India Market Entry Services for Japanese Companies

India Entry Advisory

India Market Entry Services for Japanese Companies

India has emerged as an important investment and expansion destination for Japanese companies. Its large consumer market, expanding manufacturing base, skilled workforce and developing infrastructure offer significant opportunities across multiple industries.

Japanese companies can enter India to manufacture products, develop local suppliers, serve Indian customers, establish technology centres, undertake research and development or create an export base for other international markets.

However, entering India requires more than registering a company. A Japanese business must carefully evaluate its entry structure, foreign investment regulations, tax implications, location, local partners, supply chain and continuing compliance requirements.

EzyBiz India provides comprehensive India Market Entry Services for Japanese Companies. We assist Japanese businesses throughout the complete entry journey, from market-entry planning and entity registration to FEMA, RBI, tax, accounting, payroll and ongoing regulatory compliance.

Our team works with the Japanese parent company and its advisers to develop a practical and compliant India expansion strategy.

Planning to Enter the Indian Market?

Speak with our India market entry specialists to assess your proposed business activity, suitable legal structure, foreign investment requirements and implementation timeline.

Why India Is an Important Market for Japanese Companies

India offers Japanese businesses access to one of the world’s largest consumer and industrial markets.

The World Bank describes India as one of the world’s fastest-growing major economies. It also identifies India as the world’s fifth-largest economy, with the country seeking to achieve high-income economic status over the coming decades.

This growth is creating demand across manufacturing, infrastructure, technology, logistics, healthcare, consumer products and business services.

For Japanese companies, India can serve several strategic purposes.

Access to a Large Domestic Market

India offers a broad customer base across different income groups, industries and geographic regions.

Japanese companies can target:

Individual consumers
Industrial manufacturers
Automotive companies
Government and infrastructure projects
Hospitals and healthcare providers
Technology companies
Small and medium enterprises
Large Indian corporate groups
Export-oriented manufacturers
E-commerce customers

The Indian market is highly diverse. A product that succeeds in one state or customer segment may require a different pricing, distribution or marketing strategy in another.

Therefore, Japanese companies should conduct market research before finalising their entry model.

Growing Demand for High-Quality Products

Japanese businesses have an established reputation for quality, reliability, engineering and process efficiency.

These strengths can provide a competitive advantage in India, particularly in sectors where customers value:

Product quality
Long-term performance
Precision
Energy efficiency
Safety
After-sales support
Technical reliability
Process control
Manufacturing consistency

However, Japanese products may need localisation to remain commercially competitive in India.

Localisation can include changes in:

Product design
Pricing
Packaging
Technical specifications
Service arrangements
Distribution channels
Local sourcing
Warranty terms

A Japanese company should identify which features Indian customers value and which features increase the cost without creating sufficient market benefit.

Expanding Manufacturing Ecosystem

India is developing manufacturing capacity across automotive components, electronics, industrial machinery, chemicals, pharmaceuticals, renewable energy, medical devices and consumer products.

Japanese companies can use India for:

Local manufacturing
Component sourcing
Contract manufacturing
Product assembly
Supplier development
Research and engineering
Export production
Testing and quality assurance
Regional distribution

India may also help Japanese companies reduce dependence on a limited number of manufacturing locations.

Availability of Skilled Professionals

India has a large pool of professionals in areas such as:

Engineering
Software development
Information technology
Finance and accounting
Data analytics
Research and development
Product design
Legal and regulatory support
Digital marketing
Business-process management

Japanese groups can establish engineering centres, technology centres, global capability centres, shared service operations and research facilities in India.

Supply-Chain Diversification

Global businesses are reviewing their supply chains to reduce concentration risk and improve resilience.

India can help Japanese companies diversify:

Manufacturing
Component sourcing
Raw-material procurement
Technology operations
Logistics networks
Export production
Engineering support

A Japanese company can initially source selected components from India and gradually increase local procurement after completing supplier testing and quality validation.

Access to Regional Export Markets

An Indian operation may also support exports to:

South Asia
The Middle East
Africa
Europe
Southeast Asia

The commercial feasibility of using India as an export base depends on the product, customs classification, logistics costs, trade agreements and rules of origin.

Government and State-Level Support

India offers various central and state-level schemes to promote manufacturing, employment, exports, innovation and infrastructure development.

Potential benefits may include:

Capital subsidies
Tax or duty incentives
Employment-linked incentives
Electricity-duty concessions
Stamp-duty concessions
Land-related support
Research and development incentives
Sector-specific production incentives
Export-related benefits

The availability of incentives depends on the industry, state, investment amount, project size, employment generation and proposed location.

A Japanese investor should evaluate the incentive package before purchasing land, signing a lease or commencing capital expenditure.

Japan at a Glance from an India Market Entry Perspective

Particulars	Business Perspective
Capital	Tokyo
Currency	Japanese Yen
Major Business Strengths	Automotive, electronics, industrial machinery, chemicals, infrastructure, healthcare, precision manufacturing and technology
Common India Entry Models	Wholly owned subsidiary, joint venture, branch office, liaison office, project office and distributor arrangement
Key India Opportunities	Manufacturing, local sales, sourcing, engineering, technology, renewable energy, healthcare and infrastructure
Main Regulatory Areas	FDI, FEMA, RBI reporting, corporate law, tax, transfer pricing, GST, customs and employment compliance
Trade Framework	India–Japan Comprehensive Economic Partnership Agreement
Typical Business Objective	Accessing the Indian market while developing local manufacturing, suppliers and regional export capability

India–Japan Business and Economic Relationship

India and Japan share a long-standing economic and strategic relationship.

Japanese companies have contributed significantly to India’s development in areas such as:

Automotive manufacturing
Industrial machinery
Electrical equipment
Infrastructure
Transportation
Engineering
Financial services
Chemicals
Consumer electronics
Technology

The relationship has expanded beyond traditional manufacturing and infrastructure.

India and Japan now cooperate in areas such as:

Economic security
Resilient supply chains
Semiconductors
Critical minerals
Artificial intelligence
Digital technology
Clean energy
Green mobility
Advanced manufacturing
Defence technology
Research and innovation

In August 2025, India and Japan adopted a Joint Vision for the Next Decade. It established a ten-year framework for deeper strategic and economic cooperation between the two countries.

The 16th India–Japan Annual Summit took place in New Delhi in July 2026. The two countries continued to strengthen their partnership and adopted a Joint Declaration on Economic Security Cooperation to promote project-based collaboration in key economic sectors.

This expanding partnership creates opportunities for established Japanese groups as well as small and mid-sized Japanese companies.

Japanese Foreign Direct Investment in India

Japan is one of India’s largest sources of foreign direct investment.

According to DPIIT’s foreign investment data up to March 2025, Japan ranked fifth among the leading sources of cumulative FDI equity inflows into India.

Cumulative Japanese FDI equity inflows from April 2000 to March 2025 were approximately USD 44.4 billion.

Japanese investments have traditionally concentrated on automobiles, electrical equipment, industrial machinery, trading, telecommunications, services and chemicals.

Investment opportunities are now expanding into:

Electric mobility
Batteries
Renewable energy
Semiconductors
Electronics manufacturing
Digital technology
Medical devices
Logistics
Financial technology
Food processing
Environmental technology
Global capability centres

The actual foreign ownership permitted in India depends on the proposed business activity and applicable FDI policy.

Strong Expansion Intentions Among Japanese Companies in India

Japanese companies already operating in India continue to show strong confidence in the Indian market.

JETRO’s FY2025 survey reported that 81.5% of Japanese-affiliated companies surveyed in India intended to expand their business during the following one to two years. India recorded the highest expansion intention among all countries and regions covered by the survey.

The expansion intention of Japanese companies in India has also increased for five consecutive years.

The survey further reported that 88.1% of the Japanese companies planning expansion in India identified increasing local market demand as an important reason.

These findings indicate that Japanese businesses increasingly view India as more than a low-cost manufacturing destination.

They see India as:

A major sales market
A manufacturing location
A sourcing destination
A technology and engineering centre
A base for long-term regional growth

India–Japan Comprehensive Economic Partnership Agreement

India and Japan have entered into a Comprehensive Economic Partnership Agreement, commonly known as the India–Japan CEPA.

The countries signed the agreement on 16 February 2011. It became operational on 1 August 2011.

The CEPA covers several aspects of economic cooperation, including:

Trade in goods
Trade in services
Investment
Customs procedures
Movement of professionals
Intellectual property
Competition policy
Improvement of the business environment

The agreement may provide concessional customs-duty treatment for eligible goods traded between India and Japan.

However, a product does not automatically qualify for a reduced customs rate merely because it comes from Japan.

The imported goods must satisfy the applicable rules of origin and documentary conditions.

Before claiming a CEPA benefit, a Japanese exporter and Indian importer should examine:

Customs classification of the product
Normal customs-duty rate
Preferential CEPA rate
Product-specific rule of origin
Minimum value-addition requirement
Change in tariff classification
Origin of components and raw materials
Certificate of origin
Direct consignment conditions
Record-keeping requirements

The Indian customs authorities may seek additional information to verify the origin of the imported goods.

Therefore, Japanese exporters should maintain reliable records relating to:

Manufacturing process
Raw materials
Component origin
Production cost
Value addition
Supplier declarations

A Japanese company should not finalise its Indian selling price only on the assumption that a CEPA concession will apply.

It should first confirm the customs classification, origin criteria and documentation requirements.

Japanese Industrial Presence in India

Japanese companies have developed a strong industrial presence in several Indian states.

Major locations include:

Haryana
Rajasthan
Gujarat
Maharashtra
Karnataka
Tamil Nadu
Andhra Pradesh
Telangana
Uttar Pradesh
Delhi NCR

The most suitable location depends on the proposed activity.

For example:

Automotive companies may prefer established automotive clusters.
Electronics companies may prefer locations supported by electronics-manufacturing infrastructure.
Technology and service companies may prefer cities with a large skilled workforce.
Export manufacturers may require access to ports.
Consumer businesses may prioritise proximity to large customer markets.

India and Japan have also developed Japanese Industrial Townships to support Japanese manufacturers and create an investor-friendly industrial environment.

These townships may provide access to industrial land, infrastructure, logistics and local facilitation.

However, a Japanese company should not select a location only because it falls within a recognised industrial township.

It should compare:

Land and lease costs
Availability of suppliers
Access to customers
Port and airport connectivity
Skilled workforce
Electricity and water
State incentives
Labour environment
Local regulations
Expansion capacity

A detailed location study can prevent high relocation and restructuring costs later.

