How to Set Up a Business in India and Taiwan

India continues to attract increasing interest from Taiwanese investors, with approximately 200 Taiwanese businesses having already made investments in the country as of February 2024. This growing footprint reflects India’s appeal as a strategic base for regional expansion, supported by its large consumer market, improving infrastructure, and investor-focused reforms.

However, setting up a business in India requires more than market interest; it demands clarity on foreign investment rules, regulatory pathways, and operational requirements. From choosing the right legal structure to complying with FDI norms and post-incorporation obligations, each step must be approached carefully to ensure a smooth and compliant setup.

This guide offers a step-by-step roadmap for business setup in India for Taiwanese investors, covering approvals, incorporation, tax, capital flow, and practical market entry strategies.

TL;DR

• Business setup in India for Taiwanese investors: Align with FDI norms and identify sectors under the automatic approval route
• Comparison of entry routes: Subsidiary, Joint Venture, LLP, Liaison, Branch, and Project Offices for foreign-owned businesses
• A complete incorporation roadmap using SPICe+ and NSWS; key documents, approvals, and registration essentials
• Insights into capital infusion, FEMA compliance, RBI reporting, and profit repatriation procedures
• Guidance on post-incorporation tasks, operational setup, and best practices for building a compliant local presence

FDI Rules in India: What Taiwanese Investors Must Know

Before setting up a business in India, Taiwanese investors must understand the Foreign Direct Investment (FDI) framework that governs foreign ownership across different sectors.

FDI policy in India is regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and it determines where and how foreign investment is allowed.

India permits FDI through two main channels:

• Automatic Route: No prior government approval required. Sectors like manufacturing, IT, renewable energy, and wholesale trading typically fall here.
• Government Route: Requires formal approval. This applies to sensitive areas such as telecom, defence, print media, and single-brand retail.

Most sectors are open to 100% foreign ownership, especially under the automatic route. However, some activities like gambling, atomic energy, and real estate trading are fully prohibited.

Tip: Check the sector-specific FDI policy before selecting your business structure. This helps avoid delays and ensures your investment complies with RBI and DPIIT norms.

Once you’ve confirmed your sector is open to foreign investment and understand the applicable FDI route, the next step is selecting the right business structure. This choice determines your level of control, tax exposure, and long-term flexibility in India.

Entry Options: Choosing the Right Entity

Taiwanese investors looking to establish operations in India can take advantage of India’s 100% Foreign Direct Investment (FDI) allowance in most sectors under the automatic route, which means no prior government approval is required.

However, this access is only available through certain legally recognized business structures. 

The choice of entity impacts everything from tax liability to profit repatriation and operational control. Below are the most viable entry options for Taiwanese companies, each with its specific setup process, compliance obligations, and strategic advantages:

1. Wholly Owned Subsidiary (Private Limited Company)

A wholly owned subsidiary is the most comprehensive and flexible business form available to foreign investors in India. It is a separately incorporated legal entity, allowing 100% Taiwanese ownership if the sector falls under the automatic FDI route.

Key Features:

• Registered under the Indian Companies Act, 2013
• Requires at least two directors (one must be a resident Indian)

Advantages:

• Eligibility for local tax benefits and subsidies
• Access to government incentives under ‘Startup India’ and ‘Make in India’

2. Joint Venture (JV) with an Indian Partner

A Joint Venture allows a Taiwanese company to collaborate with an Indian business to form a new entity, sharing ownership, risk, and management responsibilities.

Key Features:

• Equity is split between the foreign and Indian partners
• Registered as a Private Limited or LLP

Advantages:

• Shared financial and operational risk
• Can benefit from existing regulatory approvals held by the partner

3. Limited Liability Partnership (LLP)

An LLP is a hybrid structure combining the flexibility of a partnership with the limited liability of a corporation. 100% FDI is permitted under the automatic route in sectors where no performance-linked conditions apply.

Key Features:

• At least one designated Indian partner is required
• Simpler compliance than a company

Advantages:

• No minimum capital requirement
• Limited liability protection for partners

4. Liaison Office (Representative Office)

A liaison office is best suited for companies that want to test the Indian market or represent the parent company without engaging in direct sales or commercial operations.

