Guide to Doing Business in India
India is one of the world's most compelling business destinations — but navigating its regulatory, tax, and employment landscape requires specialist knowledge. This guide covers everything international companies need to know before entering India.
Why India?
India offers a rare combination of scale, talent, and growth that no other market can match. Here is why the world's leading companies are accelerating their India strategies.
World's Fastest-Growing Major Economy
India is projected to become the world's third-largest economy by 2027. GDP growth consistently outpaces global averages, driven by domestic consumption, infrastructure investment, and a booming digital economy.
Largest Talent Pool in the World
India produces over 1.5 million engineering graduates annually. With a median age of 28, it offers an unmatched combination of technical depth, English proficiency, and cost competitiveness.
Strategic Time Zone Advantage
IST (UTC+5:30) bridges US and European business hours — making India-based teams ideal for follow-the-sun operations, customer support, and global product development.
Digital Infrastructure at Scale
India's UPI payment system, Aadhaar identity infrastructure, and 5G rollout have created one of the world's most advanced digital ecosystems — enabling rapid business operations from day one.
Choosing Your India Entry Structure
The right structure depends on your business objectives, timeline, and risk appetite. Here is a comparison of the four main options for foreign companies entering India.
Private Limited Company (Pvt Ltd)
Best for: Most foreign companies entering India
Timeline
Pros
- Limited liability
- Easy to raise investment
- Widely recognised structure
Cons
- —Annual compliance requirements
- —Statutory audit mandatory
- —Requires India-resident director
Liaison Office (LO)
Best for: Market research and representation only
Timeline
Pros
- Simple structure
- No tax on liaison activities
- Low compliance burden
Cons
- —Cannot earn revenue in India
- —Cannot sign commercial contracts
- —RBI approval required
Branch Office (BO)
Best for: Foreign companies with existing operations
Timeline
Pros
- Can conduct business activities
- Profits repatriable
- No separate legal entity
Cons
- —RBI approval required
- —Restricted to parent company activities
- —Higher tax rate (40%)
Employer of Record (EOR)
Best for: Hiring India talent without an entity
Timeline
Pros
- No entity setup required
- Immediate hiring capability
- Full compliance managed
Cons
- —Not suitable for revenue-generating India operations
- —Employees on EOR payroll, not yours
India's Regulatory Landscape
Operating in India means navigating a multi-layered regulatory framework. Here are the key laws every foreign business needs to understand.
Companies Act, 2013
Governs the incorporation, management, and winding up of companies in India. Sets out director duties, shareholder rights, audit requirements, and annual filing obligations.
FEMA & FDI Policy
The Foreign Exchange Management Act and India's FDI Policy regulate foreign investment into India — including permitted sectors, investment limits, and repatriation of profits.
Income Tax Act, 1961
Governs corporate tax (22% for domestic companies, 40% for foreign branches), withholding tax (TDS), transfer pricing rules, and Permanent Establishment (PE) risk.
Labour Codes (2019–2020)
India's four Labour Codes consolidate 29 central labour laws — covering wages, industrial relations, social security (PF, ESI, gratuity), and occupational safety. Implementation is ongoing across states.
GST Framework
Goods and Services Tax applies to most business transactions in India. Foreign companies with taxable supplies in India must register for GST and file regular returns.
RBI Regulations
The Reserve Bank of India regulates foreign exchange transactions, external commercial borrowings, and the establishment of liaison and branch offices by foreign entities.
India Tax Overview
A summary of the key tax rates and obligations for foreign companies operating in India.
| Tax / Obligation | Rate |
|---|---|
| Corporate Tax (Domestic Company) | 22% + surcharge & cess (~25.17% effective) |
| Corporate Tax (Foreign Branch) | 40% + surcharge & cess (~43.68% effective) |
| Minimum Alternate Tax (MAT) | 15% of book profits |
| Dividend Distribution | Taxable in hands of recipient |
| Capital Gains (Long Term) | 10%–20% depending on asset |
| TDS on Salary | As per income tax slab |
| GST (Standard Rate) | 18% |
| Transfer Pricing | Arm's length standard |
* Rates are indicative. Consult LawSync for advice specific to your business structure and industry.
