India Market Entry: Routes, Structures and FDI Rules
Which legal form should your India presence take, and does your money need government approval to come in? This guide answers both, as they stand in 2026.
Choose the right vehicle first
Your entity choice decides your liability, your tax rate, what activities you may perform, and how easily you can repatriate money or exit. Most foreign investors who intend to trade, manufacture or sell in India choose a wholly owned subsidiary (a private limited company); most who only want to test the market start with a liaison office or simply appoint distributors. Here is the full menu.
| Structure | Best for | Can earn revenue in India? | Key points |
|---|---|---|---|
| Wholly Owned Subsidiary (Private Limited Company) | Full-scale operations, hiring, manufacturing, services | Yes | Separate legal entity, limited liability, 100% foreign ownership in most sectors, easiest to scale and fund. The default choice. |
| Limited Liability Partnership (LLP) | Professional services, ventures with Indian partners | Yes | Lower compliance burden than a company; 100% FDI allowed in sectors with no FDI-linked performance conditions. No equity shares, so ESOPs and VC funding are harder. |
| Joint Venture | Sectors with caps, or where a local partner adds distribution | Yes | Shares risk and local knowledge. The shareholders' agreement is everything — governance, deadlock and exit clauses need careful drafting. |
| Branch Office | Foreign companies executing contracts or providing services | Yes, within permitted activities | Needs RBI approval; parent bears full liability; taxed at the higher foreign-company rate (~35%). No manufacturing except in SEZs. |
| Liaison Office | Market research, sourcing coordination, brand presence | No | Cannot earn income — funded entirely by the parent. RBI approval needed; parent must show a profit track record. A low-risk first step. |
| Project Office | Executing a specific contract awarded in India | Only for that project | Temporary by design; generally permitted where the project is funded by inward remittance or an Indian institution. |
FDI: two routes in, one rule to check
India regulates foreign investment by sector, through two routes. Under the automatic route, no prior permission is needed: you invest, allot shares, and report the investment to the Reserve Bank of India (Form FC-GPR) within 30 days. Under the government approval route, the relevant ministry must clear the investment first via the Foreign Investment Facilitation Portal, which typically takes around 12 weeks under DPIIT’s revised standard operating procedure of May 2026, excluding time spent answering queries.
The good news: 100% FDI under the automatic route covers most of the economy — IT and software services, non-defence manufacturing, marketplace e-commerce, greenfield pharmaceuticals, renewable energy, construction and infrastructure, among others.
Sector caps you should know
| Sector | FDI limit | Route |
|---|---|---|
| IT / software / BPO, most manufacturing, renewables, infrastructure | 100% | Automatic |
| Insurance | 100% | Automatic (subject to conditions) |
| Defence manufacturing | 74% (beyond with approval) | Automatic up to 74% |
| Private sector banking | 74% | Automatic up to 49%, approval beyond |
| Single-brand retail | 100% | Automatic; a 30% domestic sourcing norm applies above 51% foreign ownership |
| Multi-brand retail | 51% | Government approval, with conditions |
| Print media (news) | 26% | Government approval |
Caps change through Press Notes issued by DPIIT. We verify your sector's current position before any structure is committed to paper.
The Press Note 3 (2020) rule (land-border countries)
Investment where the investor — or a beneficial owner above the thresholds in the anti-money-laundering rules (broadly 10% for companies) — is from a country sharing a land border with India (China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, Afghanistan) requires prior government approval. Press Note 2 (2026 Series) eased the rule in March 2026: non-controlling land-border ownership up to 10% now proceeds under the automatic route, subject to a new reporting requirement, provided majority ownership and control stay with resident Indians. Pakistan-linked investment remains government-route only and is barred from defence, space and atomic energy. If this could touch your structure, raise it in the first conversation, not the last.
Where FDI is not allowed
A short prohibited list remains: lottery, gambling and betting including casinos, chit funds and Nidhi companies, trading in transferable development rights, real estate business (buying and selling property, as distinct from construction and development, which is open), manufacturing of tobacco products, and activities closed to private investment such as atomic energy and railway operations.
Entry strategy is more than legal form
Alongside the entity decision, we help you resolve the commercial questions that determine whether the entry pays back: which state and city to locate in (labour cost, incentives, talent, logistics); whether GIFT City, a production-linked incentive scheme or state incentives improve your economics; build versus partner versus acquire; and how to phase capital so you keep FEMA reporting simple while funding growth. That work happens before incorporation, which is why our engagement starts at strategy, not paperwork.
We will confirm your sector's FDI position — without obligation.
One conversation settles the route, the structure and the realistic timeline for your entry.
Send an enquiry
Three lines about your business and target market is enough to start. A partner will reply with the structure we would choose in your place, and why.
Content on this site is general information, not professional advice. Regulations change; speak to us before acting.