How to Set Up a Private Limited Company in India as a Foreigner — 2026 Complete Guide
India's business environment has never been more accessible to foreign investors. Incorporation timelines have shortened dramatically, digital processes have replaced most paper-based filings, and the FDI regime now permits 100% foreign ownership in most sectors via the automatic route. This guide walks through every step of setting up a Private Limited Company in India as a foreign national or foreign corporate entity in 2026.
Why a Private Limited Company for Foreign Investors?
Foreign companies entering India can choose between several entity types: a Private Limited Company, a Limited Liability Partnership (LLP), a Branch Office, a Liaison Office, or a Project Office. For most commercial purposes — technology operations, manufacturing, services, or distribution — the Private Limited Company is the preferred structure because it:
- Permits 100% foreign ownership in most sectors under the automatic FDI route
- Provides limited liability protection for shareholders
- Can employ staff, own property, and enter into contracts in its own name
- Is eligible for the lower 22% corporate tax rate under Section 115BAA (or 15% for new manufacturing companies under Section 115BAB)
- Can receive FDI and make overseas investments (ODI) with RBI reporting
- Is the most recognised structure for business relationships with Indian clients and banks
Step 1: FDI Eligibility and Sector Check
Before incorporating, verify that your intended business activity is permitted under India's FDI Policy. Most sectors are under the "Automatic Route" (no prior government approval needed), but some — including defence, media, telecommunications, insurance, and brownfield pharmaceutical acquisitions — require prior approval from the relevant ministry or FIPB successor.
The current FDI Policy is published by the Department for Promotion of Industry and Internal Trade (DPIIT). Key automatic route sectors relevant to most foreign investors include: IT and IT-enabled services (100%), e-commerce (100% for B2B), manufacturing (100%), financial services (74% in private banks, 100% for NBFCs subject to conditions), real estate (100% for construction development).
Step 2: Documents Required
For a foreign corporate shareholder incorporating an Indian subsidiary, you will need:
- For the foreign parent company: Certificate of Incorporation, Memorandum and Articles of Association, board resolution authorising the India subsidiary investment, and apostilled/notarised copies of all documents
- For proposed foreign directors: passport copy, overseas address proof (bank statement or utility bill dated within 2 months), PAN card (if already held), and passport-size photograph
- For the proposed registered office in India: rental agreement or no-objection certificate from the property owner, and a utility bill for the property
Documents in foreign languages must be accompanied by a notarised English translation. Documents originating outside India must be apostilled under the Hague Apostille Convention (or consularised for countries not in the Convention).
Step 3–8: The Incorporation Process
Step 3: Obtain Digital Signature Certificates (DSC)
All proposed directors must obtain a Class 3 Digital Signature Certificate (DSC) from a licensed Certifying Authority in India. DSCs are used to digitally sign all MCA filings. For foreign nationals, DSCs can be obtained remotely through a video verification process. This typically takes 2–3 business days.
Step 4: Obtain Director Identification Numbers (DIN)
Each proposed director must have a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). For new incorporations, DINs are allotted simultaneously through the SPICe+ form — no separate application is needed for directors with no existing DIN.
Step 5: Name Reservation (SPICe+ Part A)
Submit SPICe+ Part A on the MCA portal to reserve the company name. Two proposed names can be submitted, in order of preference. The name must comply with the Companies (Incorporation) Rules, 2014 — it must not be identical or similar to existing companies, must not contain prohibited words, and must end with "Private Limited." Name approval typically takes 1–3 business days.
Step 6: File SPICe+ Part B, AGILE-PRO-S, and eMoA/eAoA
SPICe+ Part B is the main incorporation form. Along with it, you file: AGILE-PRO-S (for GST registration, PF/ESIC registration, bank account opening, and professional tax in Maharashtra/Karnataka simultaneously), eMoA (electronic Memorandum of Association), and eAoA (electronic Articles of Association). Filing and processing takes 3–7 business days.
Step 7: Certificate of Incorporation
Upon successful processing, MCA issues a Certificate of Incorporation along with the CIN (Corporate Identity Number), PAN, and TAN of the company. The company legally exists from this date.
Step 8: FEMA Reporting — FC-GPR
Within 30 days of the foreign shareholder's money arriving in the company's bank account and shares being allotted, the company must file Form FC-GPR (Foreign Currency Gross Provisional Return) with the Reserve Bank of India through the company's Authorised Dealer Bank (AD Bank). This is the critical FEMA compliance step that legitimises the FDI. Missing this deadline attracts automatic penalties.
Timeline and Indicative Costs
The total incorporation timeline for a straightforward case with all documents ready is 10–15 business days. If apostilled documents need to be obtained from overseas, add 5–15 business days depending on the country. Post-incorporation steps (bank account opening, GST registration, import-export code) take a further 5–10 business days.
Government fees for incorporation are based on authorised capital and are relatively modest — typically INR 2,000–15,000 for a standard authorised capital of INR 1 lakh–10 lakh. Professional fees for the complete incorporation process vary; at Shardhan, our all-inclusive incorporation package covers name reservation, SPICe+ filing, FEMA reporting, and initial compliance setup.
Post-Incorporation Compliance Checklist
- FC-GPR filing with RBI — within 30 days of share allotment
- Board meeting — first board meeting within 30 days of incorporation
- Auditor appointment — within 30 days
- Commencement of business declaration (Form INC-20A) — within 180 days of incorporation, after depositing subscribed share capital
- GST registration — before commencing taxable supplies
- PF and ESIC registration — before first payroll
- Import-Export Code (IEC) — if importing or exporting goods/services
- Transfer Pricing documentation — for any related-party transactions with the overseas parent
Frequently Asked Questions
Does a foreign company need an Indian director?
Yes. Under Section 149 of the Companies Act, 2013, every Private Limited Company must have at least one director who is a resident in India (i.e., has stayed in India for at least 182 days in the preceding calendar year). Many foreign companies appoint a professional nominee director in India to meet this requirement while their foreign directors serve as additional directors or managing directors. Shardhan can assist with professional nominee director arrangements.
What is the minimum share capital for an India Private Limited Company?
There is no mandatory minimum paid-up capital for a Private Limited Company under current MCA rules. In practice, most foreign-invested companies start with INR 1–10 lakh as authorised and paid-up capital, with the understanding that additional funds will flow as inter-company loans or further equity investment as the business grows.
Can the India subsidiary enter into contracts with the foreign parent?
Yes — but all transactions between the Indian subsidiary and its foreign parent are "related party transactions" subject to Indian Transfer Pricing regulations (Section 92 of the Income Tax Act, 1961). These transactions must be priced at arm's length and documented annually in a Transfer Pricing Study. Common inter-company transactions include software development services, management fee arrangements, technology licence fees, and loans.
Need help incorporating your India subsidiary?
Shardhan Corporate Consultants LLP handles the complete incorporation process — from name reservation and DSC/DIN to FEMA reporting and post-incorporation compliance. Contact us for a no-obligation consultation.