What Should International Businesses Prepare Before Setting Up Operations in...
What Should International Businesses Prepare Before Setting Up Operations in India?
International businesses should prepare five things before setting up operations in India: a clear purpose for the India centre, the right legal structure and foreign investment route, a finance and tax foundation, a people and compliance plan, and a secure technology and governance framework. Working through them in that order lets each decision support the next, so the first hire, the first invoice and the first filing all follow smoothly. For most sectors, including IT services, India permits up to 100% foreign ownership through the automatic route, so the practical question is not whether a company can enter, but how well it prepares.
iValuePlus, a Gurugram-based managed service company, helps international businesses set up and run India teams through Build-Operate-Transfer (BOT), offshore development centre and Global Capability Centre (GCC) models, supported by HR, finance and infrastructure services.
This guide explains why India set-up decisions are connected, what recent rule changes mean for 2026 planning, and how to work through a seven-step readiness plan covering purpose, entity structure, foreign investment filings, finance and tax, people and labour codes, technology and data protection, and governance. It also compares a direct subsidiary with partner-led approaches such as BOT, ODC and staff augmentation, so decision-makers can choose the route that fits their timeline, budget and need for control.
Why does preparation shape the success of an India launch?
An India launch brings legal, financial, people and technology decisions together, and each one influences the others, so a plan that covers all four from the start gives leadership a smoother and more predictable launch.
Why India set-up decisions are connected
The legal entity you choose sets the foreign investment route, the tax rate, the bank account structure, the employment contract and the data-handling set-up. When these decisions are prepared together, a single decision log can guide legal, finance, HR and IT at the same pace.
India is a well-prepared destination for this approach. The Zinnov–Nasscom India GCC Landscape Report 2026, published in May 2026, estimates 2,117 global capability centres running 3,728 individual centres, with about 2.36 million professionals and USD 98.4 billion in revenue in FY26. Many international companies already run engineering, analytics, finance and support functions from India, so talent, workspace and specialist providers are well established.
What good preparation delivers
Preparation gives leadership four practical advantages: an earlier first-hire date, cleaner books from the first month, employment contracts that match current law, and a governance rhythm with head office that is ready before the team grows. These are business outcomes rather than paperwork, because they allow the India centre to start contributing to group goals sooner.
Why 2026 is a good moment to plan carefully
India has modernised several rulebooks over the past year, so plans built on the current versions will stay relevant for longer:
- Tax: the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and introduced a single “tax year”.
- Employment: four Labour Codes came into force on 21 November 2025, and central rules followed in May 2026.
- Data protection: the DPDP Rules were notified on 14 November 2025.
Possible solutions and practical steps: a seven-step India readiness plan
Prepare in sequence: purpose, structure, investment filings, finance, people, technology and governance. Each step below sets out what to decide and what to have ready.
Step 1: Define the purpose, scope and 24-month roadmap
Start with the business outcome. Should the India operation host engineering, QA, finance operations, customer support, analytics or a mix? Write down target headcount at 6, 12 and 24 months, the functions that will report to head office, and the point at which you expect the centre to run independently.
This single page tells advisers which entity, premises and hiring plan to design. It also frames the choice between a captive GCC, an offshore development centre (ODC) or a partner-led start. For a closer look at the journey, read our guide on how global companies use BOT to build GCCs in India.
Step 2: Choose the entry structure
The structure you choose determines the approval route, tax treatment and permitted activities. The table compares the common options.