Why Japanese Companies Choose India

1. Access to a Large Customer Base

India gives Japanese companies access to both consumer and industrial customers.

Growth opportunities exist in major metropolitan cities as well as smaller cities and emerging industrial regions.

Japanese companies can pursue premium, mid-market or value-based product strategies depending on the customer segment.

2. Long-Term Manufacturing Potential

India provides opportunities to establish manufacturing plants, assembly operations and component-sourcing networks.

Companies may start with imported products and gradually increase localisation as sales volume grows.

This phased approach can reduce initial risk.

3. Skilled Engineering and Technology Talent

Japanese companies can access professionals in software, engineering, design, research, finance and data analytics.

India can therefore support both manufacturing and knowledge-based operations.

4. Local Supplier Development

Japanese companies can develop Indian vendors for components, packaging, raw materials and support services.

However, supplier selection should involve:

Financial due diligence
Technical capability assessment
Quality testing
Capacity verification
Compliance review
Delivery analysis
Business-continuity planning

A supplier should not be selected only because it offers the lowest price.

5. Opportunities for Product Localisation

Indian customers may require different price points, product sizes, functions or service models.

Japanese companies can use local research and engineering teams to adapt their products without compromising essential quality standards.

6. Diversification Beyond Existing Asian Markets

India can become an additional manufacturing and sales location within the Japanese company’s global strategy.

It can reduce dependence on a limited number of countries and provide access to new customers.

7. Expanding India–Japan Government Cooperation

The two governments continue to promote investment, innovation, infrastructure and industrial cooperation.

This creates a favourable environment for long-term Japanese participation in the Indian economy.

8. Third-Country Expansion

Japanese companies operating from India may explore opportunities in Africa, the Middle East and South Asia.

Japanese authorities have also recognised the potential for Japanese companies based in India to expand into third-country markets, including Africa.

Key Business Opportunities for Japanese Companies in India

Automotive and Electric Mobility

Japanese companies have played a major role in developing India’s automotive ecosystem.

The next phase of growth offers opportunities in:

Electric vehicles
Hybrid vehicles
Automotive components
Electric two-wheelers
Battery systems
Charging infrastructure
Vehicle electronics
Sensors
Advanced driver-assistance systems
Lightweight materials
Testing equipment
Recycling
Mobility software

Japanese manufacturers can establish wholly owned subsidiaries, joint ventures, technology collaborations or supplier arrangements.

Before entering this sector, the company should assess:

Product certification
Manufacturing location
Local sourcing requirements
Vendor quality
Customs duties
State incentives
Technology licensing
Warranty obligations
After-sales support

Electronics and Semiconductor Ecosystem

India is developing its electronics and semiconductor manufacturing capacity.

Opportunities for Japanese businesses include:

Semiconductor manufacturing equipment
Electronic components
Sensors
Industrial electronics
Printed circuit boards
Consumer electronics
Display technology
Testing and measurement equipment
Assembly and packaging
Precision materials
Factory automation

Japanese companies can also support Indian manufacturers through technology transfer, technical services and specialised machinery.

The business model must address customs classification, intellectual-property protection, technology agreements, transfer pricing and product standards.

Industrial Machinery and Factory Automation

India’s growing manufacturing sector requires advanced machinery and production technology.

Japanese companies can supply:

Machine tools
Robotics
Automation systems
Industrial control equipment
Precision instruments
Quality-control equipment
Energy-efficient machinery
Maintenance technology
Predictive monitoring systems
Warehouse automation

A Japanese machinery supplier may initially appoint an Indian distributor.

Once the customer base grows, it may establish an Indian subsidiary to manage:

Local sales
Spare parts
Installation
Maintenance
Technical support
Customer training

A local support network can improve customer confidence and reduce service delays.

Renewable Energy and Environmental Technology

India offers opportunities across clean energy, energy efficiency and environmental management.

Japanese companies can explore:

Solar technology
Wind-energy components
Green hydrogen
Battery storage
Energy-management systems
Electric mobility
Waste treatment
Water purification
Recycling technology
Carbon-reduction systems
Smart-grid solutions

The applicable investment conditions depend on the precise activity.

Energy generation, equipment supply, engineering services and technology licensing may involve different regulatory and tax requirements.

Information Technology and Digital Services

India offers a large talent pool for technology and digital operations.

Japanese companies can establish:

Software-development centres
Product-engineering centres
Artificial-intelligence teams
Cybersecurity operations
Cloud-support centres
Data-analytics teams
Research and development centres
Global capability centres
Shared-service centres
Customer-support operations

The Japanese parent company should define:

Ownership of software and intellectual property
Data-protection responsibilities
Cybersecurity standards
Cost-allocation methodology
Service-fee structure
Employee access controls
Transfer-pricing policy

Healthcare and Medical Devices

India’s healthcare market offers opportunities for Japanese companies involved in:

Medical devices
Diagnostic equipment
Hospital technology
Rehabilitation equipment
Elder-care solutions
Digital health
Surgical equipment
Laboratory instruments
Preventive healthcare
Health-monitoring devices

Before selling a product in India, the company should examine:

Product registration
Import licence
Quality certification
Labelling requirements
Pricing regulation
Distributor appointment
Product liability
After-sales service

An Indian distributor may assist with local sales. However, the Japanese company should independently verify the distributor’s regulatory capability.

Chemicals and Specialty Materials

Japanese companies have strong capabilities in specialty chemicals, advanced materials, coatings, adhesives and industrial compounds.

India offers opportunities in:

Automotive materials
Electronic chemicals
Construction chemicals
Speciality coatings
Packaging materials
Battery materials
Industrial adhesives
High-performance polymers
Water-treatment chemicals

The company should review environmental approvals, product registration, hazardous-material rules, storage requirements and customs regulations.

Infrastructure and Transportation

Japanese companies can participate in Indian infrastructure and mobility projects.

Opportunities may arise in:

Railways
Metro systems
Urban transportation
Logistics infrastructure
Industrial corridors
Ports
Warehousing
Smart-city solutions
Water infrastructure
Construction technology

The suitable entry structure depends on whether the company plans to undertake a single project or establish a permanent Indian operation.

Logistics and Supply-Chain Services

India’s manufacturing and e-commerce growth has increased demand for efficient logistics.

Japanese companies may explore:

Warehousing
Cold-chain solutions
Freight management
Supply-chain technology
Industrial logistics
Inventory management
Packaging systems
Last-mile solutions
Logistics automation

A foreign investor should review the FDI policy and licensing requirements applicable to each proposed logistics activity.

Food Processing and Consumer Products

Japanese food, beverage, beauty, lifestyle and household brands are gaining recognition among Indian consumers.

Entry options include:

Import and distribution
E-commerce sales
Licensing
Franchising
Local manufacturing
Contract manufacturing
Joint ventures

Before launching a consumer product, the company should review:

Product registration
Food-safety requirements
Packaging
Labelling
Customs duties
Shelf life
Storage
Advertising claims
Distributor margins
Online sales restrictions

The company should also adapt its pricing and packaging to Indian consumer preferences.

Financial and Business Services

Japanese financial institutions, leasing companies, insurance groups and professional-service providers may find opportunities in India.

Potential areas include:

Corporate finance
Equipment leasing
Supply-chain finance
Insurance support
Digital payments
Financial technology
Business consulting
Risk management
Shared services

Financial activities are highly regulated. The company should identify the required licence before establishing its entity or committing capital.

Small and Medium-Sized Japanese Companies Entering India

India is not limited to large Japanese multinational groups.

Japanese small and medium enterprises can also enter India through:

Distributor arrangements
Technology collaborations
Contract manufacturing
Joint ventures
Sales subsidiaries
Sourcing offices
Representative offices

However, smaller companies may face challenges relating to:

Management bandwidth
Local hiring
Compliance costs
Vendor control
Language and communication
Financial reporting
Customer collection
Regulatory monitoring

A professional local support team can help the Japanese management control these risks.

India Market Entry Services for Japanese Companies

EzyBiz India provides integrated support to Japanese companies planning to establish or expand their operations in India.

Our services cover the complete India entry lifecycle.

India Entry Strategy

We assess:

Proposed business activities
Target customers
Entry objectives
Foreign ownership
Capital requirements
Revenue model
Import and export plans
Employee requirements
Technology arrangements
Implementation timeline

We then recommend a suitable market entry route.

Market and Location Assessment

We assist the company in comparing:

Indian states and cities
Customer locations
Industrial clusters
Supplier availability
Logistics infrastructure
Labour costs
State incentives
Office and factory costs

Business Structure Advisory

We help to advise appropriate business structure by comparing:

The final recommendation considers ownership, control, tax exposure, regulatory requirements and long-term strategy.

Company Registration

We assist with:

Name approval
Digital signatures
Director identification numbers
Incorporation documents
Registered office
PAN and TAN
Initial corporate records
Post-incorporation compliance

Foreign Investment and FEMA Support

We advise on:

FDI eligibility
Automatic or government route
Foreign ownership limits
Capital structure
Share valuation
Capital remittance
Share allotment
RBI reporting
Beneficial ownership

Tax and Transfer-Pricing Planning

We review:

Corporate tax
Permanent-establishment risk
Withholding tax
India–Japan DTAA
Transfer pricing
Royalty and technical fees
GST
Customs duties
Profit repatriation

Accounting and Continuing Compliance

After establishment, we can support the Indian business with:

Accounting
Payroll
GST returns
Tax deduction compliance
Corporate tax
Transfer pricing
MCA filings
FEMA reporting
Financial reporting
Statutory audit coordination

Important Questions Before Entering India

Before proceeding, a Japanese company should answer the following questions:

Will the company sell directly to Indian customers?
Will it manufacture or only import products?
Does it require complete ownership and management control?
Will it initially test the market through a distributor?
Will Japanese employees work in India?
Will the Indian operation pay royalty, technical fees or management charges to Japan?
Will the Indian business require land, a factory or a warehouse?
Which Indian state provides the best commercial and operational environment?
Does the proposed sector permit 100% foreign ownership?
How will the company repatriate profits or capital to Japan?

The answers to these questions determine the most suitable market entry structure.

Develop a Structured India Entry Plan

A successful India entry strategy should integrate:

Commercial objectives
Legal structure
FDI and FEMA compliance
Tax planning
Transfer pricing
Customs
Product regulations
Location selection
Human resources
Continuing compliance

EzyBiz India helps Japanese companies develop a structured, practical and compliant roadmap for entering the Indian market.

Contact our team to discuss India Market Entry Services for Japanese Companies.

