India is a top destination for foreign investment, with a thriving startup ecosystem and growing demand across sectors like renewable energy, healthcare, AI, and manufacturing. For European founders, the market offers strong growth potential. This guide outlines the key steps and legal essentials for business setup in India for EU founders, with insights on how firms like BCL India can support a seamless entry.

Why India?

India, the world’s fourth-largest economy, offers a vast and dynamic consumer market, driven by steady GDP growth, a young population, and rapid digital transformation. Reforms such as liberalised FDI norms in sectors like retail, manufacturing, and fintech, along with digital tools like SPICe+ for company registration, have made it easier for foreign entrepreneurs to enter the market.

A successful business setup in India for EU founders requires a well-structured approach—choosing the right legal entity, securing necessary registrations, and ensuring compliance with local regulations—all while aligning business strategies with India’s unique market dynamics.

Step 1: Choose the Right Business Structure

When starting a business in India, the first and most critical step is selecting the right legal structure. This decision shapes your operations, taxation, and compliance responsibilities. European businesses can typically choose from the following options, depending on their market entry strategy and long-term goals:

• Private Limited Company (PLC): The most preferred structure for EU founders. It offers limited liability, scalability, credibility, and ease of raising capital. Often set up as a Wholly Owned Subsidiary, it allows 100% foreign ownership and full operational control.
• Limited Liability Partnership (LLP): Suitable for professional services, consulting, and IT firms. It offers limited liability with fewer compliance obligations and is gaining popularity due to relaxed FDI norms.
• Branch Office: Enables quick entry to carry out trading or service activities related to the parent company. Common among European businesses in finance, engineering, and tech sectors. Profits can be repatriated, but operations are limited to approved scopes.
• Liaison Office: A non-commercial setup for market research and brand promotion. Ideal for EU companies looking to understand the Indian market before committing resources.
• Project Office: Temporary setup for specific contracts or projects, especially in infrastructure or engineering, without long-term commitments.
• Joint Venture (JV): Collaborating with an Indian partner to share local expertise, resources, and risks. Useful for sectors requiring local insight or market connections.

Each structure has distinct advantages and regulatory implications. For most EU entrepreneurs, business setup in India is best achieved through a Private Limited Company due to its flexibility and long-term benefits. Consulting with experts like BCL India can ensure you choose the structure that best fits your strategic goals.

Step 2: Business Incorporation in India

A. Get Digital Signatures (DSC) and Director Identification Numbers (DIN)

• Obtain Digital Signature Certificate (DSC):
  All proposed directors must acquire a DSC, which is used to digitally sign incorporation documents submitted to the Ministry of Corporate Affairs (MCA). The DSC can be obtained through government-approved certifying authorities in India.
• Apply for Director Identification Number (DIN):
  A DIN is a unique identification number required for anyone intending to be a director in an Indian company. It is applied for through the SPICe+ form during incorporation.

Note: At least one director must be a resident in India, defined as someone who has stayed in India for 182 days or more in the previous calendar year, unless exempted under specific provisions.

B. Reserve the Company Name

Choosing a business name is a key step for European founders launching a business in India, as it represents the brand and must meet legal and regulatory standards. The name must be unique, not infringe on existing trademarks, and comply with Rule 8 of the Companies (Incorporation) Rules, 2014.

If the EU parent company wants to use its existing name for the Indian entity, it is allowed—provided certain conditions are met:

• Submit a No Objection Certificate (NOC) or board resolution from the parent company authorizing use of the name.
• If the name is trademarked, include a copy of the trademark certificate or formal permission to use it.

If applying for a new name, log in to the MCA portal and use Part A of the SPICe+ form, proposing up to two names and attaching relevant documents.
Once approved, the name is reserved for 20 days, during which the incorporation process must be completed.
For a smooth and compliant name registration process, seeking expert support from firms like BCL India is highly recommended

C. Prepare and File Incorporation Documents

Draft Incorporation Documents: Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) to define the company’s objectives and internal rules.

File SPICe+ Form (Part A & B): Submit the integrated SPICe+ form via the MCA portal along with required attachments such as proof of registered office, identity and address proof of directors and shareholders, declaration of compliance.

RoC Verification and Certificate of Incorporation: Once the Registrar of Companies (RoC) verifies the documents, you will receive the Certificate of Incorporation along with the Corporate Identification Number (CIN), officially establishing the company.

