Starting a Business in India for Foreigners: Eligibility

Can a foreigner start a business in India without an Indian partner? Yes. Starting a business in India for foreigners is allowed outright: you can own every share of the company and sit on its board.

There is a fork worth taking before you go any further, though. Plenty of people searching this do not actually want an Indian entity at all.

They want three engineers on a compliant payroll next month, and hiring in India without a local entity is a different decision with a different cost and a different timeline.

What follows is about what you personally are allowed to do: who can be a director, which visa you need, how your money becomes share capital, and what happens to your own tax bill. It does not walk you through the filings.

Start with the question almost every founder asks first, usually with a note of dread in it.

Can a foreign national actually be a director and a shareholder of an Indian company?

Yes, both. A foreign national can hold shares in an Indian private limited company and can be appointed to its board. Nobody has to be given Indian shareholding as a condition of that. The real constraint is structural rather than personal: the company needs at least two members and two directors, and at least one of those directors must be resident in India.

Notice that those are two separate questions with two separate answers. Ownership and control get bundled together in most explanations of this topic, and they are not the same thing.

Shareholding is about who owns the company. Directorship is about who is legally answerable for running it. You can hold both, one, or neither.

Who counts as a foreign national when starting a business in India

For company law purposes the label that matters is not where you were born or where your company is headquartered. Two facts drive almost every rule on this page.

The first is whether you hold an Indian passport. The second is whether you are resident in India. Some Indian rules test the first, some test the second, and they produce different answers.

A foreign national, for our purposes, is someone who holds neither an Indian passport nor an Overseas Citizen of India card. If that is you, everything below applies in full.

Does the Indian director have to be given shares?

No, and this is the single most useful thing on this page for anyone about to start negotiating with a prospective local partner.

The resident director requirement is a board seat. It is not a shareholding. The person who fills it can hold no shares at all and the company is still compliant.

We have watched founders give away real equity to solve a problem that never required equity. If that person will also be on your payroll, the legal requirements for hiring employees in India apply to them exactly as they would to any other employee.

Where the resident director rule gets stated wrongly

You will see it written that one of your directors must be an Indian citizen. That is not what the requirement says, and believing it narrows your search to the wrong people.

The test is residence in India, not Indian citizenship. A French national living in Bengaluru can take that seat. An Indian citizen living in Dallas cannot.

Get this one right and the seat becomes a hiring problem with a large pool of candidates, rather than a partnership problem with a very small one.

If you are still weighing a private limited company against a branch or a liaison office, the structure options a foreign investor can choose from are worth reading side by side before you commit to anything.

Everything above assumes you hold a foreign passport and nothing else. Hold an Indian one, or an OCI card, and the picture shifts in one specific place.

Does it change if you are an NRI or an OCI cardholder rather than a foreign national?

Yes, and the fork is three ways rather than two. A foreign national, a non-resident Indian citizen and an OCI cardholder are three different things to Indian company law, because some rules test citizenship and others test residence. For ordinary shareholding and directorship the three converge. For a One Person Company they do not.

NRI, OCI and foreign national, defined

NRI: a non-resident Indian, meaning an Indian citizen who lives outside India. The passport is Indian. The residence is not.

OCI cardholder: a person of Indian origin who holds a lifelong visa and residency status in India. It is a status, not a citizenship. An OCI cardholder does not hold an Indian passport.

Foreign national: neither of the above.

Why some rules test citizenship and others test residence

This distinction is the thing that makes the whole topic make sense once you see it, and the thing that makes it look contradictory until you do.

The resident director requirement tests residence, so an Indian passport does not help you fill it if you live in London. One Person Company membership tests citizenship, so living in Mumbai does not help you if your passport is German.

Most of the companies we work with are US companies hiring in India, and the founder's own status is usually the first thing that changes the answer we give them.

One caution on sources. Some official guidance pages still carry the pre-2021 wording on One Person Companies. Where a notified amendment and an older explanatory page disagree, the amendment is the instrument that governs, and the amendment is dated 2021.

If you want a fuller picture of what running an Indian company involves after incorporation, that is a separate body of work from getting yourself appointed to the board.

Which brings us to the structure question single founders always ask.