Business Structures Available to Japanese Companies in India

A Japanese company can enter India through an incorporated entity, an office of the Japanese parent company or a contractual arrangement with an Indian business.

The appropriate business structure depends on several factors, including:

Nature of the proposed activities
Requirement to earn revenue in India
Desired level of ownership and control
Expected investment
Need to employ personnel
Manufacturing or import plans
Regulatory approvals
Tax exposure
Long-term business strategy
Repatriation and exit plans

Japanese companies should select the entry structure only after reviewing its commercial, tax, regulatory and operational consequences.

The main India entry options are:

Wholly owned subsidiary
Joint venture with an Indian partner
Limited liability partnership
Branch office
Liaison office
Project office
Distributor, importer or sales-agent arrangement

Wholly Owned Subsidiary in India

A wholly owned subsidiary is one of the most suitable structures for a Japanese company planning long-term and full-scale business operations in India.

The Japanese parent company may hold up to 100% of the share capital of the Indian subsidiary where the proposed sector permits complete foreign ownership.

The subsidiary is incorporated in India as a separate legal entity. Its assets, liabilities, contracts and business operations are legally separate from those of the Japanese parent company.

A wholly owned subsidiary may generally undertake any lawful business activity mentioned in its constitutional documents, subject to the applicable FDI policy and industry-specific regulations.

Activities That an Indian Subsidiary May Undertake

Depending on its approved objects and licences, an Indian subsidiary may carry on:

Manufacturing
Import and export
Wholesale trading
Retail trading, subject to applicable FDI conditions
Consulting
Information-technology services
Engineering services
Research and development
Product assembly
Contract manufacturing
Sales and marketing
Technical support
After-sales service
Shared services
Global capability-centre operations
Warehousing and distribution
Other permitted commercial activities

Advantages of a Wholly Owned Subsidiary

A wholly owned subsidiary provides several benefits.

Separate Legal Identity

The Indian subsidiary has a legal identity separate from the Japanese parent company.

It can own assets, enter contracts, employ personnel, maintain bank accounts and undertake legal proceedings in its own name.

Limited Liability

The liability of the Japanese shareholder is generally limited to its investment in the Indian company, subject to contractual guarantees, legal exceptions and other commitments.

Complete Management Control

Where 100% foreign ownership is permitted, the Japanese parent company can retain complete ownership and exercise control through the board of directors and shareholder rights.

Ability to Earn Revenue in India

Unlike a liaison office, an Indian subsidiary can undertake permitted commercial activities and issue invoices to Indian and overseas customers.

Ability to Hire Employees

The company can employ Indian professionals and, subject to immigration and tax requirements, Japanese expatriates.

Long-Term Business Presence

A subsidiary is suitable for companies that plan to:

Build a customer base
Establish a manufacturing unit
Hire a local team
Acquire assets
Develop suppliers
Undertake research
Offer after-sales services
Expand into multiple business activities

Business Credibility

Indian customers, employees, banks, vendors and government authorities may prefer dealing with an Indian incorporated company where the proposed relationship is substantial or long term.

Key Compliance Requirements

A Japanese-owned Indian subsidiary must comply with:

Companies Act, 2013
FDI policy
Foreign Exchange Management Act
RBI reporting requirements
Income-tax law
Transfer-pricing regulations
Goods and Services Tax law
Labour and employment laws
State-level regulations
Industry-specific requirements

A private limited company must generally have at least two directors. Every company must also have at least one director who satisfies the statutory residence requirement of staying in India for at least 182 days during the financial year.

The resident director does not necessarily need to hold shares in the Indian company.

Shareholders of the Indian Subsidiary

A private company requires at least two subscribers at the time of incorporation.

The shareholding may be structured through:

Japanese parent company and another Japanese group company
Japanese parent company and an individual nominee
Two Japanese corporate shareholders
Japanese parent company and an Indian shareholder
Other legally permissible arrangements

The shareholders’ roles, economic rights and beneficial ownership should be properly documented.

Board of Directors

The board may include:

Representatives of the Japanese parent company
Japanese expatriate directors
Indian resident director
Independent or local business professionals, where considered necessary

The Japanese parent company should establish a clear governance framework covering:

Matters requiring board approval
Matters requiring shareholder approval
Signing authority
Banking authority
Contract-approval limits
Related-party transactions
Capital expenditure
Employment decisions
Regulatory filings

Joint Venture with an Indian Partner

A joint venture is an Indian company owned jointly by a Japanese investor and one or more Indian shareholders.

A Japanese company may consider a joint venture when an Indian partner can contribute:

Distribution network
Manufacturing facility
Land or factory infrastructure
Government licences
Local customer relationships
Industry expertise
Supply-chain access
Regulatory knowledge
Technical resources
Skilled workforce
Brand recognition
Local management

A joint venture can provide faster access to the market. However, it also requires the Japanese company to share ownership, information and decision-making authority.

When a Joint Venture May Be Suitable

A joint venture may be appropriate where:

Foreign ownership is restricted
An Indian licence holder is required
The business depends heavily on local relationships
The Indian partner has established manufacturing capacity
The Japanese company wants to reduce the initial investment
Both parties contribute complementary technology or resources
The Japanese company wants to enter the market gradually

Due Diligence on the Indian Partner

Before signing a joint venture agreement, the Japanese company should conduct detailed due diligence.

The review should cover:

Ownership and group structure
Financial statements
Tax compliance
Corporate filings
Borrowings and security interests
Litigation
Regulatory licences
Related-party transactions
Customer concentration
Vendor relationships
Employee liabilities
Intellectual property
Environmental compliance
Reputation and business conduct
Existing contractual restrictions

The company should verify the information independently instead of relying only on presentations or verbal representations.

Joint Venture Agreements

The parties may require several agreements, including:

Share-subscription agreement
Shareholders’ agreement
Technology-transfer agreement
Trademark-licensing agreement
Manufacturing agreement
Supply agreement
Distribution agreement
Management-services agreement
Employment or secondment agreement

Important Provisions in a Shareholders’ Agreement

The agreement should clearly define:

Ownership Structure

The document should state the percentage of shares held by each party and the procedure for future capital contributions.

Board Representation

The parties should agree on:

Number of directors
Right to nominate directors
Appointment of chairperson
Voting rights
Quorum
Casting vote, where applicable

Reserved Matters

Important matters should require the approval of both parties or a specified majority.

These may include:

Change in business activity
Issue of new shares
Borrowing above a specified limit
Capital expenditure
Appointment of senior management
Related-party transactions
Transfer of intellectual property
Acquisition or disposal of major assets
Declaration of dividends
Changes in accounting policies

Technology and Intellectual Property

The agreement should specify:

Ownership of existing technology
Ownership of improvements
Permitted use in India
Licence fees or royalties
Confidentiality requirements
Rights after termination
Protection against unauthorised use

Funding Obligations

The document should explain whether future funding will be provided through:

Equity
Shareholder loans
Bank finance
External commercial borrowing
Retained earnings

Deadlock Resolution

The parties should agree on a process for resolving disagreements.

Possible mechanisms include:

Escalation to senior management
Mediation
Buyout rights
Put or call options
Sale to a third party
Arbitration

Exit Rights

The agreement should address:

Lock-in period
Right of first refusal
Tag-along rights
Drag-along rights
Put and call options
Valuation methodology
Initial public offering
Sale to a strategic investor
Consequences of breach

Share-transfer and exit provisions must comply with FEMA pricing and foreign-exchange regulations.

Limited Liability Partnership in India

A Japanese company may also consider establishing or investing in an Indian limited liability partnership.

Foreign investment in an LLP is permitted under the automatic route where:

The relevant activity permits 100% foreign investment under the automatic route; and
The activity is not subject to FDI-linked performance conditions.

An LLP combines certain features of a company and a partnership.

Possible Advantages of an LLP

Separate legal identity
Limited liability of partners
Flexible internal governance
Fewer corporate formalities than a company in some areas
Profit distribution according to the LLP agreement
No dividend-distribution mechanism

Limitations of an LLP

An LLP may not be suitable where the Japanese company expects:

Multiple rounds of equity funding
Employee stock options
Investment from institutional investors
A future public listing
Complex classes of securities
A conventional parent-subsidiary structure

An LLP may also be unsuitable where the proposed business activity is subject to sectoral conditions or foreign-investment restrictions.

Japanese companies generally prefer a private limited company for long-term manufacturing, trading and corporate operations because the structure is more widely understood by investors, banks, customers and group reporting teams.

Branch Office in India

A branch office is an extension of the Japanese parent company.

It is not incorporated as a separate Indian legal entity. The business conducted through the branch is treated as business of the Japanese parent company.

The establishment and operation of branch, liaison and project offices by foreign entities are governed by FEMA regulations and RBI directions.

Activities Generally Permitted for a Branch Office

Subject to the RBI framework and approval conditions, a branch office may undertake activities such as:

Export and import of goods
Professional or consultancy services
Research connected with the parent company’s business
Promoting technical or financial collaboration
Representing the Japanese parent company
Acting as a buying or selling agent
Information-technology and software-development services
Technical support for products supplied by the parent company
Activities of foreign airlines or shipping companies, subject to sectoral rules

The approved activities should be clearly stated in the application.

Advantages of a Branch Office

Direct presence of the Japanese parent company
No separate Indian shareholding structure
Ability to conduct specified revenue-generating activities
Direct control by the head office
Suitable for certain service, trading or support activities

Limitations of a Branch Office

A branch office may face the following restrictions:

It can undertake only permitted and approved activities
It is generally not suitable for unrestricted retail trading
Manufacturing activity is restricted except in permitted circumstances
The Japanese parent may have direct liability for Indian operations
Profit attribution and permanent-establishment issues may arise
Closure requires regulatory and tax documentation
Repatriation requires compliance with prescribed conditions

Tax Considerations

A branch office ordinarily creates a taxable business presence of the Japanese company in India.

The Japanese company should review:

Permanent-establishment exposure
Attribution of profits
Branch taxation
Transfer pricing
Withholding tax
GST
Tax audit
Repatriation of branch profits

A branch office may face a different effective tax treatment from an Indian subsidiary.

The company should compare the subsidiary and branch structures before making a decision.

Liaison Office in India

A liaison office acts as a communication channel between the Japanese parent company and parties in India.

It is also known as a representative office.

A liaison office cannot ordinarily undertake commercial, trading or revenue-generating activities in India.

