How to Set Up a Business in India as a South Korean Investor

Foreign Direct Investment (FDI) from South Korea into India reached approximately USD 400 million in FY 2024, marking a notable increase over the previous year. This growth reflects the rising confidence Korean companies have in India’s manufacturing strength, digital economy, and long-term market potential.

To support this momentum, the Indian government, through the Korea Plus Programme, offers Korean investors dedicated, end-to-end facilitation for entering and operating in India. From resolving regulatory issues to coordinating with state authorities, Korea Plus has become a critical bridge between Korean businesses and Indian opportunities.

This guide explains the complete process of business setup in India for South Korea, covering everything from selecting the right entity to understanding the National Single Window System (NSWS) for FDI approvals, ensuring compliance, and building a sustainable presence in India.

TL;DR 

• Overview of the Korea Plus Programme and how it supports South Korean businesses entering India
• FDI rules for Korean investors, including sector classifications and approval processes
• Step-by-step business setup process: legal entity choice, incorporation, tax registration, capital remittance, and FEMA compliance
• Key post-incorporation tasks: accounting, audit, labor laws, and licensing across Indian states
• Expatriate management for Korean nationals: visa, FRRO registration, contracts, and tax deduction
• Practical guidance on adapting to Indian business culture, choosing locations, and engaging with local networks

Korea Plus Programme: Gateway for Korean Investors in India

Korea Plus is a dedicated investment facilitation cell established in June 2016 through a bilateral initiative between the governments of India and South Korea. It serves as a single-window support agency for South Korean businesses exploring or expanding their presence in India.

How Korea Plus Supports Korean Investors?

• Single Window and Comprehensive Support: Korea Plus provides end-to-end assistance from market entry strategy and regulatory navigation to company incorporation, location planning, and operational support. It coordinates with government departments, state agencies, and industry bodies to help resolve challenges and accelerate approvals.
• Government-to-Government Mechanism: As a bilateral initiative backed by both governments, Korea Plus operates with a unique mandate. This status gives Korean investors privileged access to facilitation services and faster responses to policy matters.
• Policy Advocacy and Dialogue: Korea Plus regularly conveys investor concerns to Indian authorities and participates in strategic policy discussions, helping improve the business environment for Korean enterprises.
• Business Networking and Innovation Linkages: The programme hosts events, trade forums, and innovation workshops that bring together Indian and Korean stakeholders. It also promotes collaboration in R&D, technology transfer, and startup activity.
• Advancing CEPA Goals: Korea Plus is instrumental in promoting the India-Korea Comprehensive Economic Partnership Agreement (CEPA), working to reduce trade barriers and enhance investment flow between the two countries.

While Korea Plus offers hands-on assistance with market entry, registrations, and operational guidance, Korean investors still need to understand the broader regulatory framework that governs foreign investment in India. The foundation of this framework lies in India’s FDI rules and the Foreign Exchange Management Act (FEMA), which define what sectors are open, under what conditions, and how investments must be structured.

Understanding India’s FDI Rules

Foreign direct investment (FDI) is the foundation of most market entry routes in India. South Korean investors can own up to 100% equity in several sectors, including manufacturing, retail, and IT services, under what’s called the automatic route. This means no prior government approval is required, only post-filing with the Reserve Bank of India (RBI).

However, sectors like defence, telecom, and media fall under the approval route, which previously involved multiple ministries and manual filings. To simplify this, India launched the National Single Window System (NSWS) in 2025, a major digital reform in its FDI process.

The NSWS acts as a centralised platform for securing approvals and licenses across ministries and states. Investors can:

• File applications in one place (instead of approaching departments individually),
• Track the real-time status of approvals,
• Access document storage and integrated query handling.

While it doesn’t replace RBI filings or sectoral compliance, NSWS has replaced the earlier Foreign Investment Facilitation Portal (FIFP) and now handles approval-based FDI sectors end-to-end.

