Business Structures in India for Non-Resident Investors: Choosing the Right Entity
India is a top destination for global entrepreneurs, NRIs, and multinational companies seeking long-term growth, a vast consumer base, and emerging market potential. However, selecting the correct business structure is crucial for success and compliance with Indian legal and tax systems.
At Jain Prachi & Company, we help non-resident investors choose and establish the ideal business entity in India—aligning with their goals, risk appetite, and investment model.
Why Business Structure Matters for International Investors
Your choice of entity affects multiple factors such as:
- Ownership and control
- Repatriation of profits
- Taxation and compliance burden
- Fundraising ability
- Regulatory restrictions on foreign investment
A well-informed structure ensures long-term tax efficiency and smooth business operations in India.
Key Business Structures Available for Non-Resident Investors
Foreign businesses and NRIs can register several types of business entities in India, subject to sector-specific FDI limits and FEMA guidelines.
- Private Limited Company (Wholly Owned Subsidiary or Joint Venture)
Best suited for: Foreign companies or NRIs planning long-term business in India with full or partial ownership
Key Features:
- 100% foreign ownership permitted under the automatic route in most sectors
- Limited liability for shareholders
- Eligible to repatriate profits and pay dividends
- Mandatory statutory compliance and audits
- Can raise funding through equity or debt
This is the most preferred structure for foreign companies setting up operations in India.
- Limited Liability Partnership (LLP)
Best suited for: Professional services firms or small investment ventures
Key Features:
- Limited liability and flexible internal structure
- FDI allowed under the automatic route in sectors where 100% FDI is permitted
- No dividend distribution tax
- Lower compliance burden than a company
- Profit repatriation allowed, subject to tax and FEMA compliance
Note: LLPs cannot raise equity capital from the public and may not be suitable for high-growth ventures.
- Branch Office (BO)
Best suited for: Foreign companies providing services or testing the Indian market
Key Features:
- Can conduct commercial activities in India
- Requires prior approval from the RBI
- All expenses must be funded from parent company
- Profits are taxable at 40% plus surcharge
- No separate legal entity; extension of the parent company
This structure is ideal for companies offering consulting, software development, or trading activities.
- Liaison Office (LO)
Best suited for: Market research, representation, and business promotion
Key Features:
- Cannot generate income in India
- Permitted only to liaise between parent and Indian businesses
- Requires RBI approval
- Expenses must be met through inward remittances
- No profit repatriation, as income generation is not allowed
This is a temporary and non-commercial presence suitable for brand establishment or regulatory approvals.
- Project Office (PO)
Best suited for: Foreign companies executing specific projects in India
Key Features:
- No prior RBI approval if the project is awarded by a government or funded by multilateral agencies
- Can open bank account for project-related expenses
- Must close once the project is completed
- Permitted only for execution of specific contracts
Comparison of Business Structures
Entity Type | FDI Allowed | Income Generation | RBI Approval | Repatriation Allowed |
Private Limited Co. | Yes | Yes | No (Automatic Route) | Yes |
LLP | Yes (Selective) | Yes | No (in most cases) | Yes |
Branch Office | Yes | Yes | Yes | Yes |
Liaison Office | Yes | No | Yes | No |
Project Office | Yes | Yes (Project-based) | Conditional | Yes |
How Jain Prachi & Company Helps
Choosing the wrong structure can result in regulatory hurdles, tax inefficiencies, or delays in business expansion. Our team ensures you are fully equipped to make the right decision.
We provide:
- Evaluation of business goals and risk profile
- FDI and FEMA advisory
- Entity registration and post-incorporation compliance
- Tax planning and transfer pricing advisory
- End-to-end support for approvals from RBI, MCA, and banks
Plan Your Indian Entry with Expert Guidance
Our firm has helped global clients—from startups to multinational corporations—enter India with confidence and regulatory clarity. Whether you are looking for a low-compliance LLP or a full-fledged subsidiary, we help you every step of the way.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
Reach out to our experts to determine the most effective entry strategy into the Indian market.
FAQs – Business Structures in India for Foreign Investors
Q: Can a foreign company own 100% of an Indian company?
Yes, in most sectors, 100% foreign ownership is permitted under the automatic route. Some sectors require prior government approval.
Q: What is the difference between a branch office and a subsidiary?
A branch office is an extension of the parent entity with limited rights, while a subsidiary is a separate legal entity that offers greater flexibility and profit repatriation options.
Q: Which business structure is best for market entry without major investment?
A Liaison Office is suitable for representation and research, but not for revenue-generating activities. An LLP may also suit low-capital ventures.