Permitted Activities

A liaison office may generally undertake activities such as:

Representing the Japanese parent company
Promoting imports from or exports to India
Promoting technical collaboration
Promoting financial collaboration
Coordinating communication with customers
Conducting market research
Gathering industry information
Developing business relationships
Supporting communication between the parent and Indian companies

Activities That a Liaison Office Cannot Undertake

A liaison office cannot ordinarily:

Sell goods in India
Purchase goods for resale
Issue commercial invoices
Provide paid services
Earn business income
Undertake manufacturing
Charge commission
Borrow funds for commercial operations
Enter into regular revenue-generating contracts

The expenses of the liaison office are generally met through inward remittances from the foreign head office.

When a Liaison Office May Be Suitable

A liaison office may be considered where the Japanese company wants to:

Study the Indian market
Identify distributors
Build customer relationships
Coordinate with suppliers
Promote the parent company
Assess long-term investment opportunities
Maintain a limited non-commercial presence

It is generally not suitable where the Japanese company expects to begin sales or provide paid services shortly after entering India.

Validity and Renewal

The RBI framework generally grants a liaison office approval for a defined validity period. The current RBI directions provide that liaison-office validity is generally three years, subject to specific exceptions and extension requirements.

The office must operate strictly within its approved activities throughout this period.

Project Office in India

A project office may be established where a Japanese company has secured a specific project or contract in India.

The project office is generally limited to activities connected with that project.

Typical Uses of a Project Office

A project office may be suitable for:

Engineering contracts
Infrastructure projects
Construction assignments
Installation and commissioning
Turnkey projects
Equipment-supply contracts
Industrial-plant projects
Technical implementation contracts

Important Factors

Before establishing a project office, the Japanese company should review:

Nature of the Indian contract
Indian customer
Project funding
Contract value
Project duration
Payment terms
Tax withholding
Permanent establishment
Import of machinery
Employee deployment
Project-office banking
Closure and repatriation

The validity of a project office is generally linked to the tenure of the underlying project.

A project office should not be used to undertake activities unrelated to the approved project.

Distributor, Importer or Sales-Agent Model

A Japanese company may enter India without immediately establishing its own entity by appointing an Indian:

Distributor
Importer
Dealer
Commission agent
Sales representative
Franchisee
Licensing partner

This model is often used to test the Indian market before making a larger investment.

Advantages of the Distributor Model

Lower initial investment
Faster market access
Use of an existing sales network
Reduced administrative burden
Local knowledge
Existing customer relationships
Ability to evaluate market demand

Commercial Risks

The Japanese company may have less control over:

Pricing
Marketing
Customer relationships
Brand positioning
Inventory
Warranty support
Regulatory compliance
Product data
After-sales service

Distributor Due Diligence

The Japanese company should assess:

Ownership
Financial strength
Tax and GST compliance
Import capability
Customer network
Warehousing
Technical team
Product-registration experience
Market reputation
Competing products
Litigation
Geographic reach

Important Provisions in the Distribution Agreement

The agreement should cover:

Territory
Products
Exclusive or non-exclusive appointment
Minimum purchase obligations
Pricing
Payment terms
Currency
Import responsibility
Product registration
Marketing commitments
Online sales
Customer ownership
Intellectual-property use
Confidentiality
Warranty
Product liability
Indemnity
Termination
Unsold inventory
Post-termination restrictions
Dispute resolution

Permanent-Establishment Risk

The Japanese company should ensure that the distributor is legally and commercially independent.

Permanent-establishment risk may arise where the Indian distributor or agent:

Habitually concludes contracts for the Japanese company
Regularly negotiates essential contract terms
Maintains stock for delivery on behalf of the Japanese company
Operates under detailed control of the Japanese company
Acts almost exclusively for the Japanese company

The agreement and actual conduct of the parties should remain consistent.

Comparison of India Entry Structures

Entry Structure	Separate Indian Legal Entity	Can Earn Revenue in India?	Foreign Ownership	Suitable For
Wholly Owned Subsidiary	Yes	Yes	Up to 100%, subject to FDI policy	Long-term, full-scale operations
Joint Venture	Yes	Yes	Shared with Indian partner	Businesses requiring local partnership
LLP	Yes	Yes	Subject to applicable FDI conditions	Selected service and professional businesses
Branch Office	No	Yes, for permitted activities	Parent company directly operates	Defined commercial activities
Liaison Office	No	No	Parent company directly operates	Market research and representation
Project Office	No	Project-related revenue	Parent company directly operates	Execution of a specific project
Distributor Model	No Japanese-owned entity	Indian distributor earns local revenue	Not applicable	Testing and developing the market

Foreign Direct Investment Rules for Japanese Companies

Foreign investment in India is regulated through:

Foreign Exchange Management Act
Foreign Exchange Management Rules and Regulations
Non-Debt Instruments Rules
DPIIT’s FDI policy
RBI directions
Sector-specific laws and licences

Foreign investment may enter India through the automatic route or government route.

Automatic Route

Under the automatic route, prior approval of the Government of India is not required.

The Japanese investor and Indian company must nevertheless comply with:

Sectoral limits
Entry conditions
Pricing guidelines
Permitted instruments
Reporting requirements
Beneficial-ownership requirements
Applicable industry regulations

The FDI policy permits up to 100% foreign investment under the automatic route in sectors that are not specifically restricted, subject to applicable laws and conditions.

Government Route

Under the government route, prior approval is required before the investment can be completed.

Government approval may be required where:

The sector falls under the approval route
Foreign investment exceeds the automatic-route limit
The activity is subject to security clearance
The investor does not satisfy prescribed eligibility conditions
The investment triggers beneficial-ownership restrictions
The transaction involves a regulated or sensitive sector

Investment proposals under the government route are considered by the relevant administrative ministry or department.

Sectoral Review

The Japanese company should not assume that every business activity permits 100% foreign ownership.

The company should first identify its precise activity.

For example, the FDI treatment may differ for:

Manufacturing
Wholesale trading
Single-brand retail
Multi-brand retail
E-commerce
Financial services
Insurance
Telecommunications
Defence
Pharmaceuticals
Medical devices
Construction development
Real estate
Media
Education
Logistics

A broad description such as “consulting,” “technology” or “trading” may not be sufficient for determining FDI eligibility.

The company should evaluate every proposed activity separately.

Beneficial Ownership and Land-Border Investment Rules

A Japanese entity investing directly from Japan is not restricted merely because it is incorporated in Japan.

However, the complete ownership and beneficial-ownership structure of the Japanese investor should be examined.

India’s FDI policy requires government approval where the investing entity is from a country sharing a land border with India or where the beneficial owner of the investment is situated in or is a citizen of such a country. A subsequent direct or indirect transfer resulting in such beneficial ownership may also require approval.

This review is relevant where the Japanese investor:

Has a multinational ownership structure
Is controlled by an overseas holding company
Has significant shareholders in another jurisdiction
Is owned by an investment fund
Has indirect beneficial owners outside Japan
Is undergoing a merger or share transfer

The company should map the ownership chain up to the ultimate beneficial owners before incorporation and capital remittance.

Capital Structure of the Indian Subsidiary

The initial capital should reflect the expected financial requirements of the Indian operation.

The company should consider:

Incorporation expenses
Office rent and deposits
Factory or warehouse costs
Employee salaries
Professional fees
Technology expenses
Import costs
Product-registration expenses
Sales and marketing
Working capital
Initial operating losses
Capital expenditure
Contingency requirements

A very low initial capital may result in repeated funding transactions and additional compliance.

Excessive initial capital may also be inefficient where the business remains in a testing phase.

Permitted Funding Methods

Funding may be introduced through:

Equity shares
Compulsorily convertible preference shares
Compulsorily convertible debentures
External commercial borrowing, subject to eligibility
Trade credit, subject to applicable rules
Other permitted instruments

The nature of each instrument affects:

Ownership
Voting rights
Conversion
Repatriation
Pricing
Tax treatment
RBI reporting
Future exit

The capital structure should therefore be planned before funds are transferred.

Share Valuation and Pricing Guidelines

The issue and transfer of shares between residents and non-residents must comply with applicable FEMA pricing guidelines.

Valuation becomes relevant when:

Shares are issued to the Japanese parent company
The Japanese investor acquires shares from an Indian shareholder
The Japanese shareholder sells shares
A joint venture is restructured
Convertible instruments are issued or converted
Shares are transferred between group companies
The Indian company undertakes a buyback or capital reduction

The company should obtain a valuation from an eligible professional wherever required.

The commercial agreement, valuation report, board approval and actual consideration should remain consistent.

Incorporation of an Indian Subsidiary

The incorporation process of an Indian Subsidiary generally involves the following stages.

Step 1: Finalising the Proposed Business Activity

The objects of the Indian company should be sufficiently broad to cover the intended business but should not include regulated activities that the company does not plan to undertake.

Step 2: Deciding the Shareholding Structure

The Japanese parent should decide:

Names of subscribers
Shareholding percentage
Initial capital
Beneficial ownership
Authorised representative
Future funding plan

Step 3: Appointing Directors

The company must appoint at least two directors in the case of a private company, including one director satisfying the resident-director requirement.

Step 4: Obtaining Digital Signatures

Proposed directors and authorised signatories may require digital-signature certificates for filing electronic incorporation forms.

Step 5: Reserving the Company Name

The proposed name should:

Be distinctive
Not conflict with an existing name
Not infringe an Indian trademark
Comply with naming rules
Reflect the group name, where appropriate

Where the Indian company intends to use the Japanese parent company’s name or trademark, an authorisation or no-objection document may be required.

Step 6: Preparing Incorporation Documents

The incorporation documents may include:

Memorandum of Association
Articles of Association
Subscriber documents
Director consent
Registered-office documents
Parent-company resolution
Identity and address proofs
Beneficial-ownership declarations
Authorisations and powers of attorney

Documents executed by foreign subscribers or directors outside India must comply with applicable notarisation, apostille or consularisation requirements.

MCA guidance provides that documents executed in a Hague Convention country generally require notarisation and apostille, depending on the nature of the document and the location of execution.

Step 7: Filing the Incorporation Application

The incorporation application is filed electronically with the Registrar of Companies.

Step 8: Obtaining the Certificate of Incorporation

Upon approval, the Registrar issues the certificate of incorporation.

The company also receives or applies for registrations such as:

Permanent Account Number
Tax Deduction and Collection Account Number
Other integrated registrations, where applicable

Registered Office in India

Every Indian company must maintain a registered office for receiving official communications and maintaining prescribed records.

