Foreign company registration in India starts with one choice. You either form an Indian legal entity (a wholly owned subsidiary, a joint venture or an LLP), or you open the foreign company’s own branch, liaison or project office. The first answers to the Companies Act, 2013 and the FDI rules; the second needs Reserve Bank of India (RBI) clearance and Registrar filings. This guide sets out who suits which, how approval works, the land-border rule and the tax gap, as at 21 October 2026.
What Foreign Company Registration Means
Section 2(42) of the Companies Act, 2013 defines a foreign company as a company or body corporate incorporated outside India that has a place of business in India, by itself or through an agent, physically or electronically, and conducts business activity here. The test is the place of incorporation. Who owns the shares does not matter, so a company incorporated in India is never a foreign company, even when a foreign parent owns all of it.
That definition corrects a common error in older guides, including the earlier version of this post, which called a foreign company “a company that operates in more than one country”. Two results follow:
- A wholly owned Indian subsidiary of a Singapore or US company is an Indian company. It does not register under Chapter XXII (Sections 379 to 393).
- A branch, liaison or project office is the foreign company itself. Once it sets up a place of business in India, it registers with the Registrar of Companies (RoC) under Section 380.
The Foreign Exchange Management Act, 1999 (FEMA) casts a wider net. Regulation 2 of the office regulations, FEMA 22(R)/2016-RB, says a “foreign company” is a body corporate incorporated outside India “and includes a firm or other association of individuals”, so a foreign partnership can also apply for an office.
The Indian Entity Route
The Indian entity route means investing in a separate legal person formed in India, a company or a limited liability partnership. The investment is foreign direct investment under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules), and the entity runs like any Indian business, with its own board or designated partners, its own assets and its own liabilities. Three structures sit in this family, each decided by one condition.
The three, with the condition that decides each:
- Wholly owned subsidiary: an Indian company in which the foreign parent holds all the shares. Under Section 2(87) it is a subsidiary because the parent controls the composition of its board; Explanation (c) lets the holding “company” be any body corporate, including one incorporated abroad. It suits a business that will sell, manufacture, hire or hold assets in India.
- Joint venture company: an Indian company in which the foreign investor and an Indian partner both hold shares; company law has no separate joint-venture form. It becomes necessary where the sector cap in Schedule I of the NDI Rules is below 100%, because foreign investment may not exceed the cap (RBI Master Direction on Foreign Investment, paras 5.2.1 and 5.2.2).
- LLP with foreign capital: allowed only where 100% foreign investment is permitted on the automatic route with no FDI-linked performance conditions (Annex 5, para 1.2 of the same Master Direction). That paragraph also excludes citizens and entities of Pakistan and Bangladesh.
A non-resident individual can own an Indian company too, a route covered on our page on registering a company as a foreigner.
The Place of Business Route
The place of business route lets the foreign company operate in India as itself, without forming a new legal person. FEMA 22(R)/2016-RB, issued by the RBI on 31 March 2016 and amended in 2018 and 2019, recognises three offices: a branch office, a liaison office and a project office. Regulation 3 bars any person resident outside India from opening one except as those Regulations allow, so the office route is permission-based from the start.
The table compares the three offices on the points that usually decide the choice.
| No. | Office | What it may do | Financial entry test | Validity |
|---|---|---|---|---|
| 1 | Branch office | Only the Schedule I activities, such as export and import of goods, consultancy other than law, research in the parent’s field, IT and software services, and technical support for the parent’s products | Profit in each of the five preceding financial years in the home country; net worth of at least USD 100,000 (Regulation 4(a)) | No fixed term |
| 2 | Liaison office | Only the four Schedule II activities: representing the parent, promoting exports and imports, promoting collaborations, acting as a communication channel | Profit in each of the three preceding financial years; net worth of at least USD 50,000 (Regulation 4(a)) | Three years, extendable by three years at a time (Regulation 4(d)) |
| 3 | Project office | Represents the foreign company while it executes a project in India | No net-worth test; needs a contract from an Indian company and qualifying funding (Regulation 4(f)) | The life of the project |
Net worth means paid-up capital plus free reserves, less intangible assets, from the latest audited balance sheet (RBI Master Direction No. 10/2015-16); a subsidiary that falls short may file a Letter of Comfort from a parent that meets the test. A branch may manufacture only in a Special Economic Zone (SEZ): the proviso to Regulation 3 allows it without approval if the sector allows 100% FDI, the branch complies with Chapter XXII and it works on a stand-alone basis.
