An NRI or OCI cardholder can start a business in India by incorporating a private limited company or LLP, or by investing in an existing one. A private company needs two shareholders and two directors, one of whom must be resident in India. Investment may be made on a repatriable basis under the foreign direct investment rules, which requires reporting to the Reserve Bank within thirty days of share allotment, or on a non-repatriation basis, which is treated like domestic investment.
- Usual vehicle
- Private limited company
- Resident director
- At least one, 182 days in India
- FDI reporting
- Form FC-GPR within 30 days
- Most sectors
- 100% under automatic route
Choosing the right vehicle
- Private limited company. The default for anything that will raise capital, hire staff or have co-founders. Limited liability, clear share ownership and the widest acceptance among investors and banks.
- Limited liability partnership. Lighter compliance and pass-through of profits without dividend tax. Foreign investment is allowed automatically only in sectors where one hundred per cent FDI is permitted without performance conditions.
- One person company. Open to a natural person who is an Indian citizen, resident or not, so available to NRIs holding Indian passports but not to OCI cardholders.
- Proprietorship or partnership firm. NRIs and OCIs may invest only on a non-repatriation basis, and not in agricultural, plantation, real estate or print media activities.
- Branch, liaison or project office of a foreign company, where the parent wants presence without a subsidiary, under Reserve Bank regulations.
Repatriable or non-repatriable investment
The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 offer two channels. Under the FDI route, funds come from abroad or an NRE or FCNR account, shares are issued at or above a fair value certified by a valuer, and capital and dividends can be taken back out freely. Sectoral caps and conditions apply, though most sectors are open up to one hundred per cent without approval. Investment from entities or beneficial owners in countries sharing a land border with India requires government approval.
Under Schedule IV, an NRI or OCI may invest on a non-repatriation basis from any account including NRO. Such investment is deemed domestic: no sectoral caps apply other than a few prohibited activities, pricing rules are relaxed and reporting is lighter. The trade-off is that sale proceeds go to NRO and leave India only within the one million dollar annual limit. Founders who intend to live in India again often prefer this route; those building for an exit abroad usually choose FDI.
Incorporation, step by step
Incorporation is online through the Ministry of Corporate Affairs. Each proposed director obtains a digital signature and director identification number; foreign nationals and NRIs submit a notarised and apostilled or consularised passport and address proof. The name is reserved, and the integrated incorporation form generates the certificate of incorporation, PAN and TAN together. A registered office address in India is needed within thirty days.
At least one director must have stayed in India for 182 days or more during the financial year. A family member or a professional resident director with a carefully drawn indemnity and limited authority usually fills this role at the outset. After incorporation come the bank account, receipt of subscription money, share allotment, the FC-GPR filing where applicable, and registrations for GST, professional tax and shops and establishments as the business requires.
Agreements that protect founders abroad
When you are not present daily, paper is your control. We draft the shareholders' agreement with reserved matters, information rights and exit provisions; founder vesting; employment and confidentiality agreements; assignment of intellectual property to the company; and a board authority matrix and bank mandate that require your approval above set limits. Where the Indian entity will bill a foreign affiliate you own, transfer pricing and service agreements need attention from the first invoice.
Most disputes that later reach us as shareholder litigation trace back to documents that were never signed.
Ongoing compliance
A company must hold board meetings and an annual general meeting, maintain statutory registers, have its accounts audited and file annual returns and financial statements. Foreign-invested entities also file the annual return on foreign liabilities and assets with the Reserve Bank by mid-July, report share transfers between residents and non-residents in Form FC-TRS, and update downstream investments. Delays are compoundable contraventions, but they surface at the worst moment, during fund-raising or exit diligence. We provide a compliance calendar and, if you wish, handle the filings.
Mistakes that cost NRIs time and money
- Choosing a structure before deciding whether returns need to leave India.
- A resident "nominee" director with no written terms.
- Issuing shares below fair value or reporting late.
- Operating without a shareholders' agreement because the partner is family or a friend.
A typical situation
Choosing the route first
Two friends, one abroad and one in India, plan a software services company. The overseas founder expects to sell his stake to a foreign buyer one day, so his investment is made on a repatriable basis from his NRE account at a certified valuation and reported within thirty days. A shareholders' agreement gives him information rights and a veto on new share issues. Five years later his exit proceeds are remitted without regulatory difficulty.
Illustration only, based on patterns we commonly see. It is not a real client's case and outcomes depend on the facts.
If you live in...
The Indian law is the same wherever you live. These are the points that differ by where you are.
USA and Canada
US founders should consider the US tax treatment of an Indian subsidiary before incorporating.
UK and Europe
UK holding structures are common; substance and treaty eligibility should be reviewed.
UAE and the Gulf
Investors from free-zone companies should have corporate documents attested for the Indian filings.
Country pages: UAE, Saudi Arabia, Qatar, Kuwait, Oman, Bahrain
Australia, New Zealand and Asia
Singapore holding companies must show commercial substance to rely on the treaty.
Country pages: Australia, New Zealand, Singapore, Malaysia
Detailed country pages for this service: Business Setup in India from Oman, Business Setup in India from Singapore
Documents you will need
For each director and shareholder:
- Passport, notarised and apostilled or consularised
- Overseas address proof: bank statement or utility bill under two months old
- PAN, if already held
- Passport photograph
- Email and mobile number for verification
- Proposed company names and business activity
- Registered office proof and owner's no-objection
- Resident director's PAN, Aadhaar and consent
How we handle it for you
Structure advice
We settle the vehicle, the investment route and the shareholding with tax and exit in mind.
Incorporation
Digital signatures, name reservation and filing are completed; certificate, PAN and TAN issue together.
Funding and reporting
Bank account opened, funds received, shares allotted and FDI reporting filed in time.
Agreements
Shareholders', founder, IP and employment documents are executed.
Compliance cover
Registrations and a calendar of filings are put in place for the first year.
Frequently asked questions
Can an NRI start a business in India?
Yes. NRIs and OCI cardholders can incorporate and own companies and LLPs, invest in existing businesses and act as directors, subject to sector rules and exchange control reporting.
Is a resident Indian director compulsory?
Yes. Every company must have at least one director who stayed in India for at least 182 days in the financial year. The other directors can live abroad.
Can an NRI own 100 per cent of an Indian company?
In most sectors, yes, under the automatic route. Two shareholders are still needed for a private company, so a nominee typically holds one share.
What is the difference between repatriable and non-repatriable investment?
Repatriable investment follows FDI rules on pricing, caps and reporting, and its proceeds can be freely sent abroad. Non-repatriable investment is treated as domestic with fewer conditions, but proceeds can leave India only within the annual NRO limit.
Do I need to visit India to register a company?
No. Incorporation is fully online. Your identity documents are notarised and apostilled or attested at the Indian mission where you live.
Which businesses are closed to NRI investment?
Lotteries, gambling and betting, chit funds, nidhi companies, trading in transferable development rights, real estate business other than construction development, and manufacture of tobacco products are among the prohibited activities.
How long does incorporation take?
Usually two to three weeks once apostilled or attested identity documents are in hand.
Is there a minimum capital for a private company?
No statutory minimum. Capital is fixed by the needs of the business and, for foreign investment, by pricing rules.