The registered office may be:

Owned premises
Leased office
Group-company premises
Approved business-centre facility
Registered-office service, subject to documentation

The company may need:

Lease deed or licence agreement
Owner’s no-objection certificate
Utility bill
Address proof
Evidence of possession

Virtual Office Considerations

A registered-office service may be suitable during the initial phase.

However, the Japanese company should examine:

Actual operating location
GST registration requirements
Availability of records
Inspection requirements
Banking verification
Employee location
Customer perception
State tax implications

A virtual office should not be used to create an inaccurate impression about the company’s actual place of business.

Opening an Indian Bank Account

After incorporation, the Indian company must open a bank account.

The bank may request:

Certificate of incorporation
Memorandum and Articles of Association
PAN
Board resolution
Registered-office proof
Director documents
Shareholder documents
Ultimate beneficial-owner details
Japanese parent-company documents
Group structure
Nature of business
Expected transactions
Source of funds

Banks follow their own KYC, anti-money-laundering and risk-review procedures. RBI’s KYC directions apply to regulated entities and are updated periodically.

Bank account opening can take longer where:

The ownership chain is complex
Documents contain inconsistent names or addresses
Shareholders include funds or trusts
The business is highly regulated
The expected transactions require additional review
The bank seeks physical verification or further clarifications

The company should select a bank experienced in foreign investment and international transactions.

FEMA and RBI Compliance After Capital Remittance

The Japanese parent should remit capital through normal banking channels.

The Indian company should retain:

Bank remittance advice
Foreign inward-remittance documents
Know-your-customer confirmation
Share-subscription agreement
Board resolution
Valuation report
Share-allotment documents
Beneficial-ownership information
RBI filing acknowledgement

The company should complete the share allotment and foreign-investment reporting within the applicable statutory timelines.

Common FEMA reporting requirements may include:

Reporting of issue of equity instruments
Reporting of transfer of shares
Reporting of downstream investment
Annual foreign-liability and asset reporting
External commercial borrowing reporting
Reporting of overseas or cross-border guarantees
Reporting on closure or restructuring

Any delay should be identified and corrected promptly. Depending on the nature of the delay, a late-submission fee, compounding or another corrective process may apply.

Downstream Investment

An Indian company that is owned or controlled by non-residents may make investments in another Indian entity.

Such downstream investment must comply with:

Sectoral caps
Entry route
Pricing requirements
Funding conditions
Reporting requirements
Other applicable FDI conditions

The Japanese group should evaluate downstream-investment consequences where the Indian subsidiary plans to:

Acquire another Indian company
Form a new subsidiary
Invest in an LLP
Participate in a joint venture
Restructure Indian group companies

Downstream-investment compliance should be reviewed before the Indian company signs the investment agreement or transfers funds.

India–Japan Double Taxation Avoidance Agreement

India and Japan have a Double Taxation Avoidance Agreement covering taxes on income.

The treaty addresses matters such as:

Tax residence
Permanent establishment
Business profits
Shipping and air transport
Dividends
Interest
Royalties
Fees for technical services
Capital gains
Employment income
Directors’ fees
Elimination of double taxation
Exchange of information

The India–Japan treaty has been amended through protocols and must also be read with applicable provisions of the Multilateral Instrument.

Treaty eligibility does not automatically arise merely because the recipient is incorporated in Japan.

The Japanese company should maintain:

Valid Tax Residency Certificate
Form 10F, wherever applicable
Beneficial-ownership evidence
Commercial-substance documentation
Agreements and invoices
Permanent-establishment analysis
Evidence supporting the nature of income

The treaty and domestic law should be compared for each payment.

Permanent-Establishment Risk for Japanese Companies

A Japanese company may become taxable in India even when it has not incorporated an Indian subsidiary.

Permanent-establishment exposure may arise from:

Fixed office
Factory
Workshop
Project site
Construction activity
Employees working in India
Long-duration services
Dependent agents
Authority to conclude contracts
Regular negotiation of key terms
Premises available to the Japanese company
Installation or commissioning work

The company should conduct a permanent-establishment review before:

Sending employees to India
Appointing a dependent sales representative
Beginning a long-term project
Maintaining stock in India
Using customer or group-company premises
Negotiating contracts through an Indian team

Where a permanent establishment exists, the company may need to:

Obtain tax registration
Maintain accounts
File an Indian tax return
Attribute profits to Indian operations
Comply with transfer-pricing rules
Undergo tax audit, where applicable

Corporate Taxation of the Indian Subsidiary

An Indian subsidiary is generally taxable as an Indian company.

Its tax obligations may include:

Corporate income tax
Advance tax
Withholding tax
Tax audit
Annual income-tax return
Transfer-pricing reporting
Minimum alternate tax, where applicable
Tax assessment and litigation

The applicable corporate tax regime should be selected after evaluating:

Nature of business
Available deductions
Tax incentives
Unabsorbed losses
Depreciation
Manufacturing status
Group structure
Expected profitability

The company should not select a tax regime only by comparing headline rates.

Withholding Tax on Payments to Japan

Payments from the Indian company to the Japanese parent or another overseas group entity may require Indian withholding tax.

Common payments include:

Royalty
Technical-service fees
Management-service fees
Interest
Software charges
Professional fees
Commission
Reimbursement of expenses
Dividend
Purchase of certain rights or assets

The withholding-tax analysis should consider:

Indian income-tax law
India–Japan DTAA
Nature of the agreement
Actual services performed
Place of performance
Permanent establishment
Beneficial ownership
Supporting documents
Tax residency

A payment described as a reimbursement may still have a taxable element where it includes a markup, service component or insufficiently documented underlying cost.

Transfer Pricing for India–Japan Transactions

Transactions between the Japanese parent and Indian subsidiary must comply with India’s transfer-pricing regulations.

The price and terms should follow the arm’s-length principle.

Common International Transactions

Import of finished goods
Import of raw materials
Export of goods
Contract manufacturing
Royalty
Technology fee
Management-service fee
Technical support
Software charges
Research and development
Cost allocation
Employee secondment
Intercompany loans
Corporate guarantees
Reimbursement of expenses
Purchase or sale of assets

Transfer-Pricing Documentation

The Indian company should maintain:

Intercompany agreements
Invoices
Transfer-pricing policy
Benchmarking analysis
Cost-allocation workings
Evidence of services
Employee time records
Technical reports
Email correspondence
Management approvals
Benefit analysis
Comparable data

Management and Technical Service Fees

Tax authorities may examine whether the Indian company actually received a measurable benefit.

The company should demonstrate:

Nature of service
Persons providing the service
Date and duration
Deliverables
Business need
Cost base
Allocation method
Benefit to the Indian company

A global cost-allocation invoice without supporting records may face tax and transfer-pricing challenges.

Royalty and Technology Payments

The company should document:

Technology licensed
Ownership
Territory
Duration
Royalty base
Rate
Exclusivity
Improvements
Technical assistance
Commercial benefit

Goods and Services Tax

The Indian subsidiary may require GST registration depending on its activities, turnover, location and transaction structure.

GST compliance may include:

Registration
Tax invoices
E-invoicing, where applicable
E-way bills
Input-tax-credit reconciliation
Periodic returns
Reverse-charge tax
Export documentation
Place-of-supply analysis
Related-party valuation
Annual reconciliation

Cross-Border Services

Services received by the Indian company from the Japanese parent may qualify as import of services.

GST may become payable under the reverse-charge mechanism, depending on the transaction.

Under Schedule I of the CGST Act, the import of services from a related person or an overseas establishment in the course or furtherance of business may be treated as a supply even when made without consideration.

Therefore, the company should review:

Management support
Technical assistance
Software access
Group IT systems
Employee support
Brand use
Central procurement
Shared services

Export of Services

Services supplied by the Indian company to the Japanese parent may qualify as export of services where all prescribed conditions are satisfied.

The company should review:

Location of supplier
Location of recipient
Place of supply
Receipt in permitted foreign exchange or other permitted manner
Relationship between establishments
Supporting agreement and invoices

Customs and Import Compliance

An Indian subsidiary importing goods from Japan must generally obtain an Importer Exporter Code and comply with customs requirements.

The company should examine:

Product classification
Customs valuation
Basic customs duty
Integrated GST
Social Welfare Surcharge
India–Japan CEPA benefit
Rules of origin
Product licences
Labelling
Technical standards
Anti-dumping duty
Related-party imports
Import restrictions

Related-Party Customs Valuation

Imports from the Japanese parent or group company may receive additional customs scrutiny.

The authorities may examine whether the relationship influenced the import price.

The company should maintain:

Supply agreement
Price list
Transfer-pricing policy
Comparable uncontrolled pricing
Cost data
Discount policy
Royalty arrangement
Payment terms
Product specifications

The customs valuation position and income-tax transfer-pricing policy should be commercially consistent, although the two regimes apply different principles and procedures.

India–Japan CEPA

Where the company claims preferential customs duty under the India–Japan CEPA, it should ensure compliance with:

Product-specific rule of origin
Certificate of origin
Value-addition requirement
Tariff-classification requirement
Direct consignment
Supporting manufacturing records

A certificate of origin alone may not be sufficient where customs authorities seek further verification.

Product and Sector-Specific Registrations

Company incorporation does not automatically authorise every business activity.

Depending on the product or service, the Japanese company may require approvals relating to:

Food safety
Medical devices
Pharmaceuticals
Cosmetics
Electronics
Telecommunications
Legal metrology
Environmental protection
Pollution control
Factory operations
Import licences
Industrial safety
Financial services
Insurance
Defence
Chemicals
Data processing

The approval process should begin early where product registration requires testing, technical documentation or local representation.

Employment and Payroll Compliance

The Indian subsidiary can hire employees under Indian employment laws.

The company should prepare:

Employment agreements
Human-resources policies
Confidentiality agreements
Intellectual-property assignment
Compensation structure
Leave policy
Expense-reimbursement policy
Code of conduct
Prevention-of-harassment policy
Termination process

Payroll compliance may include:

Salary tax withholding
Provident fund
Employee state insurance, where applicable
Professional tax
Labour welfare fund
Gratuity
Bonus
Leave benefits
Payroll reporting

The exact requirements depend on the state, employee count, salary levels and nature of establishment.

Japanese Expatriates Working in India

Japanese employees may work in India subject to immigration, tax and employment requirements.

