India welcomes foreign founders, and a foreign citizen can fully own an Indian company. But a few rules catch people out, especially for online selling. Knowing them before you start saves months of rework.
You can own a company, but you need a resident director
A foreign national can be a shareholder and director of an Indian private limited company. However, every company must have at least one resident director: someone who stays in India for 182 days or more in the year. That person can be of any nationality. If no one in your team lives in India, this is the first thing to solve.
Think twice about a virtual office
You can use a virtual office as the registered address. But GST registration on a virtual office can lead to a physical verification visit, and problems if no one is there. A real, verifiable place of business makes GST registration smoother.
The big rule for e-commerce
This is the most important point for online sellers. A foreign-owned Indian company cannot run an inventory model, meaning buying stock and selling it directly to Indian consumers online. What is allowed:
- Marketplace model: running a platform where other sellers sell.
- Single-brand retail: selling your own single brand, subject to its own conditions.
- Export or wholesale models: selling outside India, or selling in bulk to Indian businesses.
Sometimes the simplest option is not to set up in India at all, and sell into India directly from your home country.
Bringing in the money
For most countries, investment into most sectors is on the automatic route, so no prior government approval is needed. After the money comes in and shares are issued, the company must report to the Reserve Bank of India (Form FC-GPR within 30 days of issuing shares) and file a yearly return (the FLA return by 15 July).
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