⚖️ Approvals: Automatic, Government, AD Bank
Approval works differently in the two families. For an Indian entity, the question is the sector’s entry route: on the automatic route the investor needs no prior approval from the Central Government, and on the government route it does (RBI Master Direction on Foreign Investment, paras 5.1.1 and 5.1.2). For an office, the question is who grants the FEMA permission: an Authorised Dealer Category-I bank (AD bank) in most cases, and the RBI itself in a short list of cases.
Most sectors are open to entities: para 5.2.3 of the Master Direction permits 100% foreign investment on the automatic route in sectors not listed in Schedule I and not prohibited. A government-route proposal is filed on the Foreign Investment Facilitation Portal (FIFP) of the Department for Promotion of Industry and Internal Trade (DPIIT). Sector caps and prohibited activities are on our FDI policy page.
For an office, the steps run in this order:
- The foreign company files Form FNC with the AD bank it plans to bank with (Regulation 4(c)).
- The AD bank checks eligibility and background, and obtains a Unique Identification Number (UIN) from the RBI before it issues the approval letter (Master Direction No. 10/2015-16, para 2).
- In the Regulation 5 cases (Pakistan; certain countries for certain regions; defence, telecom, private security, information and broadcasting; non-profit and foreign government bodies) the RBI decides instead.
- The office opens within six months of approval; the AD bank may allow six more months, and anything longer needs the RBI (Regulation 4(c)).
- The office obtains a Permanent Account Number (PAN) and registers with the RoC (Master Direction, para 12).
These rules may change. On 3 October 2025 the RBI published draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025, proposing relaxed eligibility. The RBI’s list of FEMA notifications, which runs to 25 September 2026, shows no final replacement, so FEMA 22(R)/2016-RB still governs as at 21 October 2026.
The Land-Border Rule After 2 May 2026
The land-border rule sends certain investors to the government route whatever the sector. Rule 6(a) of the NDI Rules, substituted by S.O. 2174(E) dated 1 May 2026 and in force from its Gazette publication on 2 May 2026, says an entity or citizen of a country sharing a land border with India, or an investment whose beneficial owner is such a citizen, may invest in an Indian company only under the government route.
Beneficial owner carries its meaning under Section 2(1)(fa) of the Prevention of Money-laundering Act, 2002, tested against Rule 9(3) of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, so a European parent with a large Chinese shareholder can fall inside the rule. A later change of ownership that brings an investment inside it also needs prior approval, while a multilateral bank or fund of which India is a member is not treated as belonging to any country.
The office route has its own, separate test under Regulation 5 of FEMA 22(R)/2016-RB, and Regulation 4(g) requires an office of a person from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau to register with the State police. The full FDI rule, and what it replaced, is on the FDI policy page linked above.
💰 Tax: Domestic or Foreign Company
Tax is where the two families differ most. Under Section 6(10)(a) of the Income-tax Act, 2025, in force from 1 April 2026, an Indian company is resident in India, and Section 2(42) of the same Act treats it as a domestic company. A branch or project office is the foreign company itself, and Section 2(46) calls any company that is not a domestic company a “foreign company”. An LLP is taxed as a firm, because Section 2(45) includes a limited liability partnership in “firm”.