The company should review:

Employment visa
Foreigner registration, where applicable
Indian tax registration
Salary withholding
Tax return
Social-security treatment
Housing and other benefits
Secondment agreement
Cost recharge
Permanent-establishment risk
Transfer pricing
GST

Secondment Arrangements

A secondment arrangement should clearly identify:

Legal employer
Economic employer
Control and supervision
Salary payer
Cost recharge
Employee responsibilities
Duration
Termination
Intellectual-property ownership
Tax and social-security obligations

An arrangement described as a simple salary reimbursement may still have tax and GST implications.

Intellectual-Property Protection in India

A Japanese registration does not automatically protect a trademark, patent or design in India.

Japanese companies should consider Indian protection for:

Trademarks
Patents
Industrial designs
Copyright
Domain names
Software
Trade secrets

The company should file key trademark applications before:

Appointing a distributor
Sharing product catalogues
Launching online sales
Entering a joint venture
Licensing technology
Publicly announcing the brand

Contracts should include provisions covering:

Ownership
Permitted use
Territory
Quality control
Confidentiality
Sub-licensing
Improvements
Infringement
Termination
Return or destruction of confidential information

Documents Generally Required from the Japanese Parent Company

The exact document list depends on the entry structure and regulatory requirements.

Corporate Documents

Certificate of incorporation or registry extract
Constitutional documents
Registered-office proof
Corporate profile
Details of directors
Details of shareholders
Group structure
Ultimate beneficial-owner information
Financial statements, where required
Tax identification details

Board and Authorisation Documents

Resolution approving Indian investment
Resolution approving incorporation
Nomination of authorised representative
Power of attorney
Authorisation to use parent-company name
Authorisation to use trademark
Approval of initial capital

Director Documents

Passport
Address proof
Photograph
Email address
Mobile number
Tax identification information
Consent to act as director
Digital-signature documents

Proposed Shareholder Documents

For individual shareholders:

Passport
Address proof
Tax identification
Beneficial-ownership declaration

For corporate shareholders:

Incorporation certificate
Constitutional documents
Registered-office proof
Board resolution
Authorised representative details
Ownership structure
Beneficial-ownership information

Apostille and Translation

Documents executed in Japan may require notarisation and apostille before they can be used in India.

Where a document is in Japanese, an English translation may also be required.

The translation should be properly certified or authenticated as applicable.

The company should ensure consistency in:

Legal name
Registered address
Registration number
Director name
Passport spelling
Date format
Signatures

Small inconsistencies can delay incorporation, banking and regulatory filings.

Indicative Timeline for India Market Entry

Activity	Indicative Timeline
Initial strategy and structure review	1–2 weeks
Preparation of document checklist	2–5 working days
Japanese corporate approvals	Depends on internal process
Notarisation and apostille in Japan	1–3 weeks
Incorporation after receiving complete documents	Approximately 2–4 weeks
Bank account opening	Approximately 2–6 weeks
Capital remittance and share allotment	Depends on bank and internal approvals
GST and Importer Exporter Code registration	Approximately 1–4 weeks
Product or industry licence	Depends on the applicable regulator
Branch or liaison office approval	Usually longer and dependent on regulatory review
Distributor due diligence and agreement	Approximately 3–8 weeks

The timelines are indicative and may vary due to:

Document quality
Government processing
Bank KYC
Sectoral approval
Ownership complexity
Product registration
Japanese internal approval processes

Common Regulatory and Operational Challenges

Inconsistent Foreign Documents

Differences in company names, addresses, registration numbers or authorised-signatory details can cause delays.

Inadequate Initial Capital

Insufficient capital may require repeated foreign-investment transactions.

Incorrect Business Objects

Narrow or inaccurate objects may restrict the company’s future activities.

Delayed Bank Account Opening

Banks may seek detailed information regarding ownership, expected transactions and the source of funds.

Failure to Complete FEMA Reporting

Delayed or incorrect foreign-investment reporting can lead to late fees or corrective proceedings.

Incorrect Tax Treatment of Group Charges

Royalty, technical-service fees, software charges and management fees require detailed tax, GST and transfer-pricing analysis.

Weak Documentation

The company may face tax disallowances where it cannot demonstrate the nature, receipt and business benefit of services.

Distributor Dependency

A distributor may gain control over customers, product registration and market information unless the agreement protects the Japanese company.

Wrong Location Selection

A location chosen only on the basis of low land cost may create long-term problems relating to employees, logistics, suppliers or customers.

Failure to Plan the Exit

The company should review share transfers, closure, capital reduction, liquidation and repatriation before entering India.

Professional Considerations Before Finalising the Entry Structure

Before choosing an India entry route, a Japanese company should obtain professional advice on:

FDI eligibility
Sectoral restrictions
Beneficial ownership
Corporate structure
Shareholding
Capitalisation
FEMA reporting
Permanent establishment
Corporate tax
Transfer pricing
GST
Customs
Product approvals
Employment
Intellectual property
Repatriation
Exit strategy

A well-planned structure should support the Japanese company’s commercial objectives while reducing regulatory delays, unnecessary tax exposure and future restructuring costs.

Why Choose EzyBiz India for India Market Entry?

Entering India requires coordination across several legal, financial and operational areas.

A Japanese company may need support with:

Entry strategy
Company registration
Foreign direct investment
FEMA and RBI reporting
Corporate taxation
Transfer pricing
GST and customs
Accounting
Payroll
Corporate compliance
Banking
Employment of expatriates
Regulatory approvals

Managing these areas through several unrelated service providers may increase implementation time and create gaps between the legal structure, tax position and actual business operations.

EzyBiz India provides integrated India Market Entry Services for Japanese Companies through a single professional team.

We help Japanese companies plan, establish and operate their Indian businesses in a structured and compliant manner.

End-to-End India Entry Support

We support the complete India market entry lifecycle, including:

Initial entry strategy
Selection of business structure
FDI and FEMA review
Incorporation of the Indian entity
Bank account and capital remittance support
Tax and regulatory registrations
Accounting and payroll setup
Ongoing tax and corporate compliance
Transfer-pricing support
Repatriation and restructuring advisory

The Japanese parent company receives one coordinated roadmap instead of separate and disconnected recommendations.

Experienced Professional Team

Our team includes chartered accountants, company-law professionals, tax advisers and business consultants experienced in assisting foreign companies in India.

We understand that foreign investment cannot be handled only as a company-registration assignment.

The structure must also work from the perspective of:

Tax
Transfer pricing
Foreign exchange regulations
Banking
Commercial contracts
Corporate governance
Future funding
Profit repatriation
Exit planning

Practical and Commercially Focused Advice

We do not recommend a structure only because it is legally available.

We examine whether the proposed model is commercially appropriate for the Japanese company.

For example:

A liaison office may be unsuitable if the company intends to earn revenue.
A distributor model may be unsuitable if the company requires direct customer control.
A branch office may create greater tax and liability exposure than a subsidiary.
A joint venture may be unsuitable if the parties have not agreed on management and exit rights.
A wholly owned subsidiary may involve unnecessary cost where the company only wants to conduct an initial market study.

Our objective is to identify the most practical route based on the company’s immediate plans and long-term India strategy.

Single Point of Coordination

Japanese companies often need to coordinate with:

Indian lawyers
Chartered accountants
Company secretaries
Banks
Government departments
Tax authorities
Auditors
Payroll providers
Recruitment firms
Regulatory consultants

EzyBiz India acts as a central professional coordinator for the India entry process.

This helps the Japanese parent company monitor:

Documents required
Responsibilities
Pending actions
Statutory deadlines
Government filings
Banking requirements
Implementation progress

Clear Documentation and Responsibility Matrix

At the beginning of the assignment, we prepare a structured list of:

Documents required from Japan
Documents to be prepared in India
Notarisation and apostille requirements
Actions required from the Japanese parent
Actions required from the Indian team
Indicative implementation timeline
Regulatory registrations
Post-incorporation requirements

This reduces confusion and unnecessary exchange of incomplete documents.

Support Beyond Company Incorporation

The Indian company requires continuing support after receiving its certificate of incorporation.

It must maintain books, complete statutory filings, comply with tax laws, process payroll, hold corporate meetings and meet foreign-exchange reporting requirements.

An Indian company that has received foreign investment may also be required to submit the prescribed annual Foreign Liabilities and Assets return under FEMA, depending on the applicable facts.

Our services therefore continue beyond registration and may cover the company’s complete finance and compliance function.

Strong Understanding of Foreign-Owned Companies

A Japanese-owned Indian company has additional responsibilities compared with a purely domestic company.

These may include:

Foreign investment reporting
Beneficial-ownership documentation
Transfer-pricing compliance
Intercompany agreements
Cross-border withholding tax
Import of services under GST
Customs valuation
Foreign remittances
Japanese expatriate taxation
Group reporting
Repatriation of profits

We consider these requirements while developing the entry and operating structure.

Support for Japanese Small and Medium Enterprises

Large multinational companies may have dedicated international legal, tax and finance teams.

Japanese small and medium-sized companies may not have the same internal resources.

We assist such businesses with:

Entry planning
Local coordination
Accounting and payroll
Regulatory compliance
Management reporting
Vendor and adviser coordination
Ongoing professional support

This allows the Japanese management to focus on customers, products and business development.

Our Process for Helping Japanese Companies Enter India

We follow a structured process to reduce regulatory delays and implementation risks.

Understanding the Proposed India Business

We begin by understanding the Japanese company’s commercial plan.

The initial discussion covers:

Products or services
Target customers
Expected sales
Manufacturing plans
Import and export requirements
Proposed Indian location
Employee requirements
Expected investment
Ownership structure
Technology arrangements
Indian partners or distributors
Long-term business objectives

We also identify whether the company plans to:

Test the market
Establish a sales office
Manufacture in India
Set up an engineering centre
Appoint a distributor
Execute a specific project
Form a joint venture
Acquire an existing Indian company

The business objective forms the basis for the entry recommendation.

Comparing the Available Entry Structures

We compare the available options, including:

Wholly owned subsidiary
Joint venture
Limited liability partnership
Branch office
Liaison office
Project office
Distributor or importer model

The comparison considers:

Foreign ownership
Management control
Ability to earn revenue
Liability exposure
Tax treatment
FEMA compliance
Funding requirements
Regulatory approval
Operational flexibility
Closure and exit

We then recommend the structure that best supports the proposed activity.

FDI and Regulatory Review

Before incorporating the Indian entity or transferring funds, we review:

Applicable FDI route
Foreign ownership limit
Sector-specific conditions
Government approval requirements
Beneficial-ownership structure
Licensing requirements
Product regulations
State-level approvals
Foreign-exchange reporting

Where the proposed business includes several activities, we review each activity separately.

For example, manufacturing, retail trading, e-commerce, financial services and distribution may have different regulatory treatment.