Key Features:

• Acts as a communication channel between Indian customers and the parent company
• Requires prior approval from the Reserve Bank of India (RBI)

Advantages:

•  No income tax liability as it cannot earn revenue
•  Simple structure for initial brand building and B2B outreach

5. Branch Office

A branch office allows a Taiwanese parent company to engage in specific commercial activities in India, including service delivery, import/export, and technical support.

Key Features:

• Permitted only for activities defined by RBI guidelines
• Cannot carry out manufacturing directly (can subcontract)

Advantages:

• Direct commercial presence without full incorporation
• Suitable for short-to-medium-term operations

6. Project Office

Ideal for companies executing specific infrastructure or engineering projects, a project office exists only for the duration of a particular contract.

Key Features:

• Requires a secured contract from an Indian entity
• No separate incorporation required

Advantages:

•  Quick entry for project-specific execution
•  Temporary presence with lower regulatory burden

Which Structure Should You Choose?

If full control and long-term presence are your goals, a wholly owned subsidiary is the most robust option. For phased entry or regulated sectors, consider a JV, LLP, or liaison office depending on your needs.

Once you’ve chosen the right business structure, the next step is completing the legal formalities to bring your Indian entity to life. This includes securing approvals, registering with the appropriate authorities, and meeting tax and compliance requirements.

Step-by-Step Incorporation Process

Setting up a business in India involves multiple regulatory steps. The exact process may vary slightly based on the entity type, but most foreign-owned companies follow this general pathway:

Step 1: Reserve a Company Name

Start by reserving a unique name for your business using the RUN (Reserve Unique Name) service on the Ministry of Corporate Affairs (MCA) portal. You can propose two names in a single application.

Step 2: Obtain Digital Signature Certificates (DSC) & Director IDs (DIN)

Digital signatures are required for online filings. At least one Indian-resident director must hold a Director Identification Number.

Step 3: Register on NSWS (National Single Window System)

The NSWS portal enables identification and application for central and state approvals from a single platform.

Steps include:

• Register using your PAN (linked to DSC/Digilocker)
• Use "Know Your Approvals" to identify necessary licenses
• Upload documents to track and manage submissions

Step 4:  Submit Incorporation via SPICe+ Integrated Form

India’s Ministry of Corporate Affairs (MCA) provides a unified electronic form called SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus), designed to streamline company registration through a single digital window.

What’s Included in SPICe+:

 When filing SPICe+, you’re completing multiple registrations in one step:

• Company incorporation
• Memorandum and Articles of Association (MoA & AoA)
• Director Identification Number (DIN)
• PAN (Permanent Account Number)
• TAN (Tax Deduction Account Number)
• GST registration (optional)
• ESIC & EPFO employer codes (if applicable)
• Professional Tax registration (for applicable states)
• Bank account opening request

All documents are submitted online and must be digitally signed using Digital Signature Certificates (DSCs).

Once approved, the applicant receives:

• Certificate of Incorporation (CoI)
• Corporate Identification Number (CIN)
• PAN and TAN issued by the Income Tax Department

Why it matters:  SPICe+ eliminates the need to file separate applications across departments, saving time and ensuring compliance from day one.

Step 5: Open Bank Account & Infuse Capital

Use your Certificate of Incorporation (CoI) and PAN to open a current account with an RBI-authorised Indian bank. Once opened, transfer the initial share capital from your foreign bank account through proper banking channels.

Ensure the remittance is tagged correctly for FDI and obtain a Foreign Inward Remittance Certificate (FIRC), as this will be required for RBI reporting and future repatriation.

Note: These require additional RBI approval and issuance of a Unique Identification Number (UIN) via an AD‑I bank prior to registration.

With your company now officially incorporated and essential registrations, the focus shifts to operational readiness. Setting up internal systems, appointing auditors, and meeting ongoing compliance requirements are critical to keeping your Indian business running smoothly.

Post-Incorporation Compliance & Operational Setup

Once the Certificate of Incorporation is issued, your Indian business must meet several initial compliance steps and prepare for ongoing operations. These actions are essential to avoid regulatory penalties and to maintain good legal standing. Key Post-Incorporation Steps:

1. Appoint a Statutory Auditor

All companies must appoint a Chartered Accountant (CA) as an auditor within 30 days of incorporation.

