India Entry Strategy Advisory: After Approval: What Continues
India Entry Strategy Advisory does not end at approval — a set of obligations continues afterwards. The questions below are the ones raised most often in practice; the full scope of the service is on the India Entry Strategy Advisory page.
What is FEMA — and why does it matter for India entry?
FEMA (Foreign Exchange Management Act 1999) is the primary law governing cross-border financial transactions involving India — including FDI inflows, ODI outflows, borrowing in foreign currency, and remittance of dividends or profits. Violations of FEMA are civil offences (not criminal, unlike the old FERA regime) but carry compounding penalties. Key FEMA obligations in the India entry context: (1) FC-GPR must be filed on the RBI FIRMS portal within 30 days of any share allotment to a foreign resident; (2) FC-TRS within 60 days of any share transfer involving a foreign party; (3) the annual Foreign Liabilities and Assets (FLA) Return, filed on the RBI's FLAIR portal by 15 July (the Annual Performance Report due by 31 December applies only to overseas direct investment); (4) External Commercial Borrowings (ECB) — if the India entity borrows from its foreign parent — must comply with the FEMA ECB regulations including all-in cost ceilings, minimum maturity, and reporting obligations.
In practice: FEMA compliance is not self-service. The documentation requirements, RBI portal filings, and deadlines interact in ways that require professional management. A missed FC-GPR is an easy FEMA default to fall into, because portals stop at the COI and do not handle the post-allotment RBI reporting.
What is the FDI Automatic Route versus the Government Route?
Under the Automatic Route, a foreign investor can invest in an Indian company in a permitted sector without requiring any prior approval from the RBI or the Government of India. The only obligation is to report the investment to the RBI after the fact via the FC-GPR form on the FIRMS portal. The Government Route adds an approval step to the investment timeline (timelines depend on the authority and the case; confirm the current processing time) and requires additional documentation including a business plan, financial projections, and sometimes a technical collaboration agreement.
In practice: Beyond the approval pathway, the Government Route involves ongoing compliance: the investor must report actual fund remittance after approval, and conditions attached to the approval (local sourcing, minimum investment, employment creation) must be met and reported. We track conditions from the approval stage through the operational years.
What is the difference between a Branch Office and a Subsidiary Company for a foreign company entering India?
A Branch Office is not a separate legal entity — it is an extension of the foreign parent company in India. It requires prior approval from the Reserve Bank of India (General Permission is available for certain categories of companies). Its activities are restricted to those approved by the RBI. It cannot undertake retail trading, real estate transactions, or most manufacturing. Profits can be remitted abroad after tax, but the remittance requires RBI compliance. A Wholly Owned Subsidiary (WOS) is a separate Indian legal entity incorporated under the Companies Act 2013. It can undertake any activity permitted in India. Its liabilities are separate from the parent. It can raise local capital. It is investor-ready. The subsidiary is the appropriate vehicle for most substantive commercial operations.
In practice: Branch offices are sometimes preferred by international banks, insurance companies, and certain professional services firms where the RBI approves specific branch activities. For most commercial businesses — technology, services, manufacturing, trading — a WOS Pvt Ltd is significantly more flexible, more credible with Indian counterparties, and simpler to scale.
What was Angel Tax — and does it still affect companies receiving FDI?
Angel tax referred to Section 56(2)(viib) of the Income-tax Act, which historically taxed the excess of share issue consideration over Fair Market Value (FMV) as 'income from other sources' in the hands of the issuing company. It originally applied only to investments from resident Indian investors, and was extended to non-resident investors with effect from April 2023 (subject to exemptions for certain investor categories such as SEBI-registered FPIs and notified entities). Angel tax was abolished for all classes of investors by the Finance (No. 2) Act 2024, with effect from 1 April 2025 (assessment year 2025-26 onwards). As a result, share premium on new issuances is no longer taxable under this provision, regardless of investor category or valuation.
In practice: Angel tax abolition removed a long-standing friction point in India fundraising, but it does not remove the need for a defensible valuation. Companies Act pricing rules, FEMA pricing guidelines for FDI (shares to non-residents cannot be issued below fair value determined under an internationally accepted pricing methodology), and future investor/M&A diligence still require a Rule 11UA-style valuation report from a SEBI-registered Merchant Banker or CA. We continue to prepare these reports for all fundraising engagements — the compliance driver has shifted from tax risk to pricing-law and governance requirements.
How does the India entry strategy differ for a technology company versus a manufacturing company?
For a technology company (software development, SaaS, IT services, digital platforms): the primary concerns are PE risk (offshore development centres create PE risk for the foreign parent if Indian employees execute client-facing decisions), ESOP structuring for tech talent retention, transfer pricing for intercompany services, GST on exported services (zero-rated if conditions met), and potential DPIIT recognition. Most tech businesses set up a WOS Pvt Ltd as an R&D, delivery, or operations subsidiary with a cost-plus transfer pricing model. For a manufacturing company: the concerns shift to Import-Export Code, customs duty optimisation, BIS/FSSAI/other product certification requirements, environmental clearances, land acquisition regulations, industrial park incentives (state-level), GST on goods (CGST + SGST / IGST), and employment law compliance for factory workers. Sector, supply chain, and operational model drive entirely different regulatory and tax profiles.
