Entering the Indian market can offer your business various new opportunities. India’s economy has accelerated throughout the 21st century to become the sixth largest globally and a significant global player. India had nominal GDP in 2021 of 2,946 billion US dollars, equating to 3.10% of the global economy. A growth rate of 9.50% made it the world’s fastest-growing economy, while Goldman Sachs predicts that by 2035 only China and the US will have economies larger than India’s.

The Republic of India in South Asia is the world’s seventh-largest country by area, second-largest by population and the most populous democracy in the world. Its geographical location is an ideal launch pad for companies to expand further into Asia, the Far East and the Pacific Rim.

Foreign Direct Investment (FDI) is expected to reach between 120-160 billion US dollars annually by 2025. According to statistics from the Department for Promotion of Industry and Internal Trade, this proves a significant attraction for foreign companies planning expansion. The computer software and hardware industry attracted the highest FDI between April and Statistics from the Department for Promotion of Industry and Internal Trade.

Starting a business in India

Opening a business in any overseas territory brings issues and entering the Indian market is no different. Moving staff worldwide means lengthy processes to obtain visas and work permits. Once employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.

India is a magnet for increasing levels of foreign investment, but companies face multiple registration procedures and an employment market where employment laws are being updated and rationalised. Where will you find manufacturers, offices and distributors? There is a simple and effective alternative. By partnering with a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in India. Here we set out some of the necessary steps.

International companies entering the Indian market to hire staff and run payroll can otherwise establish a legal entity as a subsidiary. The most common route into India’s economy is to open a private limited liability company under the Companies Act (2013), which establishes rules on incorporation, shares, directors and officers, accounts and other provisions. The registration procedures include the following:

  • Applying to the Registrar of Companies(ROC) to register the unique company name.
  • eForm FC-1 must be filed with the ROC by foreign-owned subsidiaries, signed electronically by authorised representatives of the foreign company.
  • Registering the Digital Signature Certificate (DSC) of the authorised representative of the foreign parent company.
  • Having a Certificate of Incorporation issued by the ROC after applying with Form INC-7.
  • Providing a Memorandum of Association and Articles of Association.
  • Obtaining a Permanent Account Number (PAN) for both the company and the directors from the Income Tax Department.
  • Using the form DIR-12 to provide additional documentation: IDs of the officers and directors, proof of registered office address; occupations of directors and shareholders

Expanding your business into India

India is a big country with big ambition and with just cause. Its economy accounts for a 3.1% share of the global market economy with a GDP of US$2,946 billion. However, it is also a mixture of the very best and challenging. But with low costs, inexpensive accommodation and plenty of room for opportunity, foreign companies are attracted to its vast consumer base with growing disposable income.

In 2000 India introduced Special Economic Zones (SEZ), which offer incentives to businesses, including duty-free and tax breaks. They had exponential success in some areas, such as IT, with web-enabled services showing increased exports in IT software, electronics and circuit boards. However, September 2022 sees a re-vamp to be more inclusive with new legislation to draw in all 28 states to partner in the ‘Development of Enterprise and Service Hubs’. There will also be reforms for customs administration systems and providing state-of-the-art infrastructure to ease business in a new ’employment and economic enclave’.

Mumbai, formerly Bombay, is a metropolitan city with an eclectic mix of cultures, religions and ethnicities. It is the capital of Maharashtra and the vibrant financial centre of India. It is one of the largest ports and a principal hub for international freight. Great for start-ups and is officially the best hub for business opportunities in the March 22 budget, start-ups and new businesses benefited from increased tax incentives.

Bengaluru (formerly known as Bangalore) is known as India’s tech capital and host to many Fortune 500 businesses, but it is also famous for its nightlife and green spaces. Between 2014 and 2020, this ‘Silicon Valley and Startup Hub’ of India saw 11,000 new start-ups. Bengaluru Mission 22 showed plans to make the city “one of the best in the world” with investment in infrastructure to improve the environment, services and transport for its citizens.

Hyderabad has an ecosystem already primed for the IT business. Delhi and Bengaluru welcome expatriates, Kolkata is suitable for heavy industry, and Nagpur is home to many top manufacturing companies such as Procter and Gamble, Unilever, Colgate-Palmolive and Tata Motors.

Where to locate your office in India depends on your market, accessibility, suppliers and available talent. India is a vast country, and doing the research will take a lot of local ‘know-how’. Bradford Jacobs has that know-how, and ensuring your business office is in the best possible location for your company is our job. We are the oil to your business machine, lubricating the wheels of your expansion into India.

Some Indian Facts

  • Capital – New Delhi.
  • Population – 1.4 billion.
  • Regions – Geographically India has six regions: North, East, South, West, North East and Central. There are 28 states and 8 Union Territories.
  • Official language – There is no national language. Hindi is the official language of the central government, which recognizes 22 other official regional languages.
  • Economy – US$2,946 billion, ranked sixth in the world in 2021.
  • Leading sectors by GDP – Service 53.9%, industry 25.9%, agriculture 20.2%.
  • Primary exports includePetroleum products, gems and jewellry, medicines, iron, steel, tea, coffee, spices
  • Leading imports include – Mineral fuels, precious and semi-precious stones, electrical machinery, nuclear reactors, organic chemicals
  • Main trading partners – United States, China, United Arab Emirates, Saudi Arabia, Switzerland, Hong Kong, Singapore, Iraq
  • Government – Democratic republic with parliamentary government, federal in structure with a unitary element
  • Currency – Rupee (INR)


Advantages and Challenges when entering the Indian Market

Some advantages of entering the Indian market include the following:

  • Economy: A developing mixed market, middle-income economy which encourages foreign investment and has privatized and deregulated many industries
  • Location: In south Asia, ideally placed as a stepping stone for further expansion into the Far East and among Pacific Rim nations
  • Wages / Salaries: Cost-effective for businesses and allied to a relatively low cost of living
  • Mobility: Increased urbanization attracts well-educated and qualified upwardly-mobile younger generations into the cities. India’s middle class more sizeable than that of the US
  • Communication: A legacy of the British Empire is that India has one of the largest English-speaking populations in the world, making it a hub for call centres and outsourcing
  • Growth: Various financial sources predict the economy to increase by over 9% during 2023

Some challenges of entering the Indian market include:

  • Structural imbalance: Unemployment among unskilled workers not trained to adapt to developing industries
  • Infrastructure: Inefficient distribution networks causing supply chain deficiencies
  • Labour: Rigid regulations deter many firms from expanding above 100 employees, though the introduction of four new employment codes aims to rationalize laws
  • Taxes: India has poor tax collection rates
  • Bureaucracy: The World Bank ranked India only 130th out of 190 for ‘ease of doing business, with significant concerns over enforcing contracts, construction permits, paying taxes and cross-border trading


For more information, download our free guide or get in touch with our consultants here