Can you be the only owner of the company?

Not of a private limited company, no. It needs at least two members, so a single founder needs a second shareholder even if that person holds exactly one share. The One Person Company exists to solve precisely this, and it is the one structure a foreign national cannot use, because its rules restrict membership to a natural person who is an Indian citizen.

You will see it written that a One Person Company lets a single founder do this. That is true for an Indian citizen. It is not true for a foreign national, and the gap between those two sentences has sent more than a few people down a dead end.

An NRI has been able to form one since 1 April 2021. The 2021 amendment relaxed the residency condition and kept the Indian citizenship condition, which is exactly why the answer differs by passport rather than by address.

In practice a second shareholder is a small problem. It can be a co-founder, a parent company, or a trusted individual holding a nominal stake. What it does not have to be is a local partner with real control, which is the fear that usually sits underneath the question.

If you are also weighing where the parent sits, how a legal entity gets set up end to end is the wider version of this decision, and India employment law basics for a founder covers what lands on you the day the first person joins.

Here is all of it in one place, by the status you actually hold.

Two cells in that table are deliberately not answered with a yes or a no, because the position for OCI cardholders is not settled clearly enough on either point for us to state one.

Now for the part that trips people up before a single share is issued: the paperwork that has your name on it, not the company's.

What do you personally need to sign before you can be appointed?

Two credentials and a stack of attested paperwork. A foreign director needs a Digital Signature Certificate, because Indian filings are signed electronically, and a Director Identification Number, a personal identifier that follows you across every Indian board. Your identity and address documents must be attested abroad before India accepts them.

Two credentials that belong to you, not to the company

This is worth understanding as a founder, because both credentials are personal. They do not belong to the company and they do not transfer with the shares.

• Digital Signature Certificate (DSC): your electronic signature. Every filing that needs your assent is signed with it, which is why you can join an Indian board without boarding a plane.
• Director Identification Number (DIN): allotted to you as an individual. Get one once, then use it for every Indian directorship you ever hold.

Why your documents get attested twice

Your passport and your proof of address are foreign documents, and India does not simply take them at face value. They are notarised in your own country first, and then given a second layer of authentication.

Which second layer depends on where you are:

• Hague Apostille Convention countries: an apostille.
• Everywhere else: consular legalization at the Indian mission.

That sounds procedural, and it is, but it is also the step that quietly sets your timeline. Attestation runs on somebody else's calendar, not yours, and it is the reason a founder who starts the company paperwork and the document paperwork on the same day usually waits.

Our practical advice is unglamorous: start the attestation before you have finalized anything else. It is the longest pole in the tent and it is the one you control least.

For the filing sequence itself, the forms, and the full document checklist, registering a company in India is where that work lives, and this page deliberately does not repeat it.

Paperwork done, you are a director on record. That still does not let you show up and run the place.

What visa do you need to run the company you just registered?

None to own it, and one to run it. A promoter or majority owner traveling to India on company business enters on a Business visa. A foreign national drawing a salary from the Indian company needs an Employment visa, which carries a gross salary floor of about $17,000 (Rs 16.25 lakh) a year.

The flat answer in circulation, "you do not need a visa", is correct about ownership and silent about operating. Both halves matter, and the second half is the one that ruins a quarter when it is missed.

The promoter's route: a Business visa

If you are the promoter or the owner of a company holding majority stakes or shareholdings, the Business visa is your route into India for that business.

It is the right instrument for the founder who visits, meets customers, signs things and leaves. It is not the instrument for the founder who wants a salary from the Indian company.

If you have not come across the category before, what a business visa is gives you the shape of it in a minute.

The salaried route: an Employment visa

Take a paid role in your own Indian company and you move onto an Employment visa. It comes with a salary floor.

Foreign nationals employed in India should draw a gross salary above Rs 16.25 lakh a year, which is about $17,000 at roughly Rs 95.4 to the dollar as of September 2026. Sectors notified from time to time are exempt from it.

The floor counts more than base pay. Salary plus all cash allowances counts, and so do perquisites such as rent-free accommodation where those are included in salary for income tax purposes.

What neither visa covers

An Employment visa is also tied to the employer who sponsored it. You cannot switch employers while it runs.

