A Guide to Setting Up New Business In India For Foreigners


An entrepreneur is someone who makes profitable and possible what seems unviable and impossible to everyone else. For entrepreneurs from across the globe who are looking at new business set up in India, this article will be a great help. For companies, looking for India entry services or company registration services, this article will provide a guideline for the same.

Following sectors are prohibited where foreigners are not allowed to invest directly or indirectly in India:

i) Lottery Business including private lottery/Government, online lotteries, etc.
ii) Betting and Gambling including casinos etc.
iii) Chit funds
iv) Nidhi company
v) Trading in Transferable Development Rights (TDRs)
vi) Real Estate Construction or Business of Farm Houses
vii) Manufacturing of cigarillos and cigarettes, Cigars, cheroots, of tobacco or tobacco Substitutes
viii) Sectors/ Activities not open to private sector investment e.g. Railway Transport and Atomic Energy (other than permitted activities).

It is always advisable for a foreign investor to get a feel of the country before making a huge investment. For testing, establish an LO (Liaison Office) or BO (Branch Office) in India is ideally suited.

A Liaison Office undertakes the following activities:

Represent in India the group/parent companies
Promoting import from/ export to India
Promoting financial/technical collaboration between Indian companies and group/parent companies.
A communication channel between the Indian company and the parent company.

A Branch Office undertakes the following activities:

Import/ Export of goods.
Rendering consultancy or professional services.
Carrying out research in areas in which the parent company is engaged.
Rendering services in the development of software and information technology.
Foreign Shipping/ Airline Company.

The director and the first stakeholders who Indian citizens of the new company need to get a PAN from Income Tax Department of Government of India. You can contact FFMC for services related to this.

Each of the stakeholder and directors of the company needs to get a DIN (Director Identification Number).
One promoter should have the digital signature.

|Decide the capital of the proposed company.

Decide the objects of the proposed company.

Selecting at least one suitable name indicative of the main object of the company.

Make sure the selected name doesn’t resemble the name of any other already registered company.

Apply to the concerned registrar of companies (RoC) to check for the availability of the name by logging into INC-1 portal. A fee of 1000 Rs has to be paid.

After getting the approval for name, the applicant can apply for registration of the new company.

Arrange for the memorandum and article by RoC and printing for the same.

Arrange for the stamping of article and memorandum with appropriate stamp duty.

Get the memorandum and articles signed by at least two subscribers and witnessed by at least one person.

Make sure the memorandum and article is dated after the date of stamping.

Login to the www.mca.gov.in portal and fill the following forms.

Application for incorporate of a company form – INC-7 including INC -8 and INC -9

Notice of situation of registered office of the company. INC -22

Particulars of the directors managers on secretary- Form – DIR22

Submission of proof of identity and proof of address.

Submission of all the above mentioned form after attaching digital signature and pay the required registration fee.

Once the processing of the form is completed, corporate identity is generated. Obtain Certificate of Incorporation from RoC.