A foreign company is defined under the Companies Act as an entity incorporated outside India which has a place of business in India whether by itself or through an agent. Any company incorporated in India with foreign investment is regarded as an Indian company.

As per the recent announcement by the ministry of corporate affairs, the US, Singapore, and the UK have the largest business presence in India in terms of operations by active foreign companies, followed by China and Hong Kong. The Companies Act defines a foreign company as an organization formed outside of India that maintains a place of business in India, either directly or through an agent. A corporation is considered to be Indian if it was founded in India with foreign capital.

A total of 3,303 active foreign businesses were operating in India as of March 2022. 58 foreign firms were registered in India during FY22. These numbers showcase the scope of cross-border operations conducted by foreign corporations in India without setting up local subsidiaries there, a practice that is typical in the service sector.

According to data from the ministry, there are 424 active foreign firms with operations in India from the US, followed by 261 from Singapore, 255 from the UK, 189 from China and Hong Kong collectively, and 164 from Japan. Only 3,303 foreign companies were functioning as of the end of FY22, statistics showed, although over 5,000 have been registered in India yet.

In 2022, India had so far attracted a sizable amount of FDI. According to the most recent government statistics, India received foreign investments worth USD 42.5 billion between January and September 2022. Inflows of FDI into the nation reached an all-time high of USD 84.84 billion in 2021–22.

Anurag Jain, secretary of the Department for the Promotion of Industry and Internal Trade (DPIIT), stated that several initiatives, including the liberalization of the FDI policy, steps to promote further ease of doing business, lowering the burden of compliance on the industry, the implementation of the PLI schemes, and the PM GatiShakti National Master Plan for integrated infrastructure development, have made India the preferred investment destination. Jain also remarked that the National Single Window System (NSWS) portal's development is fundamentally altering how companies now seek approvals and will also make it easier for investors to enter India. He also noted that free trade agreements with the UAE and Australia will also help India attract a healthy amount of FDI inflows in 2022–2023.