Common Challenges for Foreign Companies
These are the issues that catch international businesses off guard when entering India. LawSync helps you navigate every one of them.
Permanent Establishment (PE) Risk
Engaging employees or contractors in India without a proper structure can inadvertently create a PE — triggering Indian corporate tax on global profits. This is one of the most common and costly mistakes foreign companies make.
Use an EOR or properly structured subsidiary. LawSync assesses PE risk for every client engagement.
Labour Law Complexity
India has 40+ central labour laws and additional state-specific legislation. Compliance requirements vary by state, industry, and headcount — and are frequently updated.
LawSync's compliance team monitors all central and state-level changes and updates employment practices proactively.
Payroll & TDS Compliance
Monthly TDS deduction, PF and ESI contributions, professional tax, and payroll filings must all be completed accurately and on time — with significant penalties for errors or delays.
LawSync manages end-to-end payroll compliance — every deduction, every filing, every month.
Banking & Repatriation
Opening a corporate bank account in India requires physical presence, extensive documentation, and RBI compliance. Repatriating profits requires proper documentation and FEMA compliance.
LawSync guides clients through banking setup and ensures all repatriation transactions are FEMA-compliant.
LawSync Makes India Entry Simple
Whether you want to hire your first India employee this week or build a full subsidiary, LawSync has the right solution for your stage.
Hire in India in Days — Not Months
With LawSync's EOR service, you can hire your first India employee within 3–5 days — no entity setup, no RBI approvals, no compliance infrastructure required.
Explore EOR ServicesSet Up an India Subsidiary
When you're ready to establish a permanent India presence, LawSync manages the entire Pvt Ltd incorporation process — from name reservation to PAN, TAN, and GST registration.
Subsidiary FormationManage Your India HR & Payroll
LawSync acts as your India HR department — managing payroll, compliance, benefits, and employee lifecycle administration so you can focus on building your business.
HR Outsourcing GuideOffer Competitive Benefits
Attract and retain top India talent with a fully managed benefits package — PF, ESI, health insurance, gratuity, leave, and flexible benefit plans benchmarked to market.
Localized BenefitsFrequently Asked Questions
Do I need an India entity to hire employees in India?
No. With LawSync's Employer of Record (EOR) service, you can hire employees in India without establishing a local entity. LawSync becomes the legal employer of your India team, managing all payroll, compliance, and HR administration — while your employees work exclusively for you.
What is the fastest way to start operations in India?
The fastest route is an Employer of Record (EOR) — LawSync can onboard your first India employee within 3–5 days. If you need a revenue-generating India entity, a Private Limited Company typically takes 15–25 working days to incorporate, assuming all documentation is in order.
What are the FDI rules for foreign companies investing in India?
India's FDI policy allows 100% foreign ownership in most sectors under the automatic route (no prior government approval required). Certain sectors — defence, media, banking, insurance — have caps or require government approval. LawSync's team can advise on the applicable FDI route for your industry.
What is Permanent Establishment (PE) risk and how do I avoid it?
A Permanent Establishment is created when a foreign company has a fixed place of business or dependent agent in India — triggering Indian corporate tax on profits attributable to that PE. Common triggers include employees working in India, a fixed office, or contractors with authority to conclude contracts. LawSync structures engagements to minimise PE risk and advises on the appropriate entity structure.
How long does it take to set up a Private Limited Company in India?
Typically 15–25 working days from submission of complete documentation — covering name reservation (RUN), DIN for directors, DSC, MOA/AOA filing, Certificate of Incorporation, PAN, TAN, and GST registration. LawSync manages the entire process and has established relationships with the MCA and tax authorities.
Can I repatriate profits from my India subsidiary?
Yes. Profits from an Indian subsidiary can be repatriated as dividends after payment of applicable taxes. The process requires proper documentation, compliance with FEMA regulations, and filing with the RBI. LawSync guides clients through the repatriation process to ensure full compliance.
Related Guides & Solutions
Start Your India Journey the Right Way
Book a free consultation with LawSync's India entry experts. We will assess your situation, recommend the right structure, and get you operational — compliantly and quickly.