The rates below are from Part I-B of the First Schedule to the Finance Act, 2026, for Tax Year 2026-27.
| No. | Point | Indian company (subsidiary or JV) | LLP | Branch or project office |
|---|---|---|---|---|
| 1 | Base rate | 25% if turnover or gross receipts in tax year 2024-25 did not exceed ₹400 crore, otherwise 30% (Paragraph E I) | 30% (Paragraph C) | 35% on income not taxed at a special rate (Paragraph E II(ii)) |
| 2 | Optional rate | 22% without the listed deductions (Section 200) | None | None |
| 3 | Surcharge | 7% above ₹1 crore, 12% above ₹10 crore; a flat 10% under Section 200 | 12% above ₹1 crore | 2% above ₹1 crore, 5% above ₹10 crore |
| 4 | Cess | 4% Health and Education Cess on tax plus surcharge (Section 3(15)) | 4% | 4% |
A worked example shows the size of the gap on a taxable profit of ₹5 crore in Tax Year 2026-27:
- Branch: tax at 35% is ₹1.75 crore, surcharge at 2% adds ₹3.50 lakh and cess at 4% adds ₹7.14 lakh. Total ₹1,85,64,000, about 37.1%.
- Subsidiary opting for Section 200: tax at 22% is ₹1.10 crore, surcharge at 10% adds ₹11 lakh and cess at 4% adds ₹4.84 lakh. Total ₹1,25,84,000, about 25.2%.
The subsidiary pays about ₹59.80 lakh less, though the picture is not complete there. A branch may remit its profit abroad net of Indian taxes (Regulation 4(i) of FEMA 22(R)/2016-RB), while a subsidiary’s dividend to a foreign parent is taxed at 20% under Section 207(1), unless the tax treaty with the parent’s country is more favourable, which Section 159(4) allows. The earlier version of this post put the foreign company rate at 40%; for Tax Year 2026-27 it is 35% plus surcharge and cess.
📝 Registering With the Registrar
Section 380(1) of the Companies Act, 2013 requires every foreign company to deliver its registration documents to the Registrar within 30 days of establishing a place of business in India. This is the step the term “foreign company registration” strictly describes. It applies to a branch, liaison or project office after the FEMA approval, and not to an Indian subsidiary, which is incorporated as an Indian company instead.
Section 380(1) asks for these documents and particulars:
- a certified copy of the charter or memorandum and articles, with a certified English translation where needed;
- the address of the principal office abroad and of the principal place of business in India;
- a list of directors and the secretary, and the name and address of a person resident in India authorised to accept notices;
- details of any earlier place of business in India, and a declaration that no director or the Indian representative has been convicted or debarred from forming or managing companies.
Changes are filed within 30 days (Section 380(3)). Every calendar year the company delivers a balance sheet and profit and loss account with a list of its Indian places of business (Section 381), keeps books at its principal place of business in India (Section 384(3)) and displays its name and country outside each office (Section 382). Under FEMA, a branch or liaison office files an Annual Activity Certificate as at 31 March, with audited accounts, by 30 September (Regulation 4(l)).
Skipping registration has a cost. Section 393 keeps the foreign company’s contracts valid and leaves it open to being sued, but bars it from bringing a suit, set-off or any proceeding on those contracts until it complies. And under Section 379, a foreign company in which Indian citizens or Indian companies hold 50% or more of the paid-up share capital must comply with Chapter XXII and other prescribed provisions as if it were an Indian company.
🧭 Which Route Fits Your Plan
Which route fits depends on three facts: what you will do in India, the sector’s entry route and cap, and whether the parent meets the office tests. The table starts from the plan, not the structure. Where two routes fit, the Indian entity is usually more flexible, because it has no closed list of activities and no net-worth threshold; our India entry services page sets the six routes side by side.
Match your situation to the route:
| No. | Your situation | Route that fits | Why |
|---|---|---|---|
| 1 | You will sell, manufacture or hire in India in a sector open to 100% on the automatic route | Wholly owned subsidiary | Separate legal person, any lawful activity, domestic-company tax |
| 2 | The sector cap is below 100%, or you need a local partner’s licence or market | Joint venture company | Indian shareholders hold what the cap leaves |
| 3 | A services business in a 100% automatic sector with no performance conditions | LLP or company | Annex 5 allows an LLP only on these facts |
| 4 | An established exporter or consultancy that wants to act as itself | Branch office | Schedule I activities only; five-year record |
| 5 | You want to study the market and earn nothing in India yet | Liaison office | Representation only, three-year approval |
| 6 | You hold a contract from an Indian company for one project | Project office | No net-worth test; ends with the project |
| 7 | You want to manufacture through a branch | Branch in an SEZ only | Regulation 3 proviso; stand-alone, 100% FDI sector |
One misreading is worth naming. Older guides, the earlier version of this post among them, say a branch “performs the same business activity as the head office”. It does not. Annex C of the RBI Master Direction says a branch should normally work in the parent’s line of business, but only within the Schedule I activities, so a manufacturer’s branch outside an SEZ cannot replicate the parent’s business in India.
