Approvals Required for UK Companies to Start Operations in India 

Setting up a business in India requires careful coordination with central and state regulators before operations can commence. The approvals required to start business in India primarily cover company incorporation, foreign direct investment compliance, sectoral license where applicable, tax and social security registrations, and environmental and labour approvals. These steps are administered through digital portals to speed processing. However, for sensitive sectors, several approvals still require nodal ministry clearances for sensitive sectors.  

Recent fiscal and regulatory changes in India under the union budget 2026 have further clarified foreign investment treatment and expanded incentives for digital and IFSC activity. These reforms that has been discussed in the budget are intended to make timelines and conditionalities more transparent for foreign entrants. Let’s discuss some of the approvals that are required for UK companies to setup in India.  

Incorporation and Immediate Registration 

Most investors incorporate an Indian private limited company or wholly owned subsidiary. Incorporation is executed using the SPICe+ integrated web form, which combines name reservation, Director Identification Number allocation, PAN and TAN allotment, and linked registrations such as Employees’ Provident Fund and GST, if applicable. Platforms like SPICe+ reduces procedural steps and consolidation central and certain stage registration at the time of incorporation. Here are some practical checklists at incorporation: 

• Obtain Digital Signature Certificates for proposed directors, including overseas nominees where required.  

• Ensure compliance with the Companies Act requirement for at least one director resident in India. 

• File SPICe+ (Part A and Part B as required) with memorandum and articles, proof of registered office and KYC for directors and subscribers.  

Foreign Direct Investment Compliance and Routes 

FDI into India is governed by the consolidated FDI policy and routed either under the automatic route or the government approval route. The government route is managed through the Foreign Investment Facilitation Portal (FIFP) integrated with the National Singe Window System. UK investors generally use the automatic route for sectors such as IT, manufacturing and many services. Whereas sensitive sectors such as defence, media activities and specified capped sectors require an application through FIFP. Some of the key compliance pointers to keep in mind are: 

• If equity share or convertible instruments are issued to a non-resident investor, the Indian company must file Form FC-GPR with Reserve Bank of India within 30 days of issue to report inward investment.  

• Where the government route applies, the FIFP/NSWS portal is the online channel for approvals, and the process includes inter-ministerial clearances where relevant.  

Sector-Specific Licences and Nodal Ministries 

Certain activities are regulated by sectoral authorities and require separate licences or permissions before the operations begin. Some examples include: 

• Telecom services: Licenses and spectrum or ILD/NLD authorisations from the Department of Telecommunications.  

• Financial services and insurance: Sectoral permissions from the appropriate financial ministry regulator. The Budget 2026 confirmed changes increasing the FDI limit in Insurance to 100 percent subject to conditions, and the relevant implementation pathways are through the designated financial department and FIFP.  

• Manufacturing or projects with environmental impact: Prior environmental clearances under the EIA Notification and related requirements from the Ministry of Environment, Forest and Climate change.  

When assessing a project, it is important to identify any “negative list” or restricted activities that may trigger industrial licensing or explicit ministerial approvals. It is also important to submit technical and compliance documentation to the nodal authority. 

Tax Registration and Financial Compliances  

SPICe+ automated PAN and TAN allotment at incorporation for the company. Registration for Goods and Services Tax is compulsory where taxable turnover exceeds statutory thresholds or where the business makes inter-state supplies. The Central Board of Indirect Taxes and Customs. Additional financial and banking compliance requirements include: 

• Open an Indian bank account for the company to receive foreign remittances and comply with FC-GPR reporting.  

• Budget 2026 and the accompanying Financial Bill set out tax law changes and process digitisation measures. It is important that firms review those carefully for corporate tax, withholding and transfer pricing consequences.  

Labour, Social Security and Local Registration 

Under the Employees’ Provident Funds and Miscellaneous Provisions Act, establishments generally become liable to register with Employees Provident Fund Organisation once they employee 20 or more eligible employees. This requires: 

• Online registration through the EPFO unified portal 

• Monthly Employer and employee contributions  

• Ongoing electronic filings and maintenance of statutory records 

Once coverage is triggered, the obligation typically continues even if employee strength subsequently falls below the threshold.  

Similarly, establishments employing 10 or more persons, subject to wage ceilings and state notifications, must register with the Employees’ State Insurance Corporation. The compliance involved are: 

• Periodic contribution payments 

• Employee enrolment and insurance documentation 

• Statutory reporting and inspection readiness 

Beyond central social security statutes, companies must complete state-level operational registration. These commonly include: 

• Registration under the relevant Shops and Establishments legislation prior to commencing business operations 

• Registration for professional tax in jurisdictions where such levy is applicable  

• Additional state-specific labour registration depending on industry and employee headcount 

Although SPICe+ integrates certain central registrations at the incorporation stage, many state filings remain separate. Coordinated handling of these approvals ensures that workforce expansion proceeds without regulatory disruptions.  

Post-Incorporation Compliance and Ongoing Filings 

Companies need to ensure that statutory books are updated and that annual fillings are completed with the Registrar of Companies, including AOC-4 for financial statements and MGT-7 for the annual returns. Board reports must also be approved and filed within statutory deadlines.  

Where foreign capital has been introduced, reporting to RBI may extends beyond the initial FC-GPR filings to include annual Foreign Liabilities and Asset disclosure. Other than this, routine tax compliance such as income tax returns, GST filings, TDS returns and transfer pricing documentation must be handled with precisions. An effective compliance framework generally includes: 

• A documented annual filing schedule 

• Clear internal responsibility for board approvals 

• Monitoring of indirect tax and withholding timelines 

• Tracking of RBI reporting obligations  

Getting accustomed to a disciplined filing habit and retaining supporting records will materially lower the likelihood of penalties, enquiries or compliance bottlenecks.  

Reference Table for Approvals, Authority and Typical Trigger 

Conclusion 

For any UK companies, approvals required to start a business in India combine a predictable digital front end with sectoral checks that remain supervised where national security or public interest is involved. Digital instruments such as SPICe+ and the FIFP/NSWS single window have shortened the startup compliance path by streamlining the process. However, careful mapping of sectoral rules, timely RBI reporting, and social security registrations remains essential to avoid penalties and operational delay.  

Strategic planning ahead of market entry, coordinated legal and tax structuring, and early engagement with nodal authorities will reduce friction. Union budget 2026 strengthens transparency in foreign investment regulations and implements measures aimed at improving investors confidence. Consult official budget documents and regulatory platforms before finalising filings and investment structure.