The Bureau of Immigration states that bar flatly. If you want to change employer, you leave the country and apply for a fresh Employment visa, and the FRRO or FRO concerned has to be informed if you stop working for the sponsor.

So if your plan involves restructuring which group entity employs you, do that thinking before the visa is issued rather than after.

If the wider question is what your Indian hires will need rather than what you need, work permits and visas in India is the employer-side version of this.

Now here is the one that catches people, and it is the most expensive item on this page by a distance.

What happens to your own tax position if you move to India to run it?

It changes, and it is the most expensive thing on this page. India's individual residency test turns on how many days you are physically in the country. Cross the line and India taxes your worldwide income rather than only what you earn in India. That is why the resident director seat is a hiring decision, not a travel plan.

Two presence tests, one calendar

Read the two rules next to each other and the trap is obvious.

The resident director requirement is a physical presence test. India's personal tax residency test is also a physical presence test. Satisfy the first yourself and you will very likely satisfy the second, because they are measured over the same Indian financial year.

India's individual residency test sits in section 6 of the Income-tax Act, 2025, which applies to tax years beginning on or after 1 April 2026. You are resident if you are in India for 182 days or more in the year.

You are also resident on a second limb that gets far less attention: 60 days or more in the year, combined with 365 days or more across the preceding four years.

So a founder who visits India repeatedly over several years can become tax resident well under 182 days, without ever feeling like they moved.

For an Indian citizen or a person of Indian origin who visits India, that 60 day figure becomes 182 instead. So the NRI and OCI reader has more room here than the foreign national does.

What India taxes a resident on, and what it taxes a non-resident on

The consequence is the part worth reading twice.

The split is clean:

• Resident: liable to Indian tax on global income.
• Non-resident: liable only on income received or deemed received in India, and on income accruing or deemed to accrue in India.

That is not a percentage point of difference. That is your entire salary, your portfolio, and whatever else you earn anywhere in the world, moving into the Indian tax net because of a day count you were managing for a completely different reason.

Why the answer is a local director rather than a longer stay

Founders commonly appoint a local director to fill the seat. This is the reason why, and it rarely gets spelled out.

Hiring someone already resident in India costs you a salary or a fee. Filling the seat with your own presence costs you the tax treatment of your worldwide income. One of those is a line item and the other is a life decision.

There is a second exposure sitting next to it. Running the business from inside India can raise permanent establishment risk in India for your foreign parent, which is a company-level problem rather than a personal one.

You can assess your permanent establishment exposure in a couple of minutes.

If it is an employee rather than you who is relocating, what changes when someone moves to India on payroll covers that case specifically. Once the company is live, India tax compliance obligations become a monthly rhythm rather than a one-off decision.

Assume you have decided you do want the company. Your money now has to get into it, and there is a right way to do that.

How does your money legally become share capital?

By an inward remittance through an authorised dealer bank, followed by a filing. When the Indian company issues equity instruments against your investment, it reports the issue on Form FC-GPR through that bank, within 30 days of the date the instruments are issued, on the Single Master Form on the Reserve Bank's FIRMS portal. Miss that window and the investment is irregular.

The route your investment comes in on

Foreign investment into India arrives on one of two routes:

• Automatic route: most sectors. No prior government approval, and the reporting happens afterwards.
• Government route: a smaller set of sectors. Approval comes first.

An authorised dealer bank is simply a bank licensed to handle foreign exchange transactions on India's behalf. Your remittance goes through one, and your filings go through the same one.

Worth naming the vocabulary, because it turns up in every instruction you will receive:

• Equity instruments: what the rules call shares and similar instruments.
• FIRMS: the Reserve Bank's online reporting portal.
• Single Master Form: the one form all foreign investment reporting now runs through.

The filing that makes the issue regular

The clock is short and it starts at issue, not at remittance. Thirty days from the date the equity instruments are issued.

Since 1 September 2018 this has been a single step. The older two-step process, an advance remittance form followed by a separate FC-GPR, was merged into the revised FC-GPR on the Single Master Form.

In our experience this is the deadline foreign founders miss most often, and almost always for the same reason. The money arrives, everyone relaxes, and nobody realizes the reporting clock runs off the share issue rather than off the wire.