Tax and Transfer-Pricing Assessment

We examine the proposed structure from the tax perspective.

The review may cover:

Corporate tax
Permanent-establishment exposure
India–Japan tax treaty
Withholding tax
Transfer pricing
GST
Customs duty
Royalty
Technical-service fees
Management charges
Employee secondment
Profit repatriation

India and Japan have a Double Taxation Avoidance Agreement that addresses various categories of cross-border income. Treaty eligibility and relief depend on the transaction, tax residence, documentation and applicable anti-abuse provisions.

The objective is to align the business model, agreements, invoicing and tax treatment before operations begin.

Preparing the Implementation Roadmap

After finalising the structure, we prepare an implementation plan.

The roadmap may include:

Incorporation steps
Document checklist
Responsibility matrix
Capital structure
Registered-office plan
Director requirements
Banking requirements
Foreign-investment reporting
Tax registrations
Employment registrations
Product approvals
Accounting and payroll setup
Indicative timeline

This provides the Japanese parent company with a clear sequence of actions.

Preparing and Reviewing Japanese Documents

We review the corporate and personal documents before they are notarised and apostilled in Japan.

The review helps identify:

Name differences
Address inconsistencies
Incorrect registration details
Missing authorisations
Incomplete board resolutions
Incorrect signatures
Translation requirements
Beneficial-ownership information

Correcting these issues before apostille can reduce incorporation and banking delays.

Incorporating the Indian Entity

Where the Japanese company chooses an Indian subsidiary, we assist with:

Name reservation
Digital signatures
Director identification requirements
Memorandum of Association
Articles of Association
Subscriber documents
Registered-office documents
Incorporation application
PAN and TAN
Initial corporate records

Every Indian company must have at least one director who satisfies the applicable Indian residence requirement. For a newly incorporated company, this requirement applies proportionately for the incorporation financial year.

We also help establish an appropriate governance and signing-authority framework.

Post-Incorporation Corporate Actions

After incorporation, the company may need to complete actions such as:

Opening the bank account
Issuing subscriber shares
Appointing the first auditor
Holding the first board meeting
Adopting statutory registers
Issuing share certificates
Approving banking powers
Approving initial contracts
Establishing accounting records
Completing registered-office requirements

The Companies Act provides for the appointment of an auditor by every company in accordance with the prescribed framework.

These actions should be completed within the applicable timelines.

Bank Account and Capital Remittance Support

We assist the company in preparing the documents generally required by the Indian bank.

These may include:

Incorporation documents
Board resolutions
Director KYC
Shareholder KYC
Group structure
Ultimate beneficial-owner information
Business plan
Expected transaction profile
Source-of-funds details
Registered-office proof

After opening the account, we support the company with:

Capital remittance documentation
Foreign inward-remittance records
Share allotment
Valuation support
FEMA reporting
Maintenance of investment records

Tax and Operational Registrations

Depending on the business activity, we assist with registrations such as:

Goods and Services Tax
Importer Exporter Code
Shops and establishment registration
Professional tax
Provident fund
Employee state insurance
Tax deduction account
Industry-specific registrations
Other state or municipal registrations

The registration plan depends on:

Business activity
State
Employee count
Expected turnover
Import and export activity
Physical office or factory
Products sold

Accounting and Payroll Setup

We help establish the company’s finance function from the beginning.

The setup may include:

Chart of accounts
Accounting software
Invoice format
Expense-approval process
Vendor onboarding
Customer accounting
Bank-payment controls
Payroll structure
Tax deduction procedures
GST process
Related-party transaction records
Monthly reporting format

The accounting system should satisfy Indian statutory requirements while also supporting the Japanese parent company’s reporting needs.

Continuing Compliance and Advisory

After operations begin, we provide ongoing support for:

Monthly accounting
Payroll processing
GST returns
Tax deductions
Advance tax
Corporate tax return
Transfer pricing
Statutory audit
Corporate filings
FEMA reporting
Financial reporting
Tax notices
Regulatory changes

This creates a continuing compliance framework for the Indian company.

Support During the First 90 Days After Incorporation

The first few months are critical for establishing proper systems.

We help the company prioritise the following activities.

Corporate Governance

First board meeting
Auditor appointment
Share allotment
Share certificates
Statutory registers
Signing powers
Approval of initial agreements

Banking and Funding

Bank account activation
Capital remittance
Foreign investment reporting
Payment controls
Online banking access
Authorised signatories

Tax and Registrations

GST registration
Importer Exporter Code
Payroll registrations
Tax deduction procedures
Advance-tax assessment
Customs planning

Finance Function

Accounting software
Chart of accounts
Vendor master
Customer master
Invoice approval
Expense reimbursement
Monthly closing calendar
Parent-company reporting

Human Resources

Employment agreements
Payroll structure
Leave policy
Confidentiality provisions
Intellectual-property clauses
Employee tax documentation
Expatriate arrangements

Intercompany Transactions

Supply agreement
Technology agreement
Management-services agreement
Royalty agreement
Secondment agreement
Transfer-pricing policy
Cost-allocation method

Setting up these processes early can reduce future compliance and tax disputes.

Ongoing Accounting and Financial Reporting Services

Once the Indian business becomes operational, it must maintain complete and reliable financial records.

Our accounting support may include:

Maintenance of books of account
Customer invoicing
Vendor accounting
Bank reconciliation
Expense booking
Fixed-asset accounting
Inventory accounting
Intercompany reconciliation
Foreign-currency accounting
Monthly closing
Financial statements
Management reports

Reporting to the Japanese Parent Company

We can prepare customised reports based on the Japanese group’s reporting requirements.

These may include:

Monthly profit and loss statement
Balance sheet
Cash-flow report
Accounts receivable
Accounts payable
Bank position
Expense analysis
Budget comparison
Related-party transactions
Tax-compliance status
Regulatory-compliance status

This helps the Japanese management monitor the Indian operation without depending only on year-end financial statements.

Payroll and Employee Compliance Services

We can support the Indian company with:

Monthly salary computation
Employee tax withholding
Payslips
Reimbursements
Provident-fund compliance
Employee state insurance, where applicable
Professional tax
Payroll reports
Annual employee tax statements
Full-and-final settlement
Expatriate payroll coordination

The payroll process can be designed to incorporate:

Fixed salary
Variable pay
Bonus
Housing benefits
Travel benefits
Reimbursements
Retirement benefits
Japanese expatriate allowances

Corporate Tax and GST Compliance

Our tax-compliance support may cover:

Advance-tax computation
Corporate tax return
Withholding-tax returns
Withholding-tax certificates
Foreign-remittance documentation
GST returns
Input-tax-credit reconciliation
Reverse-charge analysis
Annual GST reconciliation
Tax audit, where applicable
Assistance with tax notices

For qualifying outward remittances to a non-resident or foreign company, the Indian remitter may need to evaluate the applicable Form 15CA and Form 15CB requirements. The Income Tax Department describes Form 15CB as a chartered accountant’s certificate for specified taxable remittances exceeding the prescribed threshold.

Transfer-Pricing and Intercompany Support

Japanese-owned Indian companies commonly enter into transactions with their parent or group companies.

We assist with:

Identification of international transactions
Intercompany agreements
Transfer-pricing study
Benchmarking
Accountant’s report
Royalty analysis
Management-service fees
Technical-service charges
Cost allocations
Loans and guarantees
Employee secondment
Reimbursement arrangements

We also help align:

Agreement terms
Invoices
Accounting entries
Tax withholding
GST treatment
Supporting evidence
Actual conduct of the parties

FEMA and RBI Compliance Support

Our FEMA support may include:

Review of foreign investment
Capital remittance
Share allotment reporting
Share-transfer reporting
Annual foreign-liability reporting
Downstream investment
Foreign loans
Guarantees
Repatriation
Delayed reporting
Restructuring
Closure of Indian operations

The RBI’s FLA framework requires qualifying entities with foreign liabilities or assets to report the prescribed information annually.

Foreign-exchange reporting should be reconciled with the company’s statutory accounts and corporate records.

Assistance with Statutory Audit

Every Indian company must appoint an eligible auditor under the Companies Act framework.

We can support the company and its auditor with:

Preparation of financial statements
Trial-balance review
Account reconciliations
Related-party schedules
Fixed-asset register
Tax provisions
Audit schedules
Management representations
Responses to audit queries
Coordination with the Japanese parent company

A well-maintained monthly accounting system reduces year-end audit delays.

Support with Tax Assessments and Regulatory Notices

Indian companies may receive notices from:

Income Tax Department
GST authorities
Registrar of Companies
Reserve Bank of India
Labour authorities
Other sector regulators

Our support may include:

Analysing the notice
Collecting records
Preparing reconciliations
Drafting replies
Filing submissions
Representing the company
Managing appeals and litigation

Foreign-owned companies should respond to notices within the prescribed time and maintain a clear record of submissions.

Related India Market Entry Services

Establishing a business in India often involves several legal, regulatory and commercial considerations beyond company incorporation. Depending on their business objectives, Japanese Companies may also find the following services useful while expanding their business into India:

India Market Entry Services
Business Setup in India
Foreign Company Registration in India
Wholly Owned Subsidiary in India
Joint Venture in India
Branch Office in India
Liaison Office in India
Project Office in India
India Market Entry Services by Country – Explore our country-specific India market entry guides designed for businesses from different jurisdictions.
Distributor Appointment Services
FEMA & RBI Advisory
Company Incorporation Services
International Tax Advisory
Transfer Pricing Services
GST Registration & Compliance
Accounting & Bookkeeping Services
Virtual CFO Services

If you are uncertain about the most suitable structure for your business, our India Entry specialists can help you evaluate the available options and recommend the most appropriate strategy based on your commercial objectives and the applicable regulatory framework.

Start Your Business in India

India offers substantial opportunities for Japanese companies seeking:

A large and growing customer market
Manufacturing capacity
Skilled professionals
Technology and engineering talent
Local sourcing
Supply-chain diversification
Regional export opportunities
Long-term business growth

However, successful India market entry requires more than incorporating a company.

The Japanese investor must align:

Commercial strategy
Business structure
Foreign investment
FEMA and RBI compliance
Tax and transfer pricing
GST and customs
Banking
Employment
Corporate governance
Continuing compliance

EzyBiz India helps Japanese companies plan and execute their India entry through a structured and practical process.

Planning India Market Entry from Japan?

