As also written above : Most foreign companies entering India register as a Private Limited Company because it offers significant exemptions under the Companies Act, 2013.

In simple terms: When that private company’s shares are 100% held by a parent corporation, it is classified as a Wholly Owned Subsidiary.

 

8. Joint Venture (JV) with an Indian Partner

A Joint Venture is when a foreign company or NRI teams up with an Indian partner to form a company in India. Both parties share ownership, resources, and profits in an agreed ratio. Great for sectors where 100% foreign ownership is not permitted.

Two Main Types:

  • Equity JV: Both parties hold equity shares in a newly formed Indian company
  • Contractual JV: Partners collaborate for a specific project without forming a new company

WARNING: What Foreigners & NRIs CANNOT Set Up in India

Under FEMA guidelines, FDI is NOT allowed in the following business structures. Foreigners and most NRIs CANNOT set these up in India:

→  Sole Proprietorship (individual trading business)

→  General Partnership Firm

→  One Person Company (OPC) — only available for Resident Indians

 

How to Choose the Right Company Type in India

Choosing the right company in India is one of the most important decisions you will make. Here is a simple 4-step guide:

Step 1: Define your business purpose
Are you testing the market? Providing a service? Building a startup? If you just want to explore India, a Liaison Office is perfect. If you want to run a full business, go for a Private Limited Company.

Step 2: Check your sector’s FDI rules
Most sectors allow 100% FDI under the Automatic Route — no government permission needed. But some sectors (insurance, defense, multi-brand retail) have FDI limits or require government approval. Always check the latest FDI policy.

Step 3: Consider your long-term plan
If you plan to hire staff, raise funding, or grow significantly, a Private Limited Company or WOS is your best bet. For temporary projects, a Project Office may suffice.

Step 4: Think about liability protection
Both Private Limited Companies and LLPs offer limited liability protection — your personal assets are safe if the business faces financial problems. This is a major advantage over a sole proprietorship or general partnership.

For most foreigners and NRIs — whether from the USA, UK, UAE, Canada, or Australia — a Private Limited Company is the simplest, fastest, and most flexible way to start doing business in India.

 

Documents Required to Set Up a Company in India (Key Checklist Before Starting a Company in India)

The documents you need depend on your residential status. Here is a clear breakdown:

A. For Foreign Nationals Living Abroad

  • Valid Passport (mandatory identity proof)
  • Address proof: Bank statement, utility bill, or driving license (not older than 2 months)
  • Passport-size photograph
  • All documents must be NOTARIZED by a Public Notary AND APOSTILLED by the competent authority in your country

B. For NRIs (Non-Resident Indians)

  • Valid Indian Passport
  • Current address proof from country of residence (driving license, bank statement, or utility bill — not older than 2 months)
  • Passport-size photograph
  • Address proof must be NOTARIZED by a Public Notary in country of residence

C. For the Company (All Applicants)

  • Digital Signature Certificate (DSC) for all directors
  • Director Identification Number (DIN)
  • Memorandum of Association (MoA)
  • Articles of Association (AoA)
  • Registered office address proof in India (rent agreement / sale deed + NOC from landlord)
  • PAN card application for the company

D. For Branch / Liaison / Project Office

  • Certificate of Incorporation of parent company (notarized + apostilled)
  • Memorandum & Articles of Association of parent company
  • Audited balance sheet of parent company for last 3-5 years
  • Net worth certificate certified by a CPA/CA
  • Board Resolution authorizing the India setup
  • Banker’s report from the parent company’s bank
  • All documents must be in English or officially translated

Note for US-Based Applicants: Documents for US residents should be notarized by a US Notary Public and apostilled by the competent US state authority. India and the US are both members of the Hague Apostille Convention, making this process straightforward.

 

Benefits of Incorporating a Company in India

Why should a foreigner or NRI set up a company in India? Here are the most compelling reasons:

World’s Fastest-Growing Major Economy

India is projected to surpass $5 trillion GDP soon. It is the world’s 6th largest economy by GDP, growing rapidly. Getting in now means getting in early.

