Simple guide for foreign nationals setting up business in India – 2025

This guide is for foreign entrepreneurs and companies who want to open a business in India, especially in the IT sector. We’ll cover the best company structure, legal steps, hiring rules, and how to stay compliant — all in simple terms.

Company Setup

Can a Foreign National Be a Director in an Indian Company?

Yes! But at least one director must live in India (182+ days in a year). Minimum 2 directors are required. Its not mandatory to give shares to the Indian director

Can a Foreign Company Own 100% of an Indian Company?

Yes, in most industries. Some sectors like defense, telecom, and retail have ownership limits.

 Do you have to visit India to register a company?

What Type of Company Should a Foreigner Register in India?

Here are the most common options:

✅ Private Limited Company is the most popular choice. It’s easy to scale, allows full control, and is approved for 100% foreign ownership in most sectors.

What Documents Are Required to Register a Private Limited Company?

You’ll need:

• Passport + address proof (notarized/apostilled)

• Indian office address (virtual office is okay)

• Certificate of incorporation of a foreign company(notarized/apostilled)

Which City Should You Register In?

You can pick any city. You can register in any city and can hire employees or open offices anywhere in India. Laws are the same across India. Popular cities for tech:

• Bangalore – Tech capital

• Hyderabad – Affordable talent

• Pune – Education hub

• Gurgaon – Near Delhi

Is There a Minimum Capital Requirement?

No minimum is required. But plan for:

• Registration costs

• Office deposits

• 3–6 months of expenses

How to Register a Company in India (Step-by-Step)

Step 1: Choose a Name and Get Approval

Step 2: Get Digital Signatures (DSC) for Directors

Step 3: File SPICe+ Form for Registration

Step 4: Get PAN, TAN, and GST if needed

Step 5: Receive Certificate of Incorporation

🕐 Time: Around 12–17 working days

What to Do After Registration

• ✅ Open a business bank account

• ✅ Apply for GST if required

• ✅ Set up payroll system (e.g. GreytHR)

• ✅ Hire an auditor (within 30 days)

• ✅ Start accounting and bookkeeping

Hiring Employees

Issuing offer letters to employees after company registration and labor laws

Below are the common terms in the offer letters:

1. Job Title & Department

• Clearly states the role (e.g., Software Developer) and team (e.g., IT or Engineering).

2. Reporting Manager

• Name or position of the person the employee will report to.

3. Employment Type

• Regular, Probationary, Contract, or Internship.

• Probation is usually for 3 to 6 months.

4. Joining Date

• The date from which the employee is expected to start work.

5. Location of Work

• City and office address.

• May mention hybrid or remote terms.

6. Compensation (CTC)

• Annual salary package (Cost to Company).

• May include a breakdown or reference to an annexure.

7. Salary Components

• Basic, HRA, Special Allowance, Bonus, etc.

• Reimbursements and deductions (PF, ESIC, tax).

8. Working Hours

• Weekly working days (usually 5 or 6)

• Office hours (e.g., 9:30 AM to 6:30 PM)

9. Leave Policy

• Paid Leave (minimum 21 days/year)

• 10 National Holidays

• Sick leave, Casual Leave, etc.

10. Benefits

• Medical Insurance (mandatory)

• PF, ESIC, Gratuity (after 5 years)

• Bonus, travel allowance, wellness, etc.

11. Notice Period

• Usually 1 month (30 days)

• Can be paid in lieu of notice

12. Termination Clause

• Grounds for termination (misconduct, poor performance, etc.)

• Notice or compensation in place of notice

13. Confidentiality Clause

• Agreement not to disclose company data or client information.

14. Non-Compete / Non-Solicit (if applicable)

• Some companies restrict working with competitors or clients for 6–12 months after exit.

15. Background Verification

• Offer subject to successful verification of documents and references.

16. Acceptance of Offer

• Sign and return a copy to confirm acceptance.

• Deadline for acceptance (e.g., within 3–7 days).

Payroll Processing:

• There are many online payroll systems just like Gusto and Brex. Completely online and 1 click payroll process.
• Monthly 1 payroll cycle, typically 30th of the month.