NRI business setup in India - done right

Yes, NRIs and Persons of Indian Origin (PIOs) can start businesses in India. Most sectors allow 100% FDI under the automatic route, meaning no prior government approval is needed. You need to incorporate a company (Pvt Ltd or other entity), comply with FEMA regulations, and report capital flows to RBI.

The automatic route means you can invest up to 100% in most Indian sectors without prior government approval. After investing, you simply report the transaction to RBI within prescribed timelines (e.g., FC-GPR within 30 days). Sectors like defense, telecom, and media have specific caps or require approval.

FEMA (Foreign Exchange Management Act, 1999) governs all foreign exchange transactions in India. It regulates how foreign investment comes into India, how profits can be repatriated, and what reporting is required. Non-compliance can attract penalties up to 3x the transaction amount.

For most sectors under the automatic route, no prior RBI approval is needed. You incorporate the company and report the investment to RBI afterward (FC-GPR form). Only certain sectors (defense, telecom, etc.) require prior government or RBI approval.

NRE (Non-Resident External) accounts hold foreign-earned income and are fully repatriable - you can freely transfer funds back to your home country. NRO (Non-Resident Ordinary) accounts hold Indian-sourced income and have repatriation limits (up to $1M per financial year with proper documentation). Both are FEMA-regulated.

Yes, profits can be repatriated as dividends after paying applicable taxes in India. The post-tax dividend is freely repatriable through an AD bank. For branch profits, a branch profits tax applies before repatriation.

FC-GPR (Foreign Credit through General Permission Route) is the form used to report share capital issuance to foreign investors to RBI. It must be filed within 30 days of issuing shares to foreign shareholders. This is a mandatory FEMA compliance requirement.

DTAA (Double Taxation Avoidance Agreement) is an agreement between India and 130+ countries to prevent the same income from being taxed in both jurisdictions. NRIs can claim DTAA benefits to avoid paying tax twice - once in India and once in their home country - by providing a Tax Residency Certificate (TRC).

A wholly owned subsidiary is an Indian company (typically Pvt Ltd) where 100% of the shares are held by a foreign parent company or NRI investor. It is the most common and preferred structure for NRIs entering India, offering limited liability, easy compliance, and standard corporate governance.

Yes, NRIs can be directors of Indian companies. The only requirement is that at least one director must be a resident of India (stayed 182+ days in India in the previous financial year). NRIs need a Digital Signature Certificate (DSC) for electronic filings with MCA.

A liaison office (also called a representative office) is an extension of a foreign company in India for market research, coordination, and communication. It cannot earn revenue or conduct business operations in India. Liaison offices must be approved by RBI and are typically used as a first step before setting up a full subsidiary.

NRI-owned Indian companies are taxed like any other domestic company - 25% or 30% on profits. However, NRIs should also consider DTAA benefits, transfer pricing rules (for transactions with the overseas parent), and withholding tax on dividends/interest. We recommend CA support for cross-border tax planning.

FLA (Foreign Liabilities and Assets) return is an annual return that Indian companies with FDI must file with RBI. It discloses the company's foreign liabilities (borrowings, investments) and foreign assets. The deadline is 15 July each year for the previous financial year.

Yes. You can convert a proprietorship or partnership firm into a company. The process involves drafting MOA/AOA, transferring assets and liabilities, and filing SPICe+. Any existing business assets can be transferred to the new company, but this requires proper documentation and valuation.

Transfer pricing governs pricing between related parties (e.g., your Indian subsidiary and overseas parent). If your Indian company transacts with the overseas parent - buying goods, services, or paying royalties - the prices must be at arm's length (fair market value). Documentation is mandatory, and non-compliance can attract penalties.

FEMA violations attract penalties up to 3 times the transaction amount. Adjudicating authorities can also direct compounding (settlement) for certain violations. Serious violations involving contravention of FEMA directions can attract triple the sum involved. We recommend proactive compliance rather than penalty-driven learning.