India market entry, a foreign company's complete playbook.

Six legal entity options for foreign company in India:

1. Wholly-Owned Subsidiary (Pvt Ltd) — the default. Separate legal entity, 100% foreign ownership, limited liability, standard corporate tax, easy to operate. Choose if: you'll have Indian employees, invoice Indian customers, build material India business. See WOS guide.
2. Joint Venture (Pvt Ltd with Indian partner) — same as WOS but with Indian equity partner. Choose if: regulated sector with FDI cap (defence 74%, insurance 74%, print media 26%), or local market knowledge / government relationship is essential.
3. Branch Office — extension of foreign parent, not a separate entity. Requires RBI prior approval. Limited to specified activities (export/import, consultancy, representation, R&D). Choose if: narrow operational scope, parent wants direct accountability.
4. Liaison Office — representative office only; cannot do business. RBI prior approval. Cannot invoice; expenses funded by parent remittance. Choose if: exploratory presence, market research, no revenue plan.
5. Project Office — for a specific project (government contract, infrastructure). Time-bound.
6. LLP — foreign investment permitted only in specific sectors + under automatic route. Less common for foreign parents; chosen occasionally for small operations.

For 90%+ of foreign companies entering India for business, the answer is WOS (Pvt Ltd). See the full comparison in our Branch vs Liaison vs WOS guide.

India's FDI policy:

• Automatic route: 100% FDI allowed, no prior government approval. Applies to most sectors: IT/SaaS, trading, manufacturing, services, retail trading (single-brand under conditions).
• Approval route: FDI capped (e.g., multi-brand retail 51%, print media 26%, broadcasting 49%, insurance 74%, defence 74%, telecom under conditions). Requires prior Government approval via FDI portal (DPIIT).
• Prohibited sectors: lottery, gambling, chit funds, Nidhi companies, trading in transferable development rights, real estate business (not construction), atomic energy, railway operations (certain areas), tobacco manufacturing.
• Press Note 3 (April 2020): for countries sharing land border with India (China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, Afghanistan) OR beneficial ownership from such countries, prior government approval mandatory regardless of sector / FDI cap.

Pre-check your sector + beneficial ownership before incorporation.

• Corporate tax: 25% / 22% (Section 115BAA) / 15% (Section 115BAB new manufacturing). See corporate tax guide.
• Minimum Alternate Tax (MAT): 15% on book profit (does not apply if 115BAA / 115BAB opted).
• Dividend Distribution Tax (DDT): abolished from April 2020. Dividend taxable in shareholder's hands (foreign parent → Section 195 TDS at treaty rate).
• GST: 18% standard; 5% / 12% reduced; 28% luxury. Monthly GSTR-1 + 3B. Annual GSTR-9 if turnover > INR 2 crore.
• IGST on imports: paid on customs value + Basic Customs Duty; credit available if used for GST-taxable supply.
• Customs duty: Basic Customs Duty + Social Welfare Surcharge + IGST. HSN-wise rates. Free Trade Agreement countries (ASEAN, Japan, Korea, UAE post-CEPA, UK post-CETA 2026) have preferential rates.
• Transfer pricing: Form 3CEB + benchmarking study. See TP guide.
• Equalisation Levy: 2% on digital services payments to non-residents (though under BEPS Pillar 1 phase-out).

• Employment contracts: Indian subsidiary hires Indian employees directly. Standard offer letter + employment agreement + leave + termination terms. Governed by Shops & Establishment Act (state-specific) + Industrial Employment (Standing Orders) Act.
• PF (Provident Fund): 12% employer + 12% employee contribution. Mandatory if headcount >= 20.
• ESI (Employee State Insurance): 3.25% employer + 0.75% employee. Mandatory if gross salary <= INR 21,000/month.
• Professional Tax: state-specific, max INR 2,500/year per employee.
• Gratuity: 15 days salary per completed year of service, payable on exit after 5 years. Provision required in books.
• Section 192 TDS: employer deducts income tax on employee salary monthly.
• Alternative - EOR: if you don't yet have Indian subsidiary, use Employer of Record. See EOR guide.

• DPDP Act 2023: India's data protection law (effective FY 2024-25 onwards). Covers 'personal data' of Indian residents. Consent-based processing, data principal rights, breach notification, cross-border transfer restrictions (specific countries approved by govt). Fines up to INR 250 crore for violation.
• IP registration: trademark + copyright + patent + design — foreign company can register directly or via Madrid Protocol (trademark) / PCT national phase (patent). See India IP guide.
• Banking: current account for Indian subsidiary with HDFC / ICICI / Kotak / Axis / foreign bank Indian branch (Citi, DBS, HSBC). AD-I category banks handle FEMA remittance.
• Repatriation: dividend / royalty / FTS / interest to foreign parent. See repatriation guide.

Last updated: 2026-10-13.