With FDI rules clarified and approval channels streamlined through NSWS, Korean investors can begin the formal setup process.

Business Setup Process: Step-by-Step Guide for South Korean Businesses

The following guide walks you through each phase from choosing the right legal structure to securing tax registrations, injecting capital, and ensuring compliance. Each step is tailored to the practical needs of Korean businesses entering India in 2025.

Step 1: Choosing the Right Legal Vehicle

Under India’s Foreign Exchange Management Act (FEMA) and FDI policy, foreign investors, including South Korean businesses, are not permitted to directly set up sole proprietorships or general partnerships. Instead, they must operate through legally recognized structures that comply with India’s foreign investment framework.

The appropriate structure depends on sector eligibility, FDI route, tax treatment, liability protection, and long-term business objectives. Below are the most common entry vehicles available to South Korean investors planning to register operations in India.

Wholly Owned Subsidiary (Private Limited Company)

A Private Limited Company is the most common structure for Korean firms in India, which allows 100% FDI under the automatic route in most sectors. According to the Korea Trade Investment Promotion Agency (KOTRA), about 88% of all Korean subsidiaries established in India are wholly-owned, while approximately 11.3% are joint ventures. 

• Requires two directors (one Indian resident)
• Offers limited liability protection
• Suitable for full-scale operations like manufacturing, trading, or services

Limited Liability Partnership (LLP)

LLP is a flexible model combining corporate and partnership features. FDI is allowed only in sectors under the automatic route without restrictions.

• Requires two designated partners (one Indian resident)
• Cannot raise equity or issue shares
• Best for consulting or back-office functions with low regulatory barriers

Branch Office (BO)

Used to conduct specific business activities such as R&D, export/import, or technical services. No incorporation required, but RBI approval is mandatory.

• Parents must have a USD 100,000 net worth and a 5-year track record
• Can earn revenue, but is taxed as a foreign company
• Restricted from manufacturing or retail activities in India

Liaison Office (LO)

A non-commercial office for coordination and promotion purposes. Cannot engage in sales or revenue-generating activities.

• Requires RBI approval
• Funded entirely through inward remittances
• Often used for market research or government liaison

Project Office (PO)

A temporary office set up to execute a specific contract in India. Typically used by engineering or infrastructure firms.

• Can be established without RBI approval if the contract is secured
• Exists only for the duration of the project
• Cannot carry out unrelated activities beyond the project scope

Step 2: Incorporation Workflow & Tax Setup

Once the legal structure is chosen, setting up a business entity in India involves a defined sequence of filings and document submissions.  This is a crucial phase of business setup in India for South Korean companies, covering legal registration, tax IDs, digital infrastructure, and capital setup. 

This process is governed by the Ministry of Corporate Affairs (MCA) and other regulatory bodies.

Phase 1: Name Reservation 

Start by reserving your company’s name on the MCA portal using the RUN (Reserve Unique Name) service. You can submit up to two names along with a brief justification. If approved, the name is reserved for 20 days.

Phase 2: Digital Setup

Apply for Digital Signature Certificates (DSCs) for each director—these are used to sign documents electronically. Foreign directors must also obtain Director Identification Numbers (DINs), which can be filed through the SPICe+ form.

Phase 3: Document Collection in Korea

Prepare all required Korean company documents in English, duly notarized and apostilled. This includes:

• Board resolution approving investment
• ID and address proof of directors/shareholders
• Proof of Indian office address and landlord NOC
• PAN application (Form 49AA)

Phase 4: MCA Filing & Company Incorporation

Using the SPICe+ integrated form, submit the incorporation documents digitally signed with DSCs. This form includes Memorandum and Articles of Association (MoA and AoA), PAN, TAN, and optional GST. After approval, the company will receive its Certificate of Incorporation, along with PAN, TAN, and a unique Company Identification Number (CIN).

