How to Start a Business in India as an Australian Company 

Australian businesses looking to setup in India couldn’t have chosen a better time. With the introduction of the Comprehensive Economic Cooperation Agreement (CECA), both countries are looking to boost bilateral trade over time. For Australian businesses in particular, CECA brings key changes in tariffs rates to specific products and diplomatic incentive set to benefit businesses in the long run.

While the Indian market today is significantly easy to enter, it is by no means without its set of challenges. It requires accurate and timely decisions at key stages of the pre-incorporation process. These include choosing the right structure, registering correctly, and understanding the compliance obligations that follows.

These are the kind of details that an experienced business consultant would be aware of. But before turning to professional help, it is important to understand what you are getting into. That is what this blog covers, starting with answering questions like why India has become such a compelling destination for Australian companies and how to start a business in India as an Australian company.

Why Australian Companies Are Looking at India Now

The economic relation between the countries continue to grow beyond the trade agreements. Both governments have consistently expressed their commitment to expand their bilateral trade and investment.

“India’s growth story presents immense opportunities for Australian businesses. Together, we can build trusted and future-ready partnerships.”
-Prime Minister Narendra Modi, July 2026

This shared vision became more concrete in July 2026, when Prime Minister Modi travelled to Melbourne for the Australia-India CEO Forum. There, he addressed business leaders directly alongside Prime Minister Albanese. The message was clear, come and invest in India for the long term. The conversations pointed to an ambitious roadmap for a bilateral trade deal in years to come.

The momentum is shifting from ECTA towards a fuller Comprehensive Economic Cooperation Agreement (CECA). Companies that move now to establish an Indian presence will be in a better place than those who are waiting for the next deal.

Which Business Structure Should an Australian Company Choose in India?

The choice of business structure shapes everything that happen downstream. It affects tax position, compliance calendar, and how much control can a parent company retain. When it comes to Australian business, there is no single correct structure. Everything depends on whether the business intend to sell in India, manufacture in India, simply monitor the market, or is planning for a fixed-term project.

• Wholly Owned Subsidiary (WOS): An Indian private limited company in which the Australian parent holds up to 100 per cent of the shares, typically through the automatic route. This is the structure most Australian companies choose when they intend to invoice Indian customers, sign contracts locally, hire staff, and build a genuine commercial operation. It is a separate legal entity under Indian law, which means the parent company’s liability is generally limited to its investment.

• Joint Venture (JV): A company incorporated with an Indian partner, useful in sectors where local relationships, distribution networks, or regulatory familiarity genuinely add value, or where sectoral FDI caps make full ownership impractical. The trade-off is shared control and the need for a carefully drafted shareholders’ agreement.

• Limited Liability Partnership (LLP): An LLP blends a company’s limited liability with a partnership’s flexibility. The FDI angle is a bit narrower though, since automatic route approval only applies in sectors where 100% FDI is allowed with no performance-linked conditions attached. That rules LLPs out for a lot of regulated industries, but for consulting and professional services, it’s a genuinely lighter-weight option worth considering.

• Branch Office: An extension of the Australian parent company, not a separate Indian entity, permitted for activities such as export or import of goods, research, consultancy, or acting as a buying or selling agent. It cannot generally carry out manufacturing or retail trading directly, and it requires RBI approval.

• Liaison Office: A representative presence used purely to gather market information and act as a communication channel between the Australian parent and Indian contacts. It cannot invoice anyone and can’t sign commercial contracts. If revenue generation is the goal, this isn’t the right vehicle.

• Project Office: A temporary setup used when an Australian company has already landed a specific contract from an Indian entity, typically for infrastructure, engineering, or turnkey projects. Once the project wraps up, so does the office.

Here is how they compare side by side.

Understanding FDI Rules: Automatic Route vs Government Route

Foreign investment into an Indian company is governed by the Foreign Exchange Management Act (FEMA), 1999, through the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and by the Consolidated FDI Policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT).

Under the automatic route, investment by a person resident outside India does not require prior approval of the Reserve Bank of India or the Central Government. A smaller list of sectors sits outside this route and require government approval before funds can move.

FDI Route Comparison

For businesses coming to India, it is crucial to check the specific sector they fall into before committing to a structure. This is primarily because caps and conditions are revised periodically. Recent changes show how quickly the policy can shift in a company’s favour, such as the move to 100 percent automatic route FDI in insurance intermediaries, announced by DPIIT in February 2026.

How Does Company Incorporation Work in India?

India’s incorporation process is now handled almost entirely through a single integrated platform on the Ministry of Corporate Affairs V3 portal, called SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus). There is no alternative path for standard registrations. The platform bundles ten government services into a single filing, including name reservation, incorporation, DIN allotment, PAN, TAN, GSTIN, EPFO, ESIC, and bank account opening through a linked form called AGILE-PRO-S. The practical sequence looks like this:

1. Digital Signature Certificate (DSC): Every proposed director needs a Class 3 DSC, since all filings are electronic and require verified digital signing.

2. Director Identification Number (DIN): A unique number for each director, applied for directly within the SPICe+ form for new directors.

3. Name reservation: Filed through Part A of SPICe+. The name reserved through Part A is valid for 20 days, within which Part B must be filed.

4. SPICe+ Part B and linked forms: This is the main incorporation filing, submitted along with the electronic Memorandum of Association, electronic Articles of Association, and AGILE-PRO-S.

5. Certificate of Incorporation: Under normal processing on the MCA V3 portal, when documents and director details are error-free, the Registrar of Companies typically issues the Certificate of Incorporation within two to five working days.

6. PAN and TAN: Issued automatically as part of the SPICe+ process, needed respectively for tax filings and for deducting tax at source.

7. GST registration: Required once the company crosses the applicable turnover threshold or if it engages in interstate supply, filed through the GST Council’s common portal.

