If you’re thinking about setting up shop in India, you’ve probably heard a mix of hype and headache. The truth lies somewhere in the middle – there are real opportunities, but also clear rules you must follow. Below you’ll find the basics that will get you moving without getting stuck.
First off, you need a legal entity. Most foreigners go for a Private Limited Company because it limits personal liability and looks professional to partners. To register, you’ll need a Digital Signature Certificate (DSC), a Director Identification Number (DIN) for each director, and a unique name approval from the Ministry of Corporate Affairs.
Don’t forget GST. If your annual turnover crosses the INR 40 lakhs threshold (or INR 20 lakhs for services), registration is mandatory. GST registration not only keeps you compliant but also lets you claim input tax credit, which can shave off a good chunk of your expenses.
For US citizens, the process includes getting a Business Visa, setting up a bank account, and sometimes obtaining Foreign Direct Investment (FDI) approval. The Reserve Bank of India caps foreign ownership at 74 % for most sectors, so plan your equity split accordingly.
Capital is the next big hurdle. The Startup India scheme offers easy registration, tax benefits, and access to a network of incubators. If you qualify – which most tech‑focused ideas do – you can get up to INR 10 crore in funding without heavy paperwork.
Know where the money flows. In 2025, services, IT, and pharmaceuticals are the top revenue generators. Export‑oriented sectors like textiles and engineering goods also enjoy tax incentives. This means a SaaS platform or a health‑tech startup can tap into both domestic demand and export markets.
Speaking of exports, if you aim to sell Indian products abroad (think handmade goods or food items), you’ll need an Import Export Code (IEC) from the DGFT and must follow the latest customs duties. The recent rice export ban shows how quickly policy can shift, so stay updated with the Ministry of Commerce.
Finally, watch cash flow. Small businesses in India can write off many expenses – rent, employee salaries, travel, and even a portion of loan interest. Keeping detailed records will help you claim these deductions and reduce your tax bill.
In short, start with a solid legal foundation, get your GST and banking sorted, tap into government schemes, and choose a sector that matches India’s growth trends. Follow these steps, stay on top of policy changes, and you’ll be well‑positioned to turn the Indian market into a growth engine for your business.
Explore India’s real startup scene in 2025: policies, reality checks, areas of opportunity, and what founders need to know before jumping in.
Read More