Skip to content

Can A Foreign National Start A Business In India Without Being A Resident?

Any person can start their business in India like foreigner citizen, Non Resident Indians (NRI), Foreign Citizens, Overseas Citizen of India card holder (OCI), Person of Indian origin (PIO). There are no. of options are available for foreign nationals to set up a business in India, but most popular forms are Limited Liability Partnership, Limited Company etc.

As per the guidelines of FEMA (Foreign Exchange Management Act), Foreign Direct Investment (FDI) is not permitted in any other classes of businesses like One Person Company (OPC), Proprietorship, & Partnership Firm. Though investments in the LLP’s are allowed, but it is mandatory to take prior approval from the Reserve Bank of India (RBI).

Limited Company can be incorporated by the foreign promoter if the no. of investors in the project is required to be above 7 and the business is needed to raise equity funds from a no. of stakeholders.

A Non-Indian National has the following options to setup up a new business in India without being a resident:

  1. Limited Company
  2. Limited Liability Partnership (LLP)
  3. Project Office /Branch Office or Liaison/Representative Office

Limited Company

A foreign national or non-Indian citizen can incorporate Company in India under the act known as Companies Act, 2013, as a Wholly Owned Subsidiary or as a Joint Venture (JV).

As per the RBI, Foreign Direct Investment (FDI) is freely permitted in Limited Companies subject to the FDI Policy in almost all business sectors. Under the Foreign Direct Investment Scheme, non-residents can make investments in preference shares /shares/convertible debentures by an Indian company via two routes:

  1. Automatic route: As per this route, investment made by means of NRI or foreigners shall be completed without any previous approval of the government or the RBI. You need to keep informed the government that the funding was received from the corporation.
  2. Approval route: As per this route, investment shall not be made into the firm until and unless the approval was received from the government.

Limited Liability Partnership (LLP)

A Limited Liability Partnership is an incorporated business structure that includes the features of partnership and the company form of business. The LLP form of organization was introduced through the act known as Limited Liability Partnership Act, 2008 in India in April 2009.

Similarly as limited company the Foreign Direct Investment (FDI) is freely permitted in Limited Liability Partnership subject to the FDI Policy in almost all business sectors.

Project Office/Branch Office / Liaison Office

Business entities incorporated outside India (Foreign Company) can establish business operations in India without creating & registering a subsidiary company.

As per the RBI guidelines, a foreign company can open a Branch Office or Liaison Office in India. The scope of operations of such offices is usually limited to activities and functions like country representative office, sourcing, technical support, marketing support, import & export etc.

What are the Documents Required for the DIN and DSC?

  1. Passport Copy which is attested by Consulate of Indian Embassy or Foreign Public Notary.
  2. Driving License Copy or Bank Statement or Electricity Bills or any Property Tax Payment Receipt which is attested through Consulate of Indian Embassy or Foreign Public Notary.
  3. Latest Photo
  4. Present Profession, Email and Mobile Number and Education Qualification.

What are the Stages for Branch/ Liaison?

  1. Stage 1 : Seeking RBI approval through an Authorized Dealer of a Category I Bank
  2. Stage 2 : Registration of the branch/liaison office with the Registrar of Companies, New Delhi.

What is the General Information Required for Foreign National?

  1. DIN (Directors’ Identification Number), if already obtained from RoC (Registrar of Companies)in India
  2. Copy of valid Passport
  3. Copy of Address Proof such as Telephone Bill / Mobile Bill/Electricity Bill / Bank Account Statement must be in the name of foreign national and should not be older than 2 months.
  4. Valid Mobile Number
  5. Valid Email ID

What is the Procedure to Start a Business in India by Foreign National?

Introduce the India Business Plan

In the first step, A Foreign National or a Business Registered outside India needs to introduce and define the India Business Plan. As per your business operations Plan, one need to choose the best suited Business entity option start business in India.

Select Best Suited Business structure Option

Select best suited business from various options like Limited Company, Limited Liability Partnership (LLP), Project Office or Branch Office or Liaison Office etc.

Documentation Needed

After selecting the business form, depends on the Business option the documentation process will also differ. Typically, any document executed outside India or a copy of document produced from outside India must be notarized and apostatized or attested by the Indian Embassy in their respective countries according to the Hague Convention guidelines.

Process the Application to respective Authorities

In the next step again depending on the chosen Business option, the application process will also differ. In case of Limited Liability partnership & Limited Companies application is needed to be filed with the Registrar of Companies (ROC), MCA (Ministry of Corporate Affairs).

In case of Project Office/ Branch office / Liaison Office the application is needed to be filed with the Reserve Bank of India and after getting the approval from the RBI, the entity is needed to get registered with Registrar of Companies (ROC) Delhi, Ministry of Corporate Affairs

Get Business Registration Done and proceed to Business Start-up Formalities

After the above process done i.e. Business entity registration, the business can go for to open bank account and proceed to appoint people and start business. Also, the business is required to obtain other required registrations like Goods and Service Tax (GST) Registration, Professional Tax and Shops Registration and Establishment Registration etc. and start employing people.