India continues to be a hub of business opportunities for foreign companies/Foreign Citizens and Non-Resident Indians (NRIs) due to its growing consumer base, business-friendly reforms, and expanding digital infrastructure.
One of the most common ways for foreign investors to enter the Indian market is through the formation of a Private Limited Company, which could either be a Wholly Owned Subsidiary (WOS) or a Joint Venture/Subsidiary Company.
A key concern for foreign entities and NRIs exploring this route is understanding the cost of incorporating such a company in India. This blog will provide a detailed breakup of the various cost components involved and the factors that affect the total expenditure.
Factors Influencing the Cost of Company Registration in India
Before we dive into specific cost heads, it’s important to understand that the overall cost of incorporating a private limited company in India varies depending on several factors:
- Authorized and Paid-Up Capital
- State of Registration(each state has slightly different stamp duty charges)
- Number of Foreign and Indian Directors/Shareholders
- MHA (Ministry of Home Affairs) Approvalfor Director Verification (especially for citizens from landlocked or high-risk countries)
- FIFP (Foreign Investment Facilitation Portal) Approvalfor sectors requiring government approval
- Availability of Indian Director(provided by client or consultant)
- Office Space(virtual office provided by client or arranged by consultant)
Now, let us look at the breakup of costs under different heads.
A. Company Incorporation
Table of Contents:-
This includes:
- Digital Signature Certificate (DSC)for Directors
- Director Identification Number (DIN)
- Drafting of Memorandum of Association (MOA) and Articles of Association (AOA)
- Name Approval
- Final Incorporation and PAN/TAN Allotment
Cost Range: USD 500 to USD 700
B. GST Registration
Mandatory for businesses planning to supply goods or services in India. It requires preparing necessary documents and filing an online application with the Goods and Services Tax department.
Cost Range: USD 100 to USD 200
C. Import Export Code (IEC) Registration
Required if the Indian subsidiary plans to engage in import/export of goods or services.
Cost Range: USD 50 to USD 100
D. Other Registrations (As applicable)
Includes:
- Professional Tax Registration(for certain states)
- Shops and Establishment License
- Udyam Registrationfor MSME benefits
Cost Range: USD 100 to USD 200
E. Bank Account Opening
Corporate bank account is required to receive FDI (Foreign Direct Investment) and for operational purposes. Some banks may have minimum balance requirements.
Consultation and Documentation Support Fee: USD 100 to USD 200 (Bank fees may vary additionally)
F. MHA Approval for Director Verification
If one of the directors is a citizen of a landlocked or high-risk country (such as Pakistan, Afghanistan, etc.), prior security clearance from the Ministry of Home Affairs is required.
Cost Range (including liaison and approval process): USD 300 to USD 500
G. Arranging Virtual Office
Many foreign clients do not have a physical presence in India. In such cases, a virtual office with a commercial address, signage, and documentation support can be arranged.
Cost Range: USD 400 to USD 600 per annum (may vary by city)
H. Arranging an Indian Director
If the client does not have an Indian resident director, as mandated by the Companies Act, the consultant can arrange nominee director services.
Cost Range: USD 600 to USD 800 per annum
I. FIFP Approval
Required for sectors under the approval route for FDI. This involves preparation of documentation, liaison with ministries, and detailed follow-ups.
Cost Range: USD 800 to USD 1200 (depending on complexity)
J. RBI Compliance – Filing Form FCGPR
After receiving foreign investment, the company must file Form FCGPR with the Reserve Bank of India within 30 days. Professional help is often required for accurate filing and coordination with the AD Bank.
Cost Range: USD 300 to USD 400
Total Estimated Cost
Let us take an example:
Scenario:
- 1 Foreign Shareholder and Director
- 1 Indian Shareholder and Director (provided by client)
- Authorized capital: Up to INR 15,00,000
- No MHA or FIFP approval required
- Virtual office arranged by client
Estimated Starting Cost: USD 750 to USD 1000 + 18% GST
This covers:
- Company Incorporation
- DIN/DSC
- MOA/AOA
- PAN/TAN
- Basic Compliance Support
- GST Registration
- Bank Account opening assistance
Optional and Add-On Costs
- Virtual Office Support: USD 400 – USD 600/year
- Nominee Indian Director: USD 600 – USD 800/year
- MHA Approval: USD 300 – USD 500 (if applicable)
- FIFP Approval: USD 800 – USD 1200 (if applicable)
Conclusion
While the base cost for registering a Private Limited Company (Wholly Owned Subsidiary or Joint Venture) in India may start around USD 750 to 1000, the final cost will depend heavily on the unique requirements of each client. Factors like regulatory approvals, director availability, and office arrangements play a significant role in deciding the budget.
It is advisable to work with an experienced consulting firm, which offers end-to-end handholding for foreign companies, NRIs, and foreign citizens looking to expand into India. From incorporation to approvals and ongoing compliance, everything is taken care of under one roof.
Why Choose EZYBIZ India Consulting LLP?
At EZYBIZ India Consulting LLP, we have assisted more than 200 foreign companies from across the globe in setting up their business presence in India, either as Wholly Owned Subsidiaries or Joint Ventures.
Our expertise goes beyond business setup:
- Mergers and Acquisitions
- Joint Ventures and Strategic Alliances
- Equity Fund Raising and Private Placements
Our multidisciplinary team consists of Chartered Accountants (CAs), Company Secretaries (CSs), MBAs, Advocates, and other domain experts, offering end-to-end support.
Post incorporation, we provide complete handholding in taxation and regulatory compliances, including:
- Income Tax and GST Filings
- Statutory Accounting
- Payroll Management
- Statutory and Internal Audits