Contact EzyBiz India for assistance with:

India entry strategy
Company registration
Wholly owned subsidiary setup
Joint venture advisory
Distributor and importer arrangements
FDI and FEMA compliance
RBI reporting
India–Japan tax advisory
Transfer pricing
GST and customs
Accounting and payroll
Continuing corporate compliance

Speak with Our India Market Entry Advisers

Discuss your proposed India business, ownership structure, investment plan and implementation timeline with our team.

We will help you develop a compliant and commercially practical India entry roadmap.

Contact EzyBiz India to begin your India market entry journey.
Talk to Our India Entry Experts

Disclaimer

The information contained on this page is general in nature and is provided solely for informational and educational purposes.

It does not constitute legal, tax, accounting, regulatory, investment or commercial advice.

Foreign investment rules, company law, FEMA regulations, RBI directions, tax laws, treaty provisions, GST rules, customs regulations and regulatory procedures may change from time to time.

The applicability of any law, approval, tax treatment or compliance requirement depends on factors such as:

Proposed business activity
Industry
Ownership structure
Beneficial ownership
Investment amount
Transaction documents
Location
Product
Nature of income
Actual business conduct

The indicative timelines mentioned on this page may vary depending on document availability, government processing, banking procedures, regulatory approvals and the facts of each case.

Japanese companies and investors should obtain specific professional advice before:

Making an investment
Incorporating an entity
Transferring funds
Signing an agreement
Appointing a distributor
Sending employees to India
Starting business operations
Claiming a tax or customs benefit

Explore our India Market Entry Services by Country to learn about investment opportunities, business setup and regulatory guidance for companies from Taiwan, China, USA, Singapore, UK, Australia, Japan, South Korea, Germany and other countries.

India Market Entry Services for Japanese Companies

Frequently Asked Questions

1. Can a Japanese company own 100% of an Indian company?

Yes. A Japanese company may own up to 100% of an Indian subsidiary where the proposed activity permits full foreign investment.

The applicable FDI route, sectoral cap and sector-specific conditions should be reviewed before incorporation.

2. Does a Japanese company need an Indian joint-venture partner?

Not necessarily.

An Indian partner is not required where the proposed sector permits 100% foreign ownership.

A joint venture may still be commercially useful where the Indian partner provides:

Distribution
Manufacturing capacity
Land
Licences
Customers
Local technology
Industry knowledge

3. Which structure is most suitable for long-term operations?

A wholly owned subsidiary is generally suitable where the Japanese company intends to:

Earn revenue in India
Hire employees
Manufacture or trade
Build a long-term customer base
Establish a permanent commercial presence
Retain full ownership and control

The final choice should be based on the proposed activity and tax position.

4. Can a Japanese company test the Indian market without forming a subsidiary?

Yes.

It may initially consider:

Distributor arrangement
Importer arrangement
Sales agent
Liaison office
Market research engagement
Contractual collaboration

The company should review permanent-establishment, tax and regulatory exposure before beginning regular activity in India.

5. Can a liaison office earn income in India?

No. A liaison office is generally permitted to undertake representative, communication and market-development activities.

It cannot ordinarily undertake commercial or revenue-generating business in India.

A subsidiary or permitted branch-office structure may be more suitable if the company intends to invoice customers.

6. Can a branch office conduct business in India?

A branch office may undertake activities permitted under the applicable FEMA and RBI framework and its approval conditions.

It does not have the same unrestricted commercial flexibility as an Indian subsidiary.

The Japanese parent company should also consider direct liability and permanent-establishment consequences.

7. Is a resident Indian director compulsory?

Every Indian company must have at least one director who satisfies the statutory residence requirement.

In the year of incorporation, the requirement applies proportionately.

The resident director does not necessarily need to hold shares in the company.

8. Can all other directors be Japanese nationals?

Yes.

Japanese nationals can become directors of the Indian company, subject to completing the required identity, digital-signature, director-registration and disclosure formalities.

The company must still satisfy the resident-director requirement.

9. How many shareholders are required for a private company?

A private limited company is generally incorporated with at least two subscribers.

The shareholding can be structured through the Japanese parent company and another eligible corporate or individual shareholder.

The beneficial ownership and economic arrangement should be properly documented.

10. Is there a minimum capital requirement?

There is generally no standard statutory minimum paid-up capital for incorporating an ordinary private limited company.

However, the initial capital should be sufficient to support:

Office expenses
Salaries
Professional fees
Imports
Marketing
Working capital
Initial operating losses

Regulated sectors may have separate capital requirements.

11. Can the company use a virtual office?

A registered-office service may be used, subject to proper premises documents and verification requirements.

The company should also consider:

GST registration
Bank verification
Actual business location
Availability of corporate records
Customer and regulator expectations

A manufacturing or warehousing business will normally require additional physical premises.

12. How long does incorporation take?

Incorporation may generally take approximately two to four weeks after complete, accurate and properly authenticated documents are available.

The complete setup may take longer because of:

Apostille
Bank account opening
Capital remittance
GST registration
Product approvals
Internal Japanese approvals

The timeline is indicative and depends on the specific case.

13. Do Japanese documents require apostille?

Documents signed or issued in Japan for use in Indian incorporation or regulatory filings may require notarisation and apostille, depending on the nature of the document.

Japanese-language documents may also require an authenticated English translation.

All documents should be reviewed before apostille.

14. Can the Indian company import goods from Japan?

Yes.

The Indian company may import goods after obtaining the required registrations and complying with:

Customs classification
Customs valuation
Import policy
Product standards
Labelling
Import licences
Related-party pricing
Rules of origin

The availability of a preferential duty rate under the India–Japan CEPA should be verified separately for each product.

15. Does India have a tax treaty with Japan?

Yes.

India and Japan have a Double Taxation Avoidance Agreement covering various forms of income, including business profits, dividends, interest, royalties and specified service income.

Treaty benefits are subject to applicable documentation, substance and anti-abuse requirements.

16. Can the Indian subsidiary pay royalty to the Japanese parent?

Yes, subject to:

Commercial justification
Appropriate agreement
FEMA compliance
Transfer pricing
Withholding tax
GST
Beneficial-ownership considerations
Supporting documentation

The royalty should relate to genuine and identifiable intellectual property or technology.

17. Can the Indian subsidiary pay management or technical-service fees?

Yes.

The company should maintain evidence showing:

Nature of services
Persons providing the services
Deliverables
Business benefit
Cost-allocation method
Arm’s-length pricing
Agreement and invoices

The payment may attract tax withholding, GST and transfer-pricing requirements.

18. Can profits be repatriated to Japan?

Yes.

Profits may generally be repatriated through legally permitted methods, such as:

Dividend
Royalty
Technical-service fees
Management charges
Interest
Buyback
Share transfer
Capital reduction
Liquidation proceeds

Each method has separate tax, FEMA, corporate-law and documentation requirements.

19. Can Japanese employees work in India?

Yes, subject to applicable:

Immigration requirements
Employment visa
Tax registration
Salary withholding
Social-security analysis
Employment documentation
Foreigner-registration requirements
Transfer-pricing and secondment considerations

The arrangement should be planned before the employee begins working in India.

20. Does the Indian company need a statutory audit?

Yes.

The Companies Act requires companies to appoint an auditor under the applicable statutory framework.

The audit requirement is separate from turnover-based tax-audit requirements under income-tax law.

21. Is transfer-pricing compliance required?

International transactions between the Indian entity and its Japanese parent or associated enterprises must comply with the arm’s-length principle.

The exact documentation and reporting requirements depend on the transaction and applicable thresholds.

Common transactions include:

Goods
Services
Royalty
Loans
Guarantees
Cost reimbursements
Employee secondment

22. Is GST applicable to services received from the Japanese parent?

GST may apply under the reverse-charge mechanism where the Indian company imports taxable services from the Japanese parent or another foreign group company.

The company should review the nature of the service, place of supply, consideration and related-party provisions.

23. What is the FLA return?

The Foreign Liabilities and Assets return is an annual FEMA-related reporting requirement for qualifying Indian entities having foreign liabilities or foreign assets.

A Japanese-owned Indian subsidiary should review its filing obligation every year.

24. Can the Japanese parent give a loan to the Indian subsidiary?

A foreign loan may be possible under India’s external commercial borrowing or other applicable framework.

The company must examine:

Eligible borrower
Recognised lender
Permitted end use
Minimum maturity
Interest and cost limits
Reporting
Hedging requirements
Repayment

Funds should not be remitted as an informal shareholder loan without reviewing the applicable rules.

25. Can the Japanese company acquire an existing Indian company?

Yes, subject to:

FDI rules
Sectoral limits
FEMA pricing
Due diligence
Competition law
Tax
Share-transfer documentation
Beneficial ownership
Regulatory approvals

The Japanese investor should complete financial, legal, tax and regulatory due diligence before signing the transaction.

26. Can the Indian company manufacture products for export?

Yes.

Subject to the applicable sectoral and regulatory requirements, the Indian company may manufacture products for:

Indian customers
Japanese customers
Group companies
Third-country markets

The company should review customs, GST, export incentives, transfer pricing and rules of origin.

27. Can the Japanese company appoint an Indian distributor and later form a subsidiary?

Yes.

A phased entry model may involve:

Market testing through a distributor
Establishing an Indian sales subsidiary
Developing after-sales support
Beginning local assembly or manufacturing
Expanding local sourcing

The distribution agreement should provide a clear transition process.

28. What are the major annual compliances after incorporation?

The Indian company may need to complete:

Statutory audit
Annual corporate filings
Income-tax return
Transfer-pricing reporting
GST compliance
Tax withholding returns
Board and shareholder meetings
FEMA reporting
Foreign Liabilities and Assets return
Payroll compliance

The exact requirements depend on the company’s activities and transactions.

Still have questions about expanding your business into India? Contact our India Entry specialists for personalised guidance tailored to your business objectives and country of origin.

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Related India Entry Services

Prepared by EzyBiz India Consulting LLP

Reviewed by Anil Agrawal, Chartered Accountant
20+ years of experience in FEMA, FDI, International Tax and India Market Entry Advisory.

EzyBiz India Consulting LLP is a multidisciplinary advisory firm specializing in India Market Entry, Corporate Finance, Tax & Regulatory Advisory and Business Support Services for foreign companies and growing businesses.
Last Updated: July 2026

Disclaimer
This page provides general information regarding India’s foreign investment framework for Japanese companies. Regulatory requirements, including the FDI Policy, Government approval process, FEMA regulations and tax laws, may change over time. The applicability of these regulations depends on the specific facts and ownership structure of each investment. Professional advice should be obtained before making any investment or business decision.

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