Guide · Getting started
Doing business in India: what foreign companies need to know
India is open to foreign companies: most sectors allow 100% foreign ownership, English is the language of business and the market is one of the largest in the world. What makes it demanding is the sequence of procedures, rules that vary by state, and a business culture built on relationships. When you are ready to act, the guide to setting up a company in India covers the steps.
In short
- Open market: most sectors accept full foreign ownership, a few are capped or closed.
- Procedures run in sequence and vary by state: plan buffers.
- Relationships and trust weigh as much as contracts.
- Start light (distributor, contract manufacturer), then set up an entity when volumes justify it.
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Contents
What is different about India
- A federal country: labour rules, land, permits and some taxes differ from one state to another.
- Procedures in sequence: registrations, bank account and approvals follow each other, so one missing document delays the rest.
- Relationships first: partners, suppliers and officials work more easily with people they know and trust.
- A huge, diverse market: prices, habits and distribution change a lot between regions and city sizes.
The legal essentials
- Structure: most foreign companies use a private limited subsidiary. Compare the options in liaison office vs branch office vs subsidiary.
- Foreign investment rules: automatic route in most sectors, approval in some. See foreign direct investment in India.
- Tax: corporate tax, GST on goods and services, withholding tax on many payments, transfer pricing for trade with the parent.
- Employment: labour codes and state rules on contracts, social contributions and working conditions.
- Intellectual property: register your trademarks in India early, and sign confidentiality agreements before sharing designs.
Rules change regularly: every point is confirmed for your case by professionals in India.
How relationships and decisions work
- Invest in the relationship: meetings in person, follow-up calls and shared meals build the trust that moves projects forward.
- Read the "yes": a polite yes can mean "I will look into it". Confirm commitments in writing, with dates.
- Find the decision-maker: decisions often go up the hierarchy. Know who signs, not only who you meet.
- Agree deadlines explicitly: written milestones avoid the gap between what was promised and what is delivered.
Five mistakes foreign companies make
- Treating India as one market instead of choosing a region and a city to start.
- Choosing partners from a directory without visiting or checking them.
- Underestimating timelines, especially bank accounts, approvals and supplier onboarding.
- Skipping the written agreement because the relationship feels good.
- Forgetting the filings that follow incorporation, which lead to penalties later.
Where to start
Most companies test India before committing: a distributor or agent to sell, a contract manufacturer to produce, then their own entity. The India market entry strategy guide sets out that sequence. For software and back-office work, read outsourcing to India.
Questions about doing business in India
Is it hard for a foreign company to do business in India?
It is demanding rather than closed. Most sectors are open to full foreign ownership, but procedures run in sequence, rules vary by state, and relationships matter. Companies that work with a trusted local partner usually move faster.
Do I need a company in India to sell there?
Not at first. Many foreign companies start by exporting through a distributor or agent, then set up an entity once sales or headcount justify it.
Which language is used in business in India?
English is the main language of business, contracts and administration at company level. Local languages matter for consumer marketing and on the factory floor.
How long do things take in India?
Longer than planned, in most cases. Approvals, bank accounts and supplier onboarding often run in sequence. Build buffers into your timeline and agree written deadlines with partners.
Read next
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.