What is a Private Limited Company Registered by a Foreigner in India?
The Startup India Seed Fund Scheme (SISFS), launched on April 19, 2021, by the Department for Promotion of Industry and Internal Trade (DPIIT), aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry, and commercialization. With an outlay of ₹945 crore, the scheme is set to support approximately 3,600 startups through 300 incubators over four years.
Limited Liability Protection
The liability of shareholders is limited to their investment in the company.
Ease of Incorporation
A straightforward incorporation process for foreign individuals under the FDI policy.
Access to Indian Markets
Provides direct access to India’s growing consumer and industrial markets.
Separate Legal Entity
Operates independently, offering business continuity regardless of shareholder changes.
Ownership Flexibility
Foreigners can own up to 100% of the company’s shares in sectors with automatic FDI approval.
Ease of Expansion
Simplified business structure suitable for scaling operations.
Repatriation Benefits
Easy repatriation of profits, dividends, and capital gains following FEMA regulations.
Obtain Digital Signature Certificate (DSC)
Foreign directors need a DSC for electronic filings during registration.
Apply for Director Identification Number (DIN)
Every director must obtain a DIN through Form DIR-3.
Ensure a Resident Director
At least one director must be a resident of India (stay in India for a minimum of 182 days in the previous year.
Reserve a Unique Name
File SPICe+ Part A to check and reserve the company name, ensuring compliance with MCA naming guidelines.
Draft Incorporation Documents
Memorandum of Association (MOA) and Articles of Association (AOA).
Submit SPICe+ Form (Part B)
Fill out the incorporation form on the MCA portal and attach necessary documents.
Submit SPICe+ Form (Part B)
Upon approval, MCA issues the Certificate of Incorporation along with the Corporate Identification Number (CIN).
PAN, TAN, and Bank Account
PAN and TAN are automatically issued with the incorporation. Open a local bank account in India for company operations.
For Foreign Directors and Shareholders:
– Passport (Notarized and Apostilled).
– Proof of Address (Recent utility bill, bank statement, or driving license – notarized and apostilled).
– Digital Signature Certificate (DSC).
– Director Identification Number (DIN).
For Indian Resident Director:
– PAN Card.
– Aadhaar Card or Passport.
– Address Proof (Utility Bill or Rent Agreement).
Registered Office Proof:
– Rent Agreement or Sale Deed.
– Utility Bill (not older than 2 months).
– No Objection Certificate (NOC) from the property owner.
Incorporation Documents:
– Memorandum of Association (MOA).
– Articles of Association (AOA).
– Declaration in Form INC-9 by all directors.
Comparison: Subsidiary, Foreigner-Owned Pvt Ltd Co, Branch Office, Liaison Office
Feature | Subsidiary | Foreigner-Owned Pvt Ltd Co | Branch Office | Liaison Office |
Ownership | Owned by a foreign parent company | Owned by a foreign individual/entity | Owned by a foreign parent company | Owned by a foreign parent company |
Legal Entity | Separate legal entity | Separate legal entity | Not a separate legal entity | Not a separate legal entity |
Control | Parent company retains control | Independent | Full control by parent company | No operational control |
Activities Allowed | Operational activities, local trading | Any activities allowed to an Indian company | Restricted activities like exporting/importing, consulting | Liaisoning, market research, networking |
FDI Approval | Automatic route (most sectors) | FDI norms for company registration | RBI approval required | RBI approval required |
Taxation | Taxed as an Indian company | Taxed as an Indian company | Taxed as a foreign entity | Not taxable (no income generation) |
Compliance | High (annual filings, audits, etc.) | High | Medium | Low |
Banking | Independent bank account | Independent bank account | Operates through parent company account | Operates through parent company account |
Best For | Long-term presence, local operations | New business setups by individuals | Short-term specific projects | Initial market entry |
Frequently Asked Questions (FAQs)
Can a foreigner fully own a private limited company in India?
Yes, foreigners can own up to 100% of the shares in sectors with automatic FDI approval.
Is a resident director mandatory for a foreign-owned company?
Yes, at least one director must be a resident of India.
How much time does it take to register a foreign-owned private limited company?
It typically takes 15–30 days to complete the process if all documents are in order.
Are there any capital requirements for such a company?
There is no minimum capital requirement unless mandated by the specific sector.
Can profits be repatriated to the foreign owner?
Yes, profits can be repatriated after paying applicable taxes.
RBI approval is not required for sectors under the automatic FDI route.
Filing of annual returns, conducting statutory audits, and adhering to FEMA regulations for foreign investments.
What taxes apply to a foreign-owned company in India?
Corporate tax (25% or 30% based on turnover), withholding tax on repatriations, and GST (if applicable).
Can a foreign company convert its branch or liaison office into a private limited company?
No, branch or liaison offices cannot be directly converted into private limited companies.
What sectors have restrictions on foreign ownership?
Sectors like defense, telecom, and insurance have restrictions or require government approval for FDI.