This is essential for signing off annual accounts and maintaining regulatory compliance. Failure to comply may result in monetary penalties or the disqualification of directors.

2. Register for Shops & Establishment Act (if applicable)

This state-level registration is mandatory for offices, shops, or commercial premises used for operations or hiring.

Each state has its own timeline and documentation process, and non-compliance can lead to labour law issues during inspections.

3. Issue Share Certificates

The company must issue physical or dematerialized share certificates to all initial shareholders within 60 days of incorporation.

This must be backed by a board resolution and recorded in the company’s register of members.

4. Maintain Statutory Registers

Companies are required to maintain statutory registers under the Companies Act, 2013—these include registers of members, share allotments, directors, and board meeting minutes.

These must be kept at the registered office and presented during audits or ROC inspections.

5. File Commencement of Business (Form INC-20A)

After receiving share capital, companies must file Form INC-20A with the MCA within 180 days of incorporation.

This declaration is mandatory to activate the company’s business operations; failure to file may result in a freeze on the bank account or company status being marked as inactive.

Ongoing Compliance to Plan For

• Annual filings with the Ministry of Corporate Affairs (MCA)
• Income tax returns and TDS payments
• GST filings, if registered
• Board meetings and ROC submissions as per governance rules

Note for Foreign-Owned Entities: Additional compliance applies under FEMA, including capital reporting via Form FC-GPR and submitting shareholding details through your Authorized Dealer (AD) bank.

VJM Global assists foreign investors through every stage of incorporation, from name reservation and digital signatures to multi-agency registrations. Our experts ensure timely approvals and full compliance. Book a Demo Today

Once the company is operationally active, the next priority is managing capital flows, opening compliant bank accounts, and ensuring adherence to India’s foreign exchange laws. This is especially important for Taiwanese companies routing funds into India and repatriating profits later.

Banking, Capital Flow & Forex Regulations

India regulates all cross-border financial transactions under the Foreign Exchange Management Act (FEMA). Taiwanese investors must follow these specific procedures when bringing in capital or transferring funds to and from their Indian entity:

1. Opening a Bank Account

After incorporation, businesses must open a current account in an RBI-authorised Indian bank. This account will be used for:

• Receiving share capital from the parent company
• Making operational payments (salaries, suppliers, tax)
• Complying with capital reporting norms

2. Infusing Capital into India

Capital from Taiwan must be sent through proper banking channels and converted to INR by an Indian bank (AD Category I).

Key compliance steps include:

• Filing Form FC-GPR with the RBI to report share allotments to the foreign investor
• Submitting Foreign Inward Remittance Certificates (FIRC) to validate the source of funds
• Using Unique Identification Number (UIN) issued by the RBI (for branch/project offices)

3. Repatriation of Profits

Profits earned in India can be repatriated to Taiwan after:

• Paying applicable Indian taxes
• Complying with transfer pricing norms (if inter-company billing is involved)
• Filing required documents with your AD bank

Note: Delays or non-compliance with FEMA reporting can result in fines and blocks on future remittances. Many companies appoint a local accountant or compliance advisor to manage this correctly.

Alongside managing capital flows, understanding India’s corporate tax framework is key to financial planning. Taiwan–India tax treaties, startup incentives, and location-specific exemptions can significantly impact your total tax burden.

Tax Considerations & Incentives

Foreign businesses operating in India are subject to the country’s domestic tax laws. However, with careful structuring, Taiwanese companies can take advantage of both central incentives and bilateral agreements.

Double Tax Avoidance Agreement (DTAA)

Taiwanese companies can still avoid double taxation in India through a DTAA-like arrangement, even without a formal treaty between the two governments.

While India and Taiwan do not have a formal tax treaty, the India–Taipei Association supports a DTAA-like framework. This allows:

• Relief from being taxed twice on the same income (e.g., royalties, dividends)
• Lower withholding tax rates in specific cases
• Foreign tax credits when filing in Taiwan

Government Incentives to Explore

India offers a range of national and state-level schemes that can reduce tax burden and support business growth, especially for startups and strategic sectors.

