Guide · Investment
How to acquire a company in India as a foreign buyer
Buying an Indian company gives you customers, staff and licences on day one. It also gives you the company's past: tax, labour and legal issues come with the shares. This guide covers the steps and the rules for a foreign buyer. It is part of foreign direct investment in India.
In short
- Most sectors allow 100% foreign ownership under the automatic route; check yours first.
- Choose between a share deal and an asset deal according to the risks you accept.
- The price paid by a non-resident must respect fair value rules, and the transfer is reported.
- Due diligence on tax, labour, licences and litigation decides the real price.
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Contents
The foreign investment rules that apply
- Sector rules: automatic route, government approval or caps, as in the foreign direct investment guide.
- Land border rule: investors from, or owned from, a country sharing a land border with India need government approval.
- Pricing: shares bought from a resident at no less than fair value, certified by a qualified professional.
- Reporting: the transfer between a resident and a non-resident is reported through your bank within a set deadline.
- Competition: deals above set thresholds of assets, turnover or deal value need approval from the Competition Commission of India.
- Listed targets: SEBI takeover rules and open offers.
Share deal or asset deal?
| Share deal | Asset deal | |
|---|---|---|
| What you buy | The company itself | Chosen assets, contracts or a business unit |
| Past liabilities | Stay in the company | Mostly stay with the seller |
| Licences and contracts | Usually kept | Often transferred or obtained again |
| Buyer entity | You hold the shares directly | Usually your own Indian company |
Do you need the licences, contracts and staff exactly as they are?
YesA share deal, with strong warranties and indemnities
Nonext question
Do you want one factory, brand or business line only?
YesAn asset deal through your own Indian company
OtherwiseStart with a minority stake or a joint venture, then increase it
An asset deal usually needs your own entity: see setting up a company in India. A staged entry can start as a joint venture.
What due diligence must cover
- Company law: filings, share capital history, past foreign investment reporting.
- Tax: income tax and GST assessments, open demands and disputes.
- Labour: provident fund and state insurance contributions, contracts, contract labour.
- Licences and property: factory and environmental licences, land title and leases.
- Litigation and related parties: court cases, transactions with the founders' other companies.
- The real business: customers, margins and how much depends on the founders.
Finding a company to buy
- Your current suppliers, distributors or partners in India: you already know how they work.
- Family businesses looking for a successor or a growth partner.
- Advisers and bankers running sale processes in your sector.
- A partner on the ground who can approach companies that are not officially for sale.
From target to closing
- 01Target search
- 02First meetings
- 03Letter of intent
- 04Due diligence
- 05Valuation
- 06Agreements
- 07Approvals
- 08Closing and reporting
Questions about acquiring a company in India
Can a foreign company buy 100% of an Indian company?
In most sectors, yes, under the automatic route. Some sectors cap foreign ownership or need government approval, and buyers with links to a country sharing a land border with India need approval in every sector.
Can a foreign company buy an Indian company without an Indian entity?
For a share deal, usually yes. The foreign company buys the shares directly from abroad under the FDI rules, and the transfer is reported by the Indian bank (form FC-TRS). For an asset deal, you generally need an Indian company to hold the factory, staff and contracts you take over.
Share deal or asset deal?
A share deal keeps the company, its licences and contracts, and its past liabilities. An asset deal lets you pick what you take over, but licences, contracts and staff often have to be transferred one by one.
How is the price controlled?
When a non-resident buys shares from a resident, the price cannot be below fair value calculated under an internationally accepted method and certified by a qualified professional. The transfer is then reported through your bank.
How long does an acquisition take?
Often several months for a private company, depending on due diligence, negotiation and any approvals. Deals needing government or competition approval take longer.
What about a listed company?
Buying shares in a listed company falls under SEBI takeover rules: crossing set thresholds of voting rights triggers an open offer to the other shareholders. Plan it with Indian counsel from the start.
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General information, updated 2026. Not legal, tax or investment advice: rules change and every case is confirmed by qualified professionals in India. Expand into India introduces you to partners in India.