There is a lot of interest among foreign companies to start their operations in India and tap into one of the largest and fast growing market, and have access to some of the best human resources in the world. A Foreign National (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than entity incorporated in Pakistan or Bangladesh) can invest and own a Company in India by acquiring shares of the company, subject to the FDI Policy of India. In addition, a minimum of one Indian Director who is an Indian Director and Indian Resident is required for incorporation of an Indian Company along with an address in India.
Investment and acquisition of equity shares of a Company can be broadly divided into two categories: Investment Under Automatic Route and Investment Under Government Approval route. The automatic route requires no requirement of any prior regulatory approval for investment in equity shares of an Indian business and only post facto filing/intimation with the Reserve Bank of India within 30 days of receipt of investment money in India and filing of prescribed documents and particulars of allotment of shares within 30 days of allotment of shares to foreign investors. Foreign Direct Investment of upto 100% is allowed under the automatic route in most activities/sectors in India. Investment in activities / industries where automatic route is not available can be made with the approval of the Government under the Government Approved FDI method.