Option | Best suited for | What to plan for |
Wholly owned subsidiary (private limited company) | Long-term operations, hiring at scale and full control | Up to 100% foreign ownership in most sectors; at least two directors, one resident in India; FC-GPR filing after share allotment |
Branch office | A parent company extending its own activities, such as consultancy or import and export | RBI or authorised dealer bank approval; manufacturing and processing are outside its scope; taxed at the foreign-company rate |
Liaison office | Representation, market research and communication with head office | No independent commercial activity; approval and an annual activity certificate |
Project office | A specific contract or project in India | Approval conditions are set around the project |
Partner-led model (BOT or ODC) | A faster start, a pilot before full commitment, or limited in-house India experience | A partner builds and runs the team; under BOT, ownership transfers after an agreed period |
A domestic company can opt for a 22% base tax rate under section 200 of the Income-tax Act, 2025, which works out to about 25.17% with surcharge and cess, subject to conditions. A foreign company, including a branch, is taxed at a 35% base rate before surcharge and cess (Income Tax Department; Deloitte Tax Highlights). This is worth modelling with your tax adviser. Companies that prefer to pilot first often begin with a partner-led model, and our article on how companies launch India operations faster with the BOT model explains how that route works.
Step 3: Prepare foreign investment filings and documents
Most sectors, including IT and IT-enabled services, allow up to 100% FDI under the automatic route, which means no prior government approval (DPIIT Consolidated FDI Policy 2020). Some sectors have foreign investment caps or require government approval. For investments linked to countries sharing a land border with India, Press Note 3 (2020) was revised by DPIIT’s Press Note No. 2 (2026 Series).
Confirm your sector and investor country early. Then have these ready:
- apostilled parent-company documents and a board resolution authorising the subsidiary;
- identity and address documents, with digital signatures, for each director;
- a registered office address in India;
- a share valuation certificate for the allotment to the foreign parent.
Incorporation is filed online through the Ministry of Corporate Affairs’ SPICe+ form, which combines name reservation, director identification, PAN, TAN and EPFO and ESIC registration. After shares are allotted to the foreign parent, FC-GPR is filed on the RBI’s FIRMS portal within 30 days, and an annual FLA return follows by 15 July. Diarising these dates in the first month keeps the new entity in good standing with the RBI.
Step 4: Build the finance and tax foundation
Set up the Indian bank account, the inward remittance path, GST registration where applicable, TDS processes and an accounting system aligned to group reporting. Under the Income-tax Act, 2025, which applies from 1 April 2026, the older “previous year” and “assessment year” terms give way to a single “tax year”, so compliance calendars, contracts and transfer pricing documents should use the new terminology. Setting up accounting, payroll and statutory filings together gives head office timely reporting from the first month, and our guide to setting up accounting services in India walks through the process.
Step 5: Plan people, payroll and labour-code alignment
India’s four Labour Codes took effect on 21 November 2025, consolidating 29 central laws, and the central rules followed in May 2026, with states notifying their own rules in stages.
A new employer can build contracts, salary structures and registrations on the current framework from day one. Prepare appointment letters for every employee (required under the OSH Code), salary structures aligned to the Code on Wages, PF and ESI registrations, and HR policies for leave, working hours and conduct.
Then decide how to hire. Direct hiring offers full control but needs an HR and payroll function in place. Staff augmentation adds specialists quickly through a partner. BOT and ODC models combine recruitment, payroll and facilities in one structure.
Our comparison of staff augmentation vs full-time hiring sets out the cost, speed and flexibility trade-offs. Location matters too: the Zinnov–Nasscom report notes that two-thirds of new GCCs choose Bengaluru and Hyderabad, with talent as the top attraction, while other cities offer their own cost and ecosystem advantages.
Step 6: Prepare technology, security and data protection
Before the first hire arrives, plan devices, secure network access, identity management, collaboration tools and a connection to group systems. Our office IT setup guide offers a full infrastructure checklist. Set up engineering and quality practices at the same time, so a new team starts with the same release discipline as head office.
Data protection belongs in the design as well. Privacy notices, consent records, retention rules and breach-response steps are simple to build in from the start.
Step 7: Set governance and an operating rhythm
Agree early on reporting lines, service levels, KPIs, a time-zone overlap window, security responsibilities and knowledge-transfer steps. A monthly business review, a shared dashboard and clear escalation paths give head office visibility while the India team grows. The principles are explored in our article on the offshore operating model in India.
Which approach fits your situation?
