Starting a Business · India
Starting a business in India: foreigner's guide (2026)
India shaded by its starting a business status
India permits 100% foreign ownership under the 'automatic route' (no prior government approval) in most sectors, has abolished any minimum paid-up capital, and runs a fully online incorporation process via the MCA SPICe+ form. However, friction remains for foreigners: at least one director must be Indian-resident, foreign documents must be notarised and apostilled, and a minority of sectors are restricted or require government approval. Overall it is feasible but bureaucratic, hence moderate.
Key points
FDI up to 100% is permitted under the automatic route (no prior government/RBI approval; only post-facto reporting to RBI within 30 days) in most sectors, including most manufacturing, IT, renewables and many services.
FDI is prohibited in lottery, gambling/betting, chit funds, Nidhi companies, real estate trading and tobacco manufacturing. Sectors such as defence (beyond 74%), multi-brand retail, print media and broadcasting require prior government approval via the Foreign Investment Facilitation Portal.
Since the Companies (Amendment) Act, 2015 there is no minimum paid-up capital requirement for a private limited company, so a company can be formed with nominal capital.
Under Section 149(3) of the Companies Act, 2013, every company must have at least one director who stayed in India for 182+ days in the financial year. A foreigner cannot incorporate alone without an Indian-resident director.
Online via MCA: obtain Class-3 Digital Signature Certificate; reserve name (SPICe+ Part A); file SPICe+ Part B with e-MoA/e-AoA and AGILE-PRO (auto-allots DIN, PAN, TAN, GST, EPFO/ESIC, bank account). Foreign directors' passports/proofs must be notarised and apostilled abroad.
Incorporation generally completes in about 7–15 working days once documents are ready; the main delays for foreigners come from arranging notarisation/apostille of overseas documents.
Timeline - major decisions & events
The government tabled 'Jan Vishwas 2.0' in the Lok Sabha to decriminalise 288 minor offences across 16 Central Acts, converting many fines into civil penalties to further reduce compliance risk for businesses. It extends the trust-based reform begun in 2023.
PRS Legislative Research ↗Provisions of the 2023 Act amending the Patents, Trade Marks, GI and Copyright laws came into force, replacing imprisonment with monetary penalties for technical defaults that often affected founders protecting startup IP.
Gazette of India ↗MCA amendments allowed NRIs to incorporate OPCs, cut the residency requirement from 182 to 120 days, removed paid-up capital/turnover conversion thresholds and permitted conversion to a private/public company at any time. This made the simplest single-founder corporate vehicle far more accessible.
Press Information Bureau ↗The amendment recategorised dozens of minor/procedural offences under the Companies Act, 2013 by removing imprisonment and shifting to in-house adjudication, lowering the legal risk of routine corporate compliance lapses for new companies.
India Code (MCA) ↗MCA rolled out SPICe+ integrating name reservation, incorporation, DIN, PAN, TAN, GSTIN, EPFO, ESIC and bank-account opening into one online application across multiple ministries, drastically streamlining company formation.
Ministry of Corporate Affairs ↗India improved to rank 63 (from 142 in 2014), with the 'Starting a Business' indicator boosted by consolidated incorporation forms and faster, lower-cost registration. The jump signalled the cumulative effect of incorporation and tax reforms.
Press Information Bureau ↗India jumped to 77th globally and was named among the top 10 most-improved economies; the time to start a business was roughly halved (to ~16 days) by integrating application forms and the new GST. It anchored India's reform trajectory on business entry.
World Bank ↗GST replaced a patchwork of central and state indirect taxes with a single nationwide regime and a common GSTN registration portal, simplifying tax registration and compliance for new businesses operating across states.
Embassy of India (Govt. of India) ↗The flagship scheme created DPIIT 'recognised startup' status with benefits including a multi-year income-tax holiday, IP-filing concessions, self-certification on labour/environment laws and a Fund of Funds, building a dedicated support framework for new ventures.
Startup India (DPIIT) ↗The landmark overhaul of company law introduced the One Person Company, later abolished minimum paid-up capital requirements, and laid the modern foundation for incorporation, governance and investor protection in India.
Ministry of Corporate Affairs ↗The LLP Act created a body-corporate structure combining partnership flexibility with limited liability, giving founders and professional firms a lighter-compliance alternative to incorporating a full company.
India Code (MCA) ↗India - other topics
Last verified 5/23/2026 · Orientation, not legal advice - verify against the primary sources linked above. Explore the full world map →