• Startup India Scheme: Offers tax holidays, reduced compliance, and funding access for eligible startups in innovation-driven sectors.
• GIFT City (IFSC Zone): A special economic zone offering relaxed foreign exchange rules, GST exemptions, and tax holidays for finance and tech firms.
• State-Level Incentives:  Vary by state and sector, and may include:
  
  • Capital or interest subsidies
  • Land rebates
  • Stamp duty exemptions

In addition to national-level incentives, India offers multiple support schemes and facilitation platforms tailored for foreign investors. Taiwanese businesses can leverage these programs to reduce setup friction, connect with authorities, and access grants or policy exemptions.

Also Read: How Foreign Investors Can Set Up a Company in India: Legal and Tax Guide

Government Support & Local Initiatives

India has launched several national and regional programs aimed at making foreign business entry easier, especially in manufacturing, electronics, logistics, and innovation-led sectors.

India’s central government has introduced several flagship initiatives to attract and support foreign investors across priority sectors.

National Programs Benefiting Foreign Investors

To streamline setup and attract global capital, the Indian government has introduced flagship programs that offer policy support, faster approvals, and financial incentives.

These initiatives, such as Make in India, Startup India, and the National Single Window System (NSWS) help foreign businesses simplify entry, tap into industry-specific benefits, and engage with government bodies more efficiently.

1. Make in India

Promotes domestic manufacturing by offering fast-track clearances, sector-specific policies, and investor facilitation support through the DPIIT. Taiwanese electronics and components firms have already benefited in states like Tamil Nadu and Andhra Pradesh.

2. Startup India

Startup India is designed for technology and innovation-driven ventures. It offers:

• Income tax exemption for 3 years (subject to eligibility)
• Faster patent and IP protection
• Access to funding through SIDBI and state-level innovation funds

3. State-Level Support

Many Indian states operate their own Investment Promotion Agencies (IPAs) and tailor incentives to attract FDI. These may include:

• Single-window clearance at the state level
• Subsidized industrial land or plug-and-play factory parks
• Labour law exemptions for greenfield projects
• Power tariff rebates, interest subsidies, and skill training schemes

Example: Tamil Nadu’s Guidance TN, Karnataka’s Udyog Mitra, and Gujarat’s Vibrant Gujarat platform.

Best Practices for Entering the Indian Market

To build a sustainable presence in India, Taiwanese companies should focus on practical, localized strategies. Below are best practices drawn from successful market entries:

• Define your entry point by sector: Start with high-potential sectors like electronics, clean tech, or digital services where Taiwan has competitive strengths.
• Choose a phased entry model: Consider testing the waters with a liaison or project office before setting up full-scale operations.
• Leverage Indian contract manufacturers: For cost-efficient scaling, partner with Indian OEMs and use existing industrial clusters.
• Engage local legal and compliance advisors early:  Regional rules vary, and getting expert input prevents costly delays during setup.
• Localize your product and support strategy:  Adapt packaging, service hours, and warranties to meet Indian buyer expectations.
• Build relationships before pitching deals:  Indian business culture values trust and familiarity over speed and formality.
• Respect decision hierarchies: Always address senior leadership first in meetings and correspondence.
• Use government and industry platforms:  Platforms like Invest India or state-level IPAs can help with permits, land, and incentives.
• Invest in local teams or partners: Hiring Indian managers or partnering with distributors improves cultural fit and market reach.

Conclusion

India offers significant long-term potential for business setup in India for Taiwanese investors, backed by policy reforms and market access. The Indian market is a rare combination of scale, sectoral diversity, and long-term growth potential. From electronics and clean energy to IT and logistics, the opportunity spans far beyond traditional manufacturing.

While India’s regulatory framework may seem complex at first, platforms like NSWS, integrated filing via SPICe+, and state-level support have significantly lowered the entry barrier for foreign-owned businesses.

With the right strategy and local guidance, Taiwanese companies can establish a strong and compliant presence in India and build lasting commercial success.

Need Help Setting Up in India?

VJM Global specializes in helping international businesses establish and scale operations in India. From entity registration and FDI compliance to tax structuring and cross-border remittances, our team supports you at every step.

Contact us to get a customized roadmap for your India entry.