Phase 5: Tax Registrations (PAN, GST, IEC)

• PAN & TAN are generated automatically with the SPICe+ form and are required for income tax filings and TDS compliance.
• GST Registration is mandatory if your turnover exceeds ₹20 lakh (₹10 lakh for services) or if you engage in interstate trade or e-commerce.
• Import Export Code (IEC) is required if your business involves international trade and can be applied for via the DGFT portal.

Phase 6: Bank Account and Capital Infusion

After incorporation, open a current account with an AD Category-I bank in India. Provide incorporation documents, KYC details, and a board resolution authorizing signatories.

Capital must be remitted from Korea through SWIFT with the purpose marked as “subscription to share capital.” The inward remittance must be reported to the RBI via Form FC-GPR within 30 days of allotting shares.

VJM Global helps Korean investors move from planning to execution, coordinating every stage of incorporation, regulatory registration, and FDI readiness, so you can start operations in India without delays or compliance gaps. Contact Now.

Step 3: FEMA Compliance

Once the initial capital is credited to the Indian company’s bank account, it must be reported to the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). Korean investors should be aware that even routine capital infusion is governed by mandatory filings, and delays here can affect downstream expansion, future FDI rounds, or dividend repatriation.

Key Compliance Actions Required:

• File Form FC-GPR: Within 30 days of issuing shares to the foreign investor, the company must submit this form through the RBI’s FIRMS portal, along with necessary documents like the valuation certificate and board resolution.
• Submit Annual FLA Return: Every year by July 15, companies with any foreign investment or external liabilities must submit the Foreign Liabilities and Assets (FLA) return, even if there are no changes from the previous year.
• Report Transfers Using FC-TRS: If shares are transferred between a Korean shareholder and an Indian resident (either as exit or entry), the Form FC-TRS must be filed to record the transaction. This also applies to rights issues or buybacks involving foreign investors.
• Ensure Valid Valuation: Any share issuance or transfer to/from a foreign party must be backed by a valuation report prepared by a SEBI-registered merchant banker or chartered accountant using accepted methodologies (DCF, NAV, etc.).
• Downstream Investment Rules: If your Indian entity invests in another Indian company, FEMA's downstream investment rules apply. Ensure the investee company also complies with sectoral caps, entry routes, and reporting formats.

Non-compliance with these FEMA regulations can lead to penalties, difficulties in repatriating profits, or bottlenecks in raising future capital. RBI scrutiny during repatriation or M&A transactions is strict and expects all filings to be traceable.

Step 4: Audit Readiness, Licensing & Workforce Compliance

Once your company is incorporated, Korean businesses must meet a combination of central and state-level obligations. These include both financial controls and local labor regulations, which are essential for day-to-day operations and long-term scalability.

1. Financial Setup & Audit Controls

• Appoint Statutory Auditor: Required within 30 days of incorporation; annual audits are mandatory under the Companies Act.
• Follow Indian GAAP: Use AS or Ind AS, depending on your company’s size and structure.
• Annual MCA Filings: Submit financial statements and board approvals yearly.
• Internal Controls: Deploy accounting software or ERP early to ensure audit readiness and proper remittance tracking.
• RBI Documentation: Maintain compliant books for smooth profit repatriation and dividend distribution.

2. Local Licensing & Labor Law Compliance

• Shop & Establishment Registration: Mandatory in most states within 30 days of opening any office or site.
• Professional Tax: Applicable in states like Maharashtra, Karnataka, and West Bengal if you employ staff.
• Contract Labor License: Needed if engaging over 20 outsourced workers.
• Factory Compliance: If manufacturing, register under the Factories Act and meet safety and welfare norms.
• Employee Onboarding Rules: Issue offer letters, maintain registers, and provide wage slips as per law.
• EPFO & ESIC Registration: Required if you hire over 10 (ESIC) or 20 (EPFO) employees.
• Display Requirements: Labor laws require publicly displaying statutory rules and notices.

