Offshore Company Registration in India: Pros, Cons, and Process
Today’s India is not just an affordable outsourcing destination; it is a strategic location for global businesses. A booming consumer base, expanding digital and other infrastructure, and investor-friendly norms, India is becoming a preferred destination for offshore company registration.
However, it is not only about registration – it requires navigating the complex regulatory environment, ensuring the appropriate company structure, understanding taxation, and being compliant. The potential opportunities are tremendous but so are the expectations.
In this blog, we break down all you need to know about offshore company registration in India – including the pros and cons, common pitfalls, and the step-by-step registration procedure.
Why Consider Offshore Registration?
The country is a lucrative option due to several reasons, which include:
- One of the fastest-growing and largest consumer bases
- Competitive costs for manufacturing, research and development, IT, and other services
- Deep pool of talented personnel in finance, technology, legal, and engineering fields
- DTAAs with more than 90 countries
- Ease of doing business with gradual FDI liberalization and startup regulations
Detailed Registration Steps
Before we discuss the step-by-step registration process, here are the basic requirements for foreign company registration India:
Directors and Shareholders: Private limited companies need at least two directors, while a public company requires a minimum of seven directors; an LLP needs two designated partners. At least one partner or director must be an Indian citizen
Authorized Share Capital: Must be a minimum of INR 100,000
MOA and AOA: MOA must comprise the company name, capital clause, registered office, liability, and object. AOA should include details related to share capital, transfer of shares, directors’ appointment, shareholders’ voting rights, and accounts and audit
Office Address: Head office or primary office may be offshore. However, an Indian registered office address and a local agent are required for offshore company registration for all official correspondence
Let us now understand the registration process:
- DIN Application
- Procure DSC
- Company Name Reservation
- Register for e-filing on the MCA portal
- Upload the required documents
The ROC verifies the application and the documents before granting the Certificate of Registration. For a detailed understanding of the registration process, you can check our guide here.
Pros and Benefits
Offshore company registration India has several benefits, such as
- Minimal authorized capital requirement (INR 100,000)
- Comparatively more competitive tax rates with several incentives for IT and ITES companies
- DTAAs with a large number of countries ensure that the same income is not taxed twice
- Easy availability of highly skilled and English proficient personnel
- Robust infrastructure with world-class technology and offshore support services
Cons and Risks to Manage
Undoubtedly, India offers tremendous opportunities, but there are several challenges, like:
- Complex Regulatory Environment: The Indian legal and tax regulations require a deep and thorough understanding to ensure compliance
- FDI Norms: While the majority of sectors offer 100% FDI, certain industries like defense, print media, and real estate must adhere to conditional rules and maximum capping
- Time-Consuming: Bureaucratic delays may significantly impact your Indian subsidiary, and digital filings, approvals, and verification are also cumbersome and time-consuming
- Cultural Challenges: An understanding of the local business culture and administrative systems is crucial for success
Should You Go Offshore?
Registering a foreign subsidiary in India is not a one-size-fits-all decision. Global businesses can choose different structures, such as a branch office, liaison office, wholly owned subsidiary, joint venture, or LLP. The decision depends on multiple factors, such as business model, risk appetite, and market strategy. Additionally, decisions like location, personnel, regulatory requirements, and others are crucial for the long-term success of an offshore company.
The right business setup consulting India firm can help foreign companies navigate the complex regulatory environment. Additionally, they help with the financial, legal, and operational hurdles to ensure offshore companies can focus on expansion and growth.
At Greenvissage, we specialize in assisting global companies in establishing and scale their operations in India. Thinking of registering an offshore company? Please connect on +91 8237857853 or drop us a mail at info@greenvissage.com for a tailored roadmap catering to your unique requirements.
Frequently Asked Questions
- What is an offshore company?
An offshore company is a business entity registered in India by a foreign national, overseas corporation, or non-resident.
- Can a foreign company own 100% of an Indian entity?
Yes, several sectors allow 100% FDI under the automatic route, which means government approval is not a pre-requisite.
- How long does offshore company registration take?
Based on factors like type of entity, sector, and the need for government approval, the entire process may take up to six weeks or longer.
- What are the key compliance requirements post-registration?
These include annual filings with the MCA, income tax return filings, audit and bookkeeping requirements, FDI filings as per RBI guidelines, and GST and TDS filings (as applicable).
- Which sectors have FDI restrictions?
Sectors like atomic energy, gambling, lottery, and real estate are prohibited. A few others, like defense, multi-brand retail, and print media, have certain caps and may need government approval.