Your situation | Approach worth considering |
A long-term plan and India leadership already identified | Own subsidiary, set up with legal and tax advisers |
A wish to validate the model before full commitment | BOT, with transfer once the centre is stable |
Specialists needed within weeks while scope takes shape | Staff augmentation or a small ODC |
A strategic centre across engineering, analytics or finance operations | A GCC, owned directly or BOT-led |
How iValuePlus can help
iValuePlus helps international businesses cover the people, operations and infrastructure side of an India launch, working alongside your legal and tax advisers.
We help international businesses start in India through the models that fit this plan. With Build-Operate-Transfer, we build the team and facilities, operate them to agreed service levels, and transfer ownership when you are ready. An Offshore Development Centre gives you a dedicated team from a first pilot, and it can grow into a full Global Capability Centre.
Alongside these models, we support the HR, finance and infrastructure set-up that the readiness plan calls for, working with your legal and tax advisers. One engagement published on the iValuePlus website describes a US-based technology services firm new to India: under BOT, we handled office set-up, approvals, recruitment and operations, and the client established its Indian operations within six months and hired 15 professionals in its first year. Explore iValuePlus Global Capability Centre services to see how a first India team can grow into a full centre.
Conclusion
A strong India launch treats legal structure, investment filings, tax, people, technology and governance as one connected programme. Decide the purpose first, choose the structure that fits your timeline and control needs, line up FDI and tax filings, build hiring on the new Labour Codes, and design security and data protection in from the start. Whether you set up your own subsidiary, begin with BOT, or add a dedicated team through an ODC, preparation gives your India operation a confident start.
Ready to turn this checklist into a roadmap for your business? Contact us and let’s shape the right India set-up approach together, step by step.
FAQs
Do international businesses need an Indian partner to set up operations in India?
No. Most sectors, including IT services, permit up to 100% foreign ownership through the automatic route, so a foreign company can own an Indian subsidiary outright. Many still choose an operating partner to speed up hiring, premises and compliance through a BOT or ODC model.
Which legal structure is most common for international businesses in India?
A wholly owned private limited company is a common choice for long-term operations, because it is a separate Indian legal entity taxed as a domestic company. Branch, liaison and project offices suit narrower purposes and need approval from the RBI or an authorised dealer bank.
What is FC-GPR and when is it filed?
FC-GPR reports shares issued to a foreign investor. The Indian company files it with the RBI through the FIRMS portal within 30 days of the allotment.
How do the new Labour Codes affect a new employer?
Employers starting now can build on the four Labour Codes in force since 21 November 2025. Contracts, wage structures and registrations should follow the codes and your state’s rules, and the central rules were notified in May 2026.
How long does it take to set up operations in India?
It depends on the entity type, document readiness, bank onboarding and hiring pace. Incorporation is filed online, while building a full team and office takes longer. In one iValuePlus BOT engagement, operations were established within six months.
Can a mid-sized company build a GCC?
Yes. A GCC can start small. With a partner-led model such as BOT, a mid-sized company can begin with a pilot team and expand as results justify, rather than committing to a large centre on day one.
What documents does a foreign company need to establish an Indian subsidiary?
A foreign company typically needs parent-company incorporation documents, a board resolution authorising the Indian subsidiary, identity and address proofs for directors, and documents for the registered office. Foreign documents may need notarisation or apostille, depending on the country and applicable requirements.
What factors should businesses consider when choosing an Indian city for operations?
Businesses should compare talent availability, salary costs, office and infrastructure expenses, connectivity, industry ecosystem and access to relevant skills. Bengaluru and Hyderabad are established GCC locations, while other Indian cities may offer advantages depending on the roles, budget and business objectives.
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iValuePlus Services
iValuePlus is a one-stop solution to address all your needs to access, build and grow your business in the Indian market which is cost-effective & has a huge talent pool. Established in 2019 as a ‘Business Solution provider', our team has delivered successful growth projects in the international market.
Our services include setting up ODC (offshore development center), Staff Augmentation, Talent Acquisition, Digital Marketing, in the IT/ITES domain.
