India has become a global business hub, attracting foreign investors and companies eager to establish operations in the country. One of the most common questions asked by Non-Resident Indians (NRIs) and foreign businesses is whether a foreign company can own 100% of an Indian company. The answer depends on the sector and the FDI Policy in India.
Understanding Foreign Direct Investment (FDI) Regulations in India
Foreign Direct Investment (FDI) in India is governed by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT). Depending on the sector, FDI can be:
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Allowed up to 100% under the automatic route (no government approval required).
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Allowed up to a certain limit with government approval.
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Restricted or prohibited in certain sensitive sectors.
Sectors with 100% FDI Permitted
Certain industries allow full foreign ownership under the FDI Policy in India, including:
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Information Technology (IT) and Business Process Outsourcing (BPO)
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Manufacturing
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E-commerce (under specific conditions)
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Renewable energy
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Construction and infrastructure
For businesses considering NRI company registration in India, it is crucial to check the sector-specific FDI regulations in India before proceeding.
Steps to Register a Foreign Company in India
If an NRI or a foreign entity wants to set up a fully-owned subsidiary in India, the online registration of company involves the following steps:
1. Choose the Business Structure
NRIs and foreign companies can establish a Private Limited Company, Limited Liability Partnership (LLP), or a Wholly-Owned Subsidiary.
2. Obtain Director Identification Number (DIN)
To register a business in India, at least one director must obtain a DIN number from the Ministry of Corporate Affairs.
3. Appoint a Resident Director
Indian laws mandate that at least one director must be an Indian resident. Many foreign companies opt for Resident Director Services for NRI Companies to fulfill this requirement.
4. Secure a Virtual Office Address
If a physical office isn't immediately required, companies can use a Virtual Office for NRI Businesses in India for registration and compliance purposes.
5. Submit Required Documents
The document requirement for company incorporation includes:
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Passport copies of foreign directors
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Address proof of directors
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Incorporation documents such as Memorandum of Association (MoA) and Articles of Association (AoA)
6. File for Incorporation and Obtain a Corporate Identification Number (CIN)
The company must register with the Ministry of Corporate Affairs through online registration of company.
7. Post-Incorporation Compliance for NRI Companies
Once the company is incorporated, businesses must adhere to Post-Incorporation Compliance for NRI Companies, including:
Cost of Incorporating a Company in India for NRIs
The Cost of Incorporating for NRIs varies based on:
To get an exact estimate, businesses should explore Cost of Incorporating a Company in India for NRIs based on the latest government regulations.
Tax Implications for Foreign-Owned Companies in India
Foreign-owned companies in India are subject to Tax on Indian Company regulations. Taxation depends on:
Foreign companies should comply with the FDI Policy in India and taxation laws to avoid legal complications.
How NRIs Can Start a Business in India
NRIs looking to launch a company should follow the How to Start a Company in India Step-by-Step guide, covering:
Conclusion
Yes, a foreign company can own 100% of an Indian company in sectors where FDI regulations in India permit it. The process involves NRI company registration in India, obtaining a Resident Director for NRIs, and ensuring compliance with taxation and legal requirements. NRIs can also benefit from services like Virtual Office in India for NRIs to ease the incorporation process.
For more details, visit India for NRI