Check your cap table before anything else

Check your own cap table before you check anything else. Press Note 3 (2020 Series), issued on 17 April 2020, made investment from a country that shares a land border with India a government approval question rather than an automatic one.

It also looks through to the beneficial owner rather than stopping at the immediate investor. So a clean-looking direct investor does not settle it if the ownership behind them sits somewhere restricted.

That position changed in March 2026. The Union Cabinet approved amendments on 10 March 2026 that do three things:

• Define beneficial ownership: by reference to the Prevention of Money-Laundering Rules, 2005, applied at the level of the investor entity.
• Open the automatic route to small stakes: investors with non-controlling land-border beneficial ownership of up to 10 percent are permitted under the automatic route, subject to the applicable sectoral caps and entry routes, and to reporting by the investee entity to DPIIT.
• Set a 60-day clock for specified manufacturing: proposals in capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer are decided within 60 days, with majority shareholding and control staying with resident Indian citizens or resident Indian entities at all times.

So if anyone in your ownership chain sits in one of those countries, confirm where you land with counsel before you file rather than after.

As of September 2026 this is the fastest-moving rule on this page. Treat it as a live question rather than a settled one.

If you want the numbers on where foreign capital is actually going, India investment statistics are a more useful read than a policy circular, and the labor law rules that apply to foreign companies in India cover what binds you once people are on the books.

There is one last gate, and it is the only one that can stop the whole plan outright.

Are there sectors you simply cannot enter as a foreign investor?

Yes, and it is a short closed list: lotteries, gambling and betting, chit funds, Nidhi companies, trading in Transferable Development Rights, real estate business or farm house construction, and tobacco manufacturing. Anything closed to private investment generally, such as atomic energy, is closed to you too.

Here is the prohibited list in full, because it is short enough to read in one go:

• Lottery business: government and private lotteries, and online lotteries.
• Gambling and betting: including casinos.
• Chit funds and Nidhi companies: both closed.
• Trading in Transferable Development Rights: closed.
• Real estate business or farm house construction: closed. Note that this is narrower than it sounds and does not close every property-related activity.
• Tobacco manufacturing: cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
• Sectors not open to private investment at all: atomic energy is the standard example.

Foreign technology collaboration in any form is also prohibited for lottery business and for gambling and betting, so a licensing or franchise arrangement does not get you around the door.

Above that prohibited list sits a second layer: sectoral caps, which limit how much foreign ownership is allowed in particular industries and sometimes attach conditions to it.

Those run sector by sector. Check them against your specific activity rather than against a general summary.

Most founders reading this are not in any of these sectors, and the whole list takes thirty seconds to clear. Once it is cleared, the real work starts, and hiring in India is where most of your first year actually goes.

How can Wisemonk help you start and run a company in India?

Wisemonk is an India-native Employer of Record (EOR) that helps global companies hire, pay, and manage talent in India without setting up a local entity.

For a founder who wants the company and not just the people, that means an Indian entity with its tax and employer registrations in place, and a team hired onto compliant Indian employment contracts.

All without you having to fill the resident director seat with your own passport and your own calendar.

For everyone else, we will say so plainly: plenty of readers should employ people first and incorporate later, and the EOR vs entity calculator usually settles that question faster than a conversation does.

We support 300+ global clients and more than 2,000 employees across India, process $20M+ in annual payroll, and hold a 4.8/5 rating on G2. Pricing starts from $99 per employee per month as of September 2026.

Here is how we help:

• Entity setup in India: incorporating the Indian company and obtaining the tax and employer registrations. Priced on a custom quote, and you own 100% of it from day one.
• Capability center setup in India: standing up and staffing an India capability center, from operating model through to the run state. Custom quote.
• Build, operate and transfer in India: we build and run the India team, then hand it to your own entity when you are ready for it. Custom quote.
• PEO services for a company with its own Indian entity: payroll, statutory filings, benefits, onboarding and offboarding run under your registrations once the company exists.

From our experience helping global founders set up in India, the ones who move fastest are the ones who line up a resident director before they file, rather than planning to cover that seat themselves and discovering the tax consequence a year later.