In practice: India entry work spans sectors such as technology services, FMCG distribution, financial services, manufacturing, healthcare, and education. The strategy diagnostic asks the sector questions explicitly because the regulatory footprint varies dramatically. A tech services model and a food manufacturing model entering India at the same time would produce entirely different entity structures, registration sequences, and compliance programmes.
What is the role of a Company Secretary in India entry — and does PNPC provide CS services?
A whole-time Company Secretary is mandatory key managerial personnel for listed companies and for other companies with paid-up share capital at or above the prescribed threshold, so a smaller private company need not appoint one. Certain certifications, such as the annual return certificate under Section 92(2) for larger companies and the secretarial audit under Section 204, must be given by a practising CS, while other ROC forms are certified by a CA, CS or cost accountant depending on the form. PNPC works in coordination with qualified CS professionals for client engagements where CS certification is mandatory — all within the same client relationship.
In practice: The CA-CS boundary in Indian corporate compliance is a common source of confusion. PNPC advises you on where each applies and coordinates both functions — you do not need to independently locate and brief a separate CS firm.
We already have an Indian operation that was set up without proper strategy. Can PNPC help restructure it?
Yes. PNPC can help restructure an existing India presence. Common scenarios: (1) A branch office that now generates revenue and needs conversion to a subsidiary; (2) An LLP that has grown beyond the FDI-in-LLP restrictions and needs conversion to a Pvt Ltd; (3) An Indian entity with direct FDI that would benefit from routing through a treaty jurisdiction (subject to the MLI principal purpose test, GAAR and substance requirements); (4) An entity with FEMA defaults (missed FC-GPR or FC-TRS reporting, an unfiled FLA Return) that needs regularisation through the RBI late submission fee or, where required, compounding; (5) A company whose MoA does not cover its current business activities and needs an amendment; (6) An entity being acquired or restructured for M&A, requiring transfer pricing, capital gains, and FEMA compliance across the transaction. Each restructuring has its own tax, FEMA, and Companies Act implications — and all must be coordinated to ensure the new structure is fully compliant from the restructure date.
In practice: Restructuring an India presence is often more complex than a fresh entry — because existing contracts, employees, customers, and RBI/regulatory approvals must be transitioned. We map the full restructuring sequence and handle all filings in one coordinated engagement.
What is the PNPC India Entry Advisory package — and what does it include?
PNPC's India Entry Strategy & Market Entry Advisory covers: structured diagnostic sessions with promoters; FDI eligibility and sector analysis; DTAA and investment routing recommendation; entity type recommendation with written rationale; shareholding and governance structure design; custom MoA and AoA drafting (for Pvt Ltd); FEMA declaration drafting; RBI application preparation (if Branch/LO/PO or government route); SPICe+ incorporation filing and full coordination; FC-GPR filing on FIRMS portal within 30 days of allotment; tax registrations (GST, TAN, PF, ESI, IEC as needed); INC-20A and ADT-1 filing post-COI; Year 1 compliance calendar; transfer pricing documentation initiation; and direct access to your engagement CA for questions through the entry period. All at an agreed fixed fee stated in writing before engagement begins.
In practice: We are often asked whether we are 'expensive' compared to a standalone registration portal. The answer depends on what you are comparing. We are significantly more expensive than a portal that files SPICe+ and sends you a COI. Proper structuring at entry avoids costly remediation later, such as correcting an unsuitable entity type, catching up on missed FEMA filings, and clearing accumulated compliance defaults.
How does PNPC's Dubai presence help with India-UAE structures?
PNPC has an operating office in Dubai staffed by qualified CAs who advise UAE-based businesses and NRIs on both UAE regulatory/tax matters (UAE Corporate Tax, VAT, WPS payroll, free zone vs mainland structure) and India regulatory/tax matters (FDI compliance, DTAA, transfer pricing, FEMA). For a UAE business setting up in India — or an Indian company expanding into the UAE — PNPC manages both sides from one firm. This means: one brief, one relationship, no information lost in handoff between two separate firms, and coherent advice that accounts for both the India-UAE DTAA and the UAE CT framework simultaneously. PNPC has offices in both India and the UAE, with resident professional staff in each.
In practice: The India-UAE business corridor is one of the most active in emerging-market trade and investment. The combination of UAE as a global hub for re-export, holding structures, and financial services, and India as a large domestic market and manufacturing base, creates a range of structuring questions that only a firm present in both can answer well. That means looking at the full picture, not just the Indian half.
Where this sits in the wider engagement
India Entry Strategy Advisory rarely arrives on its own. The statutory basis and the current requirements are set out on the India Entry Strategy Advisory service page, and the related services are grouped under Business Setup.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On India Entry Strategy Advisory we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.