Business Structures Suitable for Foreign Companies in India

India’s rapidly growing economy and favourable investment landscape have made it a top destination for foreign companies seeking to expand their footprint. As businesses explore opportunities to establish their business in India, a key question arises: which company structure is best suited for them? Let’s take a closer look at the options.

Private Limited Company (Pvt Ltd)

• A Private Limited Company is the most common choice for foreign businesses as it allows up to 100% foreign ownership in many sectors. 
• It requires a minimum of two directors, with at least one being an Indian resident who has stayed in the country for at least 182 days in the previous financial year. 

Public Limited Company 

• A Public Limited Company is ideal for businesses aiming for large-scale operations and looking to raise capital from the public. 
• It requires at least seven shareholders and is governed by stricter regulatory and compliance rules. 
• This structure is best suited for foreign companies planning significant expansion and seeking broader investment opportunities.

Branch  

• Opening a branch enables a foreign company to set up a presence in India without creating a separate legal entity
• Prior authorization from the Reserve Bank of India is needed before setting up a branch in India.
• It is considered ideal for activities such as market research, project coordination or representative functions.

Limited Liability Partnership (LLP) 

• A Limited Liability Partnership is a hybrid business model that blends features of both a company and a partnership.
• This allows foreign companies to invest through the automatic route in various sectors.

India provides a receptive and progressive market for foreign companies. Though the setup process demands careful attention, the potential benefits are substantial. Choosing the company type that matches their needs goes a long way in building a strong foothold in the country.