PAN and TAN: The Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are automatically generated during the incorporation process.

The specific steps involved in registering your business in India can vary significantly depending on the chosen business structure. Engaging an expert consultancy can provide valuable guidance tailored to your needs.

Step 3: Open a Bank Account and Bring in Capital

Once the company is incorporated, you must open a corporate bank account in India. For foreign investors, inward remittance of share capital must be reported to the Reserve Bank of India (RBI) via Form FC-GPR within 30 days of allotment of shares. A professional firm can ensure timely compliance with these regulatory requirements.

Step 4: Obtain Statutory and Sector-Specific Registrations

After incorporation, EU founders must secure additional licenses based on the nature and location of their business. Key registrations include:

• Shops and Establishment License – Mandatory in most states for commercial establishments.
• Professional Tax Registration – Required in certain states for employers and employees.
• Import Export Code (IEC) – Essential for businesses involved in cross-border trade.
• Sector-Specific Licenses – Includes FSSAI (for food businesses), drug licenses, environmental clearances, etc., depending on the industry.

BCL India can assist European founders in identifying applicable licences and completing local registrations.

Step 5: Understand Taxation and Compliance

For business setup in India for EU founders, understanding the local tax framework is critical to ensure smooth operations and compliance. Key tax obligations include:

• GST Registration & Compliance – Mandatory for businesses crossing prescribed turnover limits or involved in interstate trade, with regular return filings.
• Corporate Income Tax – All Indian entities must file annual returns and pay taxes on income earned.
• TDS (Tax Deducted at Source) – Requires periodic deductions and filings based on transactions.
• Transfer Pricing Compliance – Applicable to transactions with foreign affiliates, requiring proper documentation and benchmarking.
• Statutory Audits & Filings – Appointment of an auditor within 30 days of incorporation and filing of annual financial statements is mandatory.

BCL India offers comprehensive support in navigating India’s tax system, ensuring full compliance and leveraging available incentives.

Step 6: Leverage Government Schemes and Incentives

The Indian government offers various schemes to attract foreign investment and support business growth. European founders can benefit from:

• Start-up India Initiative: Offers tax exemptions, simplified compliance, and funding support for eligible start-ups.
• SEZ Benefits: Businesses operating in Special Economic Zones enjoy tax holidays, duty exemptions, and other export-related incentives.
• State-Specific Incentives: Several Indian states provide additional benefits for infrastructure development, employment generation, and sector-specific projects.

Tapping into these incentives can significantly reduce costs and improve long-term profitability.

Step 7: Hire and Manage Employees Legally

If you plan to hire Indian staff, ensure compliance with labour laws:

• Draft employment contracts as per Indian labour standards.
• Register with Employees’ Provident Fund Organization (EPFO) and Employees’ State Insurance Corporation (ESIC).
• Adhere to minimum wage, leave policies, and bonus rules applicable in the region.

Hiring through Professional Employer Organizations (PEOs) or local HR consultants is a common practice to reduce administrative burden in the initial phase.

Step 8: Develop a Local Market Strategy

Registering a company is just the first step—success in India requires adapting to its diverse market. European founders should:

• Customise Products & Strategy: Align offerings with Indian preferences and pricing expectations.
• Set Up Locally: Establish operations in cities like Bengaluru, Hyderabad, Pune, or Gurugram.
• Hire Local Experts: Navigate legal and cultural nuances with regional advisors.
• Partner Strategically: Work with Indian suppliers, distributors, or firms to scale effectively.
• Network Actively: Engage with industry bodies and chambers for market insights and connections.

With proper localisation and expert support from firms like BCL India, EU businesses can thrive in the Indian market.

Final Thoughts

How to launch business in India from Europe? – The question may seem daunting, but with a clear roadmap and reliable partners, success is very much within reach. From choosing the right business structure to complying with Indian laws and scaling operations, each step plays a vital role in your Indian business journey.

BCL India, with 30+ years of experience, supports European founders with services such as company incorporation, FEMA and RBI compliance, payroll, tax, accounting, and Virtual CFO solutions. Their end-to-end support ensures smooth entry and sustained growth in the Indian market.

Starting a business in India as a European is no longer a bureaucratic challenge—it is an opportunity. By following this step-by-step India company registration guide and working with the professionals, you can unlock the full potential of the Indian market while ensuring full compliance and strategic growth