Also Read: Cost of Registration of a Company in India | Quick, Easy and Affordable Process

Step 5: Expatriate Management & Workforce Deployment

Deploying South Korean nationals to manage or support Indian operations brings immigration, tax, and employment compliance into focus. Companies must ensure that expatriates have the correct visas, valid employment contracts, and are properly registered with Indian authorities.

• Employment Visa (E-Visa): Must be sponsored by an Indian entity and aligned with the job role. Tourist or business visas are not valid substitutes.
• FRRO Registration: Mandatory within 14 days if the stay exceeds 180 days.
• Local Employment Contract: Required under Indian labor law, detailing salary, role, tax treatment, and grievance terms.
• Tax Deduction at Source (TDS): Indian employers must withhold and deposit monthly income tax on behalf of expats.
• Social Security Check: India has exemptions for countries with bilateral agreements; confirm if Korean nationals qualify.
• Cultural & Compliance Training: Helps reduce adaptation time and ensure alignment with Indian office norms.
• Visa Tracking & Renewals: Maintain a calendar to monitor visa status, FRRO renewals, and related reporting.

If you're looking for hands-on assistance, VJM Global supports Korean and other foreign companies with end-to-end FEMA compliance, RBI filings, and regulatory governance. Our India-based CA team helps you stay on track with automated calendars, post-investment documentation, and accurate, on-time submissions, so your expansion runs without compliance delays.

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

Completing the formal setup is only the first milestone. To succeed long-term, Korean companies must also adapt to India’s business environment, operational realities, and cultural nuances. The following playbook outlines what to expect on the ground and how leading Korean firms have navigated these challenges successfully.

Indian Market Playbook for Korean Investors

South Korean companies entering India face a large, complex market, but one that rewards those who prepare with local knowledge, operational flexibility, and smart sequencing. Here’s how Korean investors can approach market entry and growth effectively.

Follow Proven Strategic Patterns

Korean companies that have scaled successfully in India tend to adopt a phased, ground-level strategy:

• Begin with pilot operations to understand local demand, costs, and compliance.
• Localize business models through Indian leadership, tailored branding, or region-specific offerings.
• Focus on in-market decision-making to avoid delays and adapt quickly to state-level rules.

Avoid Common Market Missteps

• Over-reliance on HQ decisions: Delegating authority to Indian managers speeds execution.
• Ignoring state-specific compliance: Labor laws, licenses, and tax regimes vary significantly.
• Expecting automatic approvals: Regulatory processes in India require proactive follow-up and strong documentation.

Leverage Korean Strengths

• Strong compliance practices: Korean firms often bring mature audit and documentation systems, an advantage under India’s regulatory scrutiny.
• Technology-driven operations: Sectors like automotive, electronics, and clean energy benefit from Korea’s process precision.
• Structured management: Korean-style hierarchy aligns well with India’s corporate culture, enabling smoother integration.

Capitalize on India-Specific Channels

• State incentives: Tamil Nadu, Gujarat, and Maharashtra offer subsidies and industrial clusters for electronics and auto.
• Korean support networks: Korea Plus, KOCHAM, KOTRA, and the India-Korea Startup Hub can provide troubleshooting, policy support, and JV connections.
• Brand credibility: Korean companies often enter with high trust and perceived quality, which is especially useful in B2B and consumer durables.

India isn’t a market for rapid replication; it rewards localization, patience, and on-ground execution. Korean investors who adopt flexible planning, build strong Indian teams, and tap into bilateral channels are best positioned for long-term success.

Conclusion: Laying the Groundwork for Long-Term Success

South Korean investors bring to India not just capital but also technological expertise and global business acumen. India, in return, offers access to a large and growing market, a skilled workforce, and a strong manufacturing and service ecosystem.

With the right structure, regulatory clarity, and local insight, Korean businesses can build a lasting presence in India.

VJM Global supports foreign investors across every stage of setup and compliance. If you're planning your India entry, book a free appointment with our experts for tailored guidance and on-ground execution support.