Starting a Business in India: An End-to-End Partner

The first decision any business faces when entering India is how to establish a legal presence. The options — a wholly owned subsidiary, a liaison office, a branch office, or a joint venture — each carry different implications for tax, liability, operational scope and eventual exit.

A wholly owned subsidiary (typically a Private Limited Company) is the most common route for companies intending to trade, hire staff and build a long-term presence. It offers full operational control and is straightforward to incorporate, though it requires ongoing compliance with the Companies Act 2013.

A liaison office is appropriate for companies that want to explore the market before committing — it can conduct market research and represent the parent company, but cannot generate revenue in India. A branch office allows limited commercial activity but is subject to more restrictive RBI regulations.

Joint ventures remain relevant in sectors where local knowledge, distribution networks or regulatory relationships are critical. The right structure depends on your sector, your timeline and your appetite for operational complexity. Getting this decision right at the outset avoids costly restructuring later.

India operates a layered regulatory environment. At the central level, the Ministry of Corporate Affairs governs company law; the Reserve Bank of India oversees foreign investment and remittances; the Securities and Exchange Board of India regulates capital markets. Sector-specific regulators — IRDAI for insurance, TRAI for telecoms, SEBI for financial services — add further layers.

Foreign Direct Investment (FDI) policy determines which sectors are open to foreign ownership and at what percentage. Most sectors now operate under the automatic route, meaning no prior government approval is required. A smaller number of sensitive sectors — defence, media, pharmaceuticals — require government approval.

Compliance obligations begin at incorporation and continue throughout the life of the entity: annual filings with the Registrar of Companies, statutory audits, board meeting requirements, and regular RBI reporting for foreign-owned entities. The compliance calendar is dense. Missing deadlines attracts penalties that compound quickly.

India operates under Indian Accounting Standards (Ind AS), which are broadly converged with IFRS but with important local modifications. Foreign companies with Indian subsidiaries need to reconcile group reporting requirements with local statutory obligations — a task that requires accountants familiar with both frameworks.

The Goods and Services Tax (GST), introduced in 2017, unified India's indirect tax system into a single national framework. For most businesses, GST compliance is a significant ongoing obligation: monthly or quarterly returns, input tax credit reconciliation, and e-invoicing requirements for larger entities.

Corporate tax for domestic companies currently stands at 22% (plus surcharge and cess), with a lower 15% rate available for new manufacturing companies. Transfer pricing rules are strictly enforced and require careful documentation for any intercompany transactions between the Indian entity and its foreign parent.

Tax treaties between India and the UK, UAE, Singapore and other jurisdictions can significantly affect the effective tax burden on dividends, royalties and service fees. Treaty planning should be considered at the structuring stage, not as an afterthought.

India's legal system is common law-based, inherited from the British period, but has evolved significantly. Contract law, intellectual property, employment law and dispute resolution each have their own complexities that differ materially from UK or US equivalents.

Employment law in India is state-specific in important respects. The four Labour Codes — on wages, industrial relations, social security, and occupational safety — are in the process of replacing a patchwork of legacy legislation, but implementation has been uneven across states. Hiring, termination and employee benefits all require careful local advice.

Intellectual property protection is available and enforceable, but registration is essential. India operates a first-to-file system for trademarks. Patent protection is available but subject to specific exclusions — notably for pharmaceutical compounds — that differ from Western norms.

Dispute resolution in Indian courts can be slow. For commercial contracts, arbitration clauses are strongly advisable, with a preference for institutional arbitration (SIAC, ICC or the Mumbai Centre for International Arbitration) over ad hoc proceedings. Enforcement of foreign arbitral awards is generally reliable under the New York Convention.

Compliance and structure are necessary but not sufficient. The businesses that succeed in India over the long term are those that invest seriously in relationships — with government, with industry bodies, with potential partners and with the senior people who shape how decisions are made.

India is a relationship-driven market. Procurement decisions, regulatory approvals, partnership negotiations and market access all move faster — and more reliably — when the right people know who you are and why you are there. Cold approaches to senior decision-makers rarely work. Warm introductions from trusted intermediaries carry disproportionate weight.

This is not about informal influence or shortcuts. It is about the basic reality that trust is built through people, not paperwork. A company that arrives in India with strong local relationships — built through the right introductions at the right level — will move faster, encounter fewer obstacles and build a more durable presence than one that relies solely on formal channels.

The relationship layer is where Keldora Partners operates. We help clients identify the right people to know in their specific sector and geography, and we make introductions that carry credibility on both sides.

Most companies entering India assemble a patchwork of advisers: a law firm for incorporation, an accountant for tax, a consultant for market research, a PR firm for visibility. Each does their part. None of them talks to the others. The client ends up coordinating between them, translating between disciplines, and filling the gaps themselves.

The gaps are where things go wrong. The legal structure that is technically correct may be commercially suboptimal. The tax advice that is accurate in isolation may not account for the relationship dynamics of the market. The market research that identifies the right targets does not tell you how to reach them.

A single, senior-level partner who understands the full picture — structure, compliance, relationships and commercial strategy — can hold these threads together. They can flag when a decision in one domain has implications in another. They can move faster because they are not waiting for sign-off from a committee.

This is the model Keldora Partners offers for clients entering India. We are not a law firm or an accountancy practice. We are a strategic partner who works alongside your specialist advisers, ensuring that the commercial and relational dimensions of your market entry are as well-considered as the technical ones.