FAQ
No. Section 2(42) of the Companies Act, 2013 defines a foreign company by incorporation outside India, so a company incorporated in India is an Indian company whoever holds its shares. A wholly owned subsidiary of a foreign parent therefore does not register under Chapter XXII (Sections 379 to 393). It files the same Registrar returns as any Indian company, and its foreign investment is reported to the RBI. It is taxed as a domestic company under Section 2(42) of the Income-tax Act, 2025, with the option of the 22% rate under Section 200.
Usually not directly. Under Regulation 4(c) of FEMA 22(R)/2016-RB, the foreign company applies in Form FNC to an Authorised Dealer Category-I bank, which grants approval after the RBI allots a Unique Identification Number. The RBI’s prior approval is needed only in the Regulation 5 cases: applicants from Pakistan; applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau for offices in Jammu and Kashmir, the North East region or the Andaman and Nicobar Islands; defence, telecom, private security and information and broadcasting businesses; and non-profit or foreign government bodies.
Regulation 4(a) of FEMA 22(R)/2016-RB sets two tests. A branch office needs a profit-making record in each of the five preceding financial years in the home country and a net worth of at least USD 100,000. A liaison office needs three profitable years and USD 50,000. Net worth is paid-up capital plus free reserves, less intangible assets, from the latest audited balance sheet. An applicant that is itself a subsidiary and falls short may file a Letter of Comfort from a parent or group company that meets both tests. A project office has no net-worth test.
Three years. Regulation 4(d) of FEMA 22(R)/2016-RB lets the AD bank extend it by a further three years from the date of expiry, on an application by the foreign company. Non-banking finance companies and entities in construction and development (other than infrastructure development companies) get two years only, with no extension; at the end they close or convert into a joint venture or wholly owned subsidiary under the FDI policy. A liaison office may be upgraded to a branch where the company qualifies, keeping its PAN and bank accounts.
A branch is taxed as a foreign company, at 35% on income not taxed at a special rate, under Paragraph E II(ii) of Part I-B of the First Schedule to the Finance Act, 2026. Surcharge is 2% where total income exceeds ₹1 crore and 5% above ₹10 crore, and the 4% Health and Education Cess applies to tax plus surcharge. On a profit of ₹5 crore the total comes to ₹1,85,64,000, about 37.1%. A subsidiary opting for Section 200 of the Income-tax Act, 2025 would pay ₹1,25,84,000 on the same profit.
Its contracts stay valid, but it cannot enforce them. Section 393 of the Companies Act, 2013 says a failure to comply with Chapter XXII does not affect the validity of any contract or the company’s liability to be sued, but the company may not bring a suit, claim a set-off, make a counter-claim or start any legal proceeding on those contracts until it complies. Registration under Section 380 is due within 30 days of establishing the place of business, and changes within 30 days of the change.
Conclusion
Foreign company registration in India comes down to one decision. An Indian subsidiary, joint venture or LLP is a separate legal person, taxed as a domestic company or a firm, with no closed list of activities. A branch, liaison or project office is the foreign company itself: approved through an AD bank under FEMA 22(R)/2016-RB, registered with the Registrar within 30 days under Section 380, and taxed as a foreign company at 35%.
Setindiabiz’s process experts can test your plan against the sector’s entry route, the land-border rule and the office criteria, then handle the incorporation or the office approval and the filings that follow. Call +91 98996 00605 (Monday to Saturday, 9:30 AM to 6:30 PM) or write to help@setindiabiz.com.