1.4 Billion Consumers

Access to one of the world’s largest consumer markets with a fast-growing middle class, young population (about 65% of the people are under the age of 35), and rising digital adoption.
Talent & Innovation Hub

India produces millions of STEM graduates annually. Skilled talent at competitive costs makes India a top destination for tech companies, R&D, and service centers.

 Low Operating Costs

Office rental, labor, and operational costs in India are significantly lower than in the US, UK, or Europe — giving your business a major cost advantage. The cost is almost 50-60% lower than in Western countries.
Limited Liability Protection

As a shareholder, your personal assets are fully protected. The company’s debts and liabilities are the company’s responsibility — not yours personally.

 Easy Profit Repatriation

India allows foreign investors to freely repatriate profits, dividends, and capital back to their home country after paying applicable taxes — subject to RBI guidelines.
Thriving Startup Ecosystem

India is the world’s 3rd largest startup ecosystem. Programs like Startup India, Make in India, and PLI schemes offer incentives, tax exemptions, and easier compliance for new ventures.

 Digital-First Government

Company registration, tax filings, GST, and compliance can all be managed online — making it easier for NRIs abroad to run their Indian company remotely.

 

Company Law and Regulations in India

If you are setting up a company in India as a foreigner or NRI, here are the key laws and regulatory bodies you need to know about:

Companies Act, 2013 The primary law governing company incorporation, management, director responsibilities, shareholder rights, and annual compliance in India. Administered by the Ministry of Corporate Affairs (MCA).
FEMA, 1999 The Foreign Exchange Management Act governs all foreign exchange transactions — including FDI, share issuance to non-residents, repatriation of funds, and the opening of branch/liaison offices. Administered by the Reserve Bank of India (RBI).
FDI Policy (DPIIT) The Foreign Direct Investment Policy, issued by the Department for Promotion of Industry and Internal Trade, defines which sectors allow FDI and on what terms — Automatic Route vs. Government Approval Route.
Income Tax Act, 1961 Governs taxation of companies in India. Corporate tax rate for domestic companies is 22-30% depending on the nature of the company. Foreign companies pay approximately 35%+ on Indian income. Administered by Income Tax Department of India.
GST (Goods & Services Tax) All businesses with annual turnover above Rs. 20 lakhs must register for GST — a unified indirect tax on goods and services.
LLP Act, 2008 Governs the formation, management, and compliance of Limited Liability Partnerships. Provides a flexible and tax-efficient structure for professionals and service businesses.

How Mercurius can help set up your company in India?

Mercurius is a trusted legal and compliance advisory firm, with deep expertise in helping foreigners, NRIs, and global businesses set up and operate companies in India. We have assisted clients from over 60 countries — including the USA, UK, UAE, Canada, Singapore, and Australia.

Our Services Include:

  • End-to-end company registration
  • RBI / MCA / FEMA filings
  • DIN & DSC for foreign nationals
  • Liaison & Branch & Project Office setup
  • GST, TDS & annual compliance
  • Virtual Indian Director service
  • Transfer pricing & tax advisory
  • Post-incorporation support

Our 5-Step Process:

1. Free Consultation
We understand your business objectives, sector, country of origin, and investment size — and recommend the best company structure for your goals.

2. Document Preparation & Review
We guide you through the exact documents needed, review them for completeness, and advise on notarization and apostille requirements based on your country.

3. Company Incorporation
We file all applications with the MCA, RBI, and other authorities on your behalf — handling DSC, DIN, name reservation, MoA, AoA, and incorporation certificate.

4. Post-Incorporation Compliance
We handle PAN, TAN, GST registration, FEMA reporting, RBI filings, annual returns, board meetings, and all ongoing statutory compliance so you can focus on your business.

5. Ongoing Advisory & Support
From tax planning to repatriation of profits to scaling your India operations — Mercurius remains your trusted partner every step of the way.

 

Ready to Set Up Your Company in India?

Contact Mercurius today for a free company set up consultation in India. We handle everything — from registration to compliance — so you can focus on growing your business.

Visit: www.masllp.com  |  Email: info@masllp.com India +91 966 777 9615