8. Bank account opening: Completed through AGILE-PRO-S alongside incorporation, though most Indian banks will still require an in-person or video KYC step for foreign directors.

9. Declaration of Commencement of Business (INC-20A): It must be filed within 180 days of incorporation. Share capital must be received into the company’s bank account before this filing.

Registration Timeline

The steps above rarely happen in sequence, several run in parallel; therefore, founders still need a realistic sense of overall timing. Here is what the process typically looks like end to end.

How much money is needed to start a business in India?

The amount of money needed to start a business in India depends heavily on the business model, there’s no single number that applies. Legally, most structures, including private limited companies, LLPs, sole proprietorships, and one-person companies, require no minimum capital. But actual investment comes down to factors like industry, scale, licensing, premises, technology, and working capital.

Based on business type, the investment looks like:

*Prices are indicative and subject to change

Startup costs include:

*Prices are indicative and subject to change

The Companies Act, 2013 removed the earlier minimum paid-up capital requirements, so promoters can decide how much capital is appropriate.

A good rule of thumb to estimate funding requirement is:

Startup Cost = One-time Setup Costs + 6 Months of Operating Expenses + Contingency (10–20%)

Compliance Requirements that Australian Companies Often Underestimate

Most of the problems Australian founders run into with their Indian subsidiary show up during later years. This is usually once the initial paperwork is forgotten and the business is actually fully operational. Compliance requirements include:

• Resident director requirement- This is a requirement that catches people off-guard. Section 149 of the Companies Act, 2013 requires every company to have at least one director who has spent 182 days or more in India in the previous calendar year. There’s no exception for wholly owned subsidiaries of foreign parents, and the days don’t need to run consecutively, but they do need to add up. If you don’t already have an executive based in India, sort this out early. Either appoint someone local you trust or have a director plan to spend the required time in the country.

• Registered office – You need a physical address in India from the day the company is incorporated, not sometime after. This has to be backed by a recent utility bill and either proof of ownership or a no-objection certificate from whoever owns the property.

• FEMA reporting – Once shares are allotted to the Australian parent, someone needs to file Form FC-GPR with the RBI through the FIRMS portal, usually within 30 days of allotment. This deadline is easy to miss amid everything else happening around closing, and missing it brings compounding penalties. Add it to your calendar to avoid any loose end.

• GST compliance – Businesses are generally required to file GSTR-1 (details of outward supply) and GSTR-3B (summary return and tax repayments) on a monthly or quarterly basis, depending on their eligibility under the QRMP scheme. An annual return (GSTR-9) may also be required, subject to the applicable turnover threshold and exemptions.

• Annual ROC compliance – Every company must hold a board meeting, maintain statutory registers, file annual financial statements and the annual return, and comply with annual audit requirements. A statutory auditor must be appointed within the prescribed time limit.

• Transfer pricing – Transactions between the Indian subsidiary and its Australian parent, including management fees, royalties, and intercompany services, must comply with India’s arm’s length pricing rules. Furthermore businesses should maintain appropriate documentation and meet the applicable annual reporting requirements.

• Import Export Code (IEC) – If the entity plans to import or export goods, it must obtain an IEC from the Directorate General of Foreign Trade separately. This registration is separate from the incorporation.

Key Registrations at a Glance

The table below brings key registrations together in one place for quick reference.

What Should Australian Companies Know Before Hiring Employees in India?

Once a foreign business begins the hiring process, it must comply with a range of obligations.

• Once the headcount threshold of 20 or more employees is met, Provident Fund registration becomes mandatory under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The If the employer has met the minimum employee threshold of 20 workers, they have 30 days to register with the EPFO. Once the registration is completed, the employee gets a Universal Account Number (UAN) that stays with them for life. From there, it runs on monthly basis. 12 percent of basic salary is deducted from the employee, matched by an equal employer contribution.

• Employee State Insurance (ESI), follow the similar logic. Once the headcount threshold is met, businesses that are covered under the Employees’ State Insurance Act must register with the Employees’ State Insurance Corporation (ESIC) and make contribution for eligible employees. The headcount threshold varies depending on the state and the nature of the establishment. Foreign business must check the applicable threshold based on the state they are planning to operate.

• Depending on the state where the business operates, employers need to obtain registration under the applicable Shops and Establishment Act and must comply with professional tax requirements.

• Employment agreements must be drafted in accordance with the applicable state regulations and 4 labour codes that came into effect in November 2025.

What are the Common Mistakes Australian Companies Make When Entering India

For any foreign business coming to India, there are various practical requirements that they tend to miss out on. Some common mistakes include:

• Choosing a liaison office when the business model requires invoicing customers or carrying out commercial operations.

• Underestimating the time required for bank account opening and KYC verification for foreign-owned entities.

• Missing the deadline for filing Form FC-GPR after the allotment of shares to the foreign parent.

• Treating the resident director requirement as a formality rather than an ongoing statutory obligation.

• Beginning operations before confirming the applicable FDI route and sector-specific conditions.

Conclusion

India’s rules for foreign companies are not complicated once you know the sequence: pick the right structure, confirm your FDI route, complete SPICe+ incorporation, and stay on top of the compliance calendar that follows. Most of the difficulty founders run into isn’t in any single step. It comes from rushing incorporation and leaving compliance, FEMA reporting, resident directors, and registrations to be sorted out later, once problems have already started.

The current environment makes this worth doing sooner rather than later. ECTA has already reshaped trade flows between the two countries, and both governments are working towards a fuller CECA. Companies that get their structure and compliance obligations right from day one are the ones who will benefit as this relationship between the countries continues to grow. If you have questions like “how to start a business in India as an Australian company” professionals at Stratrich can help. Book an appointment for a hassle-free business setup in India.