How to Set Up a Private Limited Company in India as a Foreigner: 2026 Complete Guide

Editor's note (updated 27 Sep 2026). This post was first published on 4 May 2026. We have corrected or updated the following points.

1. FIPB was abolished in May 2017. Government-route proposals now go to the administrative ministry through the Foreign Investment Facilitation Portal (FIFP). The original reference to an "FIPB successor" has been clarified.
2. Sector list corrected.
   • Telecom has been 100% automatic since 2021.
   • Insurance can take up to 100% FDI under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act 2025, in force from 5 Feb 2026, subject to conditions.
   • Brownfield pharma needs government approval only above 74%.
   • Defence is automatic up to 74%.
   • We have added the land-border-country rule (Press Note 3 of 2020).
3. Tax sections. From 1 Apr 2026 the Income-tax Act 2025 applies. The 22% regime (old s.115BAA) is now s.200, and the 15% regime (old s.115BAB) is s.201. The 15% regime is not available to new companies: manufacturing had to start by 31 Mar 2024. Transfer pricing (old ss.92–92F) sits in Chapter X of the 2025 Act.
4. Resident director. The 182-day test counts days in the financial year, not the "preceding calendar year".
5. FC-GPR. It is due within 30 days of the allotment of shares, and is filed on RBI's FIRMS portal through the AD bank. Shares must be allotted within 60 days of receiving the money. A delay attracts a Late Submission Fee. It is not an "automatic penalty".
6. Government fees. MCA fees are nil for authorised capital up to ₹15 lakh. The main cost is state stamp duty.
7. New points added:
   • A non-resident managing director may need Central Government approval.
   • Director KYC is now due once every three years (from 31 Mar 2026).
   • The annual FLA return is due by 15 July.

India's business environment has never been more accessible to foreign investors. Incorporation timelines have shortened, digital processes have replaced most paper filings, and the FDI regime permits 100% foreign ownership in most sectors under the automatic route. This guide walks through each step of setting up a private limited company in India as a foreign national or foreign company in 2026.

Why a private limited company?

Foreign companies can choose between a private limited company, an LLP, a branch office, a liaison office or a project office. For most commercial purposes, including technology, manufacturing, services and distribution, the private limited company is preferred because it:

• permits 100% foreign ownership in most sectors under the automatic route
• gives shareholders limited liability
• can employ staff, own property and contract in its own name
• can opt for the 22% corporate tax regime (s.200 of the Income-tax Act 2025, formerly s.115BAA), about 25.17% with surcharge and cess
• can receive FDI and make overseas investments, subject to FEMA reporting
• is the structure Indian clients and banks recognise most readily

Step 1: FDI eligibility and sector check

Before you incorporate, check that the activity is permitted under DPIIT's Consolidated FDI Policy. Most sectors are on the automatic route, where no prior approval is needed and the investment is reported afterwards. Others are on the government route, where approval comes from the administrative ministry through FIFP. FIPB was abolished in 2017.

Land-border rule. Any investment from an entity of a country that shares a land border with India, or whose beneficial owner is in or is a citizen of such a country, needs government approval whatever the sector (Press Note 3 of 2020).

Step 2: Documents required

• Foreign parent: certificate of incorporation, charter documents, a board resolution approving the investment, and details of beneficial ownership.
• Foreign directors: passport, overseas address proof dated within the last 2 months, and a photograph.
• Registered office: rent agreement or owner's NOC, and a recent utility bill.

Documents executed abroad must be apostilled (Hague Convention countries) or consularised, and translated into English where needed.

Steps 3–8: The incorporation process

Step 3: DSC. Each director obtains a Class 3 Digital Signature Certificate. For foreign nationals this can be done remotely with video verification, usually in 2–3 business days.

Step 4: DIN. For up to three proposed directors without a DIN, it is allotted through the SPICe+ form itself.

Step 5: Name reservation (SPICe+ Part A). Propose up to two names. They must comply with the Companies (Incorporation) Rules 2014 and end in "Private Limited". Approval takes 1–3 business days.

Step 6: SPICe+ Part B, AGILE-PRO-S, eMoA / eAoA. Part B is the main incorporation form. AGILE-PRO-S covers:

• EPFO and ESIC registration (mandatory)
• a bank account
• optional GSTIN
• Professional Tax and Shops registration in certain states

Processing takes 3–7 business days once the documents are in order.

Step 7: Certificate of Incorporation. MCA issues the certificate with the CIN, PAN and TAN. The company exists from this date.

Step 8: FEMA reporting (FC-GPR).

• Allot shares within 60 days of receiving the foreign remittance.
• File Form FC-GPR on RBI's FIRMS portal, through the AD bank, within 30 days of allotment. This also applies to subscriber shares issued on incorporation.
• Filing late attracts a Late Submission Fee under RBI's formula: ₹7,500 + 0.025% × amount × years of delay. This is available for up to three years. After that the delay has to be compounded.

Timeline and indicative costs

A straightforward case takes 10–15 business days if the documents are ready. Add 5–15 business days to obtain apostilled documents from overseas. Opening the bank account, GST registration and IEC (for goods) take a further 5–10 business days.

Government cost. MCA fees are nil for authorised capital up to ₹15 lakh. State stamp duty on the MoA and AoA varies, usually from a few hundred to a few thousand rupees at this capital level. Professional fees vary with scope.

Post-incorporation compliance checklist

• FC-GPR: within 30 days of allotment.
• First board meeting: within 30 days of incorporation.
• First auditor: appointed by the board within 30 days.
• INC-20A (commencement of business): within 180 days, after the subscription money is received.
• GST registration: before taxable supplies, and within 30 days of becoming liable.
• PF and ESI: PF becomes mandatory at 20 employees and ESI at 10 (in notified areas). Register via the common registration and set up payroll under the Labour Codes.
• State registrations: Shops & Establishments, Professional Tax and LWF, according to the state.
• IEC: for import or export of goods.
• Transfer pricing documentation: for transactions with the parent.
• FLA return: to RBI by 15 July each year.
• Director KYC: DIR-3 KYC Web is now due once every three years (from 31 Mar 2026), and whenever contact details change.

Frequently asked questions

Does a foreign company need an Indian director? Yes. Section 149(3) of the Companies Act 2013 requires at least one director who has stayed in India for 182 days or more in the financial year. Newly incorporated companies apply the test proportionately.

Many groups appoint a professional resident director, and foreign directors join the board. Appointing a non-resident as managing or whole-time director may need Central Government approval under Schedule V. Shardhan can help with resident-director arrangements.

What is the minimum share capital? There is no statutory minimum. Many foreign-owned companies start with ₹1–10 lakh. Further funding comes as equity, or as loans from the parent under RBI's external commercial borrowing framework.

Can the subsidiary contract with its foreign parent? Yes. These are international transactions with an associated enterprise and must be priced at arm's length under India's transfer pricing rules, now in Chapter X of the Income-tax Act 2025. They are also related-party transactions under s.188 of the Companies Act. Typical examples are software services, management fees, licence fees and loans.

Need help incorporating your India subsidiary? Shardhan Corporate Consultants LLP handles the full process, from name reservation and DSC/DIN to FEMA reporting and post-incorporation compliance. Contact us for a no-obligation consultation.

General information, not legal advice. Last reviewed 27 Sep 2026.