Starting a company in India as an NRI or foreign investor: entity, FDI route and FEMA filings
Private limited company, LLP or branch office? How the resident director rule, the FDI automatic route, SPICe+ incorporation and FC-GPR reporting work when you invest into India from abroad.
India allows foreign investment without prior approval under the automatic route, except in sectors that are prohibited, capped or need government approval, and NRIs, OCIs and foreign companies regularly set up Indian companies for trading, logistics, IT services and back-office work. The process is largely online, but three early decisions shape everything that follows: the type of entity, who will be the resident director, and how the money comes in.
1. Choose the entity
- Private limited company — the usual choice. It needs at least two directors and two members, has no minimum paid-up capital, and can take up to 100% foreign investment under the automatic route unless the sector is prohibited, capped or needs approval.
- Limited liability partnership — can take foreign investment under the automatic route where 100% FDI is automatic for the sector and there are no FDI-linked performance conditions. It needs at least two designated partners, one of them resident in India.
- One Person Company — since 1 April 2021 open to any Indian citizen, whether resident in India or not. Foreign nationals and OCI holders cannot form one.
- Branch, liaison or project office — for a foreign company that wants a presence without a separate Indian company, approved through an authorised dealer bank under the RBI's rules.
2. Plan the resident director
Under section 149(3) of the Companies Act, 2013, every company needs at least one director who stays in India for 182 days or more in the financial year; for a new company the test applies proportionately at the end of its first financial year. For an LLP, at least one designated partner must be resident in India, which since 1 April 2022 means 120 days or more in the financial year. If all the founders live abroad, this is usually the first practical question to solve.
3. Check the FDI route for your activity
Under the Consolidated FDI Policy and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, foreign investment of up to 100% is allowed under the automatic route in sectors that are not specifically listed. Wholesale (cash and carry) trading and e-commerce marketplaces are 100% automatic; the inventory model of e-commerce remains prohibited, except — since 3 September 2026 — for an inventory model used exclusively to export goods manufactured or produced in India.
Investment by an entity of a country that shares a land border with India, or where the beneficial owner is situated in or is a citizen of such a country, needs government approval. Press Note 2 (2026 Series) now defines 'beneficial owner' by reference to India's anti-money-laundering rules, and investments with smaller land-border ownership must be reported. Investment by NRIs and OCIs on a non-repatriation basis is treated as domestic investment, which is generally outside the FDI caps and FC-GPR reporting, subject to the restrictions in Schedule IV of the Non-debt Instruments Rules; the sale proceeds are not freely repatriable.
4. Incorporate through SPICe+
Companies are incorporated on the MCA portal using SPICe+ (Form INC-32). Part A reserves the name; Part B incorporates the company and issues the PAN, TAN and DIN for up to three directors. The linked AGILE-PRO-S form covers EPFO, ESIC, professional tax and shops and establishments registration (where the state requires it), the bank account and, optionally, GST. Identity and address documents of foreign subscribers must be notarised and, depending on the country, apostilled or consularised.
5. Report the investment under FEMA
- Shares must be issued within 60 days of receiving the money, and Form FC-GPR filed on the RBI's FIRMS portal within 30 days of issuing them.
- Form LLP(I) within 30 days of receiving a foreign capital contribution into an LLP.
- The annual FLA return by 15 July each year for every company or LLP with foreign investment.
Missed deadlines can generally be regularised by paying a late submission fee within three years of the due date, but a clean record makes later funding rounds and repatriation easier.
6. Tax and GST from the start
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. A domestic company can opt for the concessional rate of 22% plus surcharge and cess under section 200 of the new Act (formerly section 115BAA), if it gives up specified deductions and incentives; once chosen, the option cannot be withdrawn. GST registration is required once turnover crosses ₹40 lakh for suppliers of goods only in states that adopted that limit, or ₹20 lakh otherwise (₹10 lakh in some special category states), and immediately — regardless of turnover — for inter-state supplies of goods and the other cases listed in section 24, such as certain e-commerce sellers and operators.
A practical sequence
- Decide the entity and who will be the resident director.
- Confirm the FDI route for your activity and where the funds will come from.
- Prepare and attest the foreign documents.
- Incorporate through SPICe+ and open the bank account.
- Bring in the capital, issue shares within 60 days and file FC-GPR within 30 days of issue.
- Put the first-year compliance calendar in place: INC-20A within 180 days, the first auditor within 30 days, then the annual filings and the FLA return.
See our India company setup page or talk to our team about your plans.
Frequently asked questions
Can an NRI set up a private limited company in India?
Yes. An NRI can be a shareholder and director of an Indian private limited company. The company needs at least two directors, one of whom stays in India for 182 days or more in the financial year.
Do foreign investors need RBI approval to invest in an Indian company?
No prior approval from the RBI or the Government is needed under the automatic route. Government approval is required in listed sectors and where the investor or its beneficial owner is from a country sharing a land border with India. The investment is then reported in Form FC-GPR within 30 days of issuing shares.
What is the difference between repatriable and non-repatriable NRI investment?
Investment on a repatriation basis is foreign investment and follows the FDI rules and reporting. Investment by NRIs and OCIs on a non-repatriation basis under Schedule IV of the Non-debt Instruments Rules is treated as domestic investment.
Sources: Companies Act, 2013 (sections 3, 10A, 139 and 149); Companies (Incorporation) Rules, 2014 and the Companies (Incorporation) Amendment Rules, 2021; LLP Act, 2008, as amended in 2021; Consolidated FDI Policy Circular of 2020; DPIIT Press Notes 2 and 3 (2026 Series); Foreign Exchange Management (Non-debt Instruments) Rules, 2019; FEMA 395/2019-RB, as amended; FEM (Non-debt Instruments) Amendment Rules, 2026; RBI FED Master Direction No. 10/2015-16; RBI A.P. (DIR Series) Circular No. 16 dated 30 September 2022 (late submission fee); Income-tax Act, 2025 (section 200); CGST Act, 2017 (sections 22 and 24) and Notification No. 10/2019-Central Tax.