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Planning to set up your Australian business in India in 2026?
Picture this: You're an Australian founder who has built a product with real traction at home. A couple of Indian enterprise clients are already paying you in USD, your WhatsApp inbox is full of inbound from Bengaluru and Hyderabad, and someone from Sequoia's India fund just asked whether you have a local entity yet. You don't. And right there — in that single question — lies the most consequential operational decision you'll make before your first Indian office lease.
India attracted over USD 70 billion in FDI in 2023–24, with Australian investment growing nearly 18% year-on-year. Sectors from AgriTech and EdTech to FinTech and Mining Services are seeing Australian founders stake serious ground. The bilateral foundation has never been stronger — the Australia-India Economic Cooperation and Trade Agreement (ECTA), which came into force in December 2022, reduced tariffs on over 85% of Australian goods and opened up services trade in meaningful ways.
But here's the part nobody puts in the brochure: ECTA does not simplify your regulatory setup inside India one bit. You still need to navigate the Ministry of Corporate Affairs (MCA), the Reserve Bank of India (RBI), the Foreign Exchange Management Act (FEMA), the GST Council, and a patchwork of state-level registrations. And in 2025–26, the RBI issued draft regulations that significantly tightened the rules around branch and liaison offices — catching many founders mid-process off-guard.
This guide exists to change that. Whether you're validating your India thesis through a liaison office or building a full-scale subsidiary, this step-by-step checklist walks you through every decision point, every registration, and every FEMA deadline — with honest timelines, real cost estimates, and the 2026 regulatory updates you actually need to know.
The India market entry opportunity for Australian companies isn't just growing — it's structurally deepening. The ECTA, combined with India's Production Linked Incentive (PLI) schemes and the government's stated goal of becoming a USD 5 trillion economy, has created genuine pull for foreign investment across sectors. But 2026 is also the year that regulatory compliance for foreign-established entities got meaningfully more complex.
The single most consequential decision in your India market entry journey isn't your hiring plan or your go-to-market strategy. It's your legal structure — because it determines everything downstream: how you're taxed, how you can repatriate profits, how easily you can hire, whether you can raise local funding, and how much ongoing compliance you're committing to. There is no universally correct answer, but there is a right answer for your stage and model.
For the overwhelming majority of Australian founders entering India with a commercial intent — whether that's selling SaaS, building an engineering team, or running operations — the wholly owned private limited subsidiary is the right structure. Think of how Atlassian India Private Limited, Canva India Private Limited, or WiseTech Global's Indian subsidiary operates: as an independent Indian legal entity that can hire freely, sign contracts, open bank accounts, and receive revenue — while being majority or fully owned by the Australian parent.
What you need to know: Under the Companies Act 2013, a private limited company must have a minimum of two directors, with at least one being an Indian resident (a person who has stayed in India for 182 days or more in the preceding calendar year). Minimum paid-up capital has no statutory floor since 2015, though RBI sectoral caps on FDI apply. The structure is incorporated under MCA, and FDI is reported to RBI post-facto — no prior RBI approval needed for most sectors under the automatic route.
Ideal for: Founders who want to build a serious India operation, contract with Indian clients, hire an India-based team, or raise Indian VC funding. If you're beyond the validation stage and ready to commit, this is your structure.
Realistic timeline: 6–10 weeks end-to-end (documents in order, processing in parallel)
Indicative cost: AUD 4,600–11,000 (professional fees + government filings + first setup costs)
A branch office is not a separate Indian legal entity — it is an extension of your Australian parent operating inside India. This sounds simpler, but the compliance burden and restrictions are actually higher. The branch can engage in limited activities (trading, services, R&D, consultancy for the parent — but not manufacturing). All profits must be repatriated; you cannot retain surplus in India. And crucially, you need prior RBI approval before setting up, which — post the 2025 draft rules — is slower and requires more documentation than it used to be.
For reference, large Australian mining services companies like Worley or Monadelphous have historically used branch structures for specific project work in India. But for early-stage founders or tech companies, the branch is generally the wrong tool.
Timeline: 3–5 months (RBI approval alone can take 8–12 weeks)
If you're still figuring out whether India is a real market for you — talking to potential customers, meeting distribution partners, doing market research — a Liaison Office (LO) is the lowest-commitment structure. The critical constraint: itcannot earn any income in India. Every expense must be funded through inward remittance from the Australian parent. It's a listening post, not a commercial operation.
Post the 2025–26 draft regulations, the compliance burden for LOs has also increased — notably the Annual Activity Certificate (AAC) filing, which has shifted from a relatively light compliance to a more scrutinised declaration. Missing this filing is a FEMA violation with retrospective penalties.
Timeline: 3–6 months (RBI prior approval required)
If you're running a consultancy, professional services firm, or have an Indian partner you're bringing in as a co-operator, an LLP (Limited Liability Partnership) under the LLP Act 2008 might be appropriate. Foreign investment in LLPs is permitted under the automatic route — but only in sectors where 100% FDI is permitted, which excludes several professional categories. The LLP requires at least two designated partners, with at least one being an Indian resident. Compliance is lighter than a private limited company annually, but FDI documentation is equally rigorous.
India has 25 Registrar of Companies (ROC) offices across the country, and your registered office address determines which ROC handles your incorporation. This is less about legal strategy and more about practical considerations: where your first employees will sit, which clients you're serving, and which state's Shops & Establishments compliance applies to you.
For most Australian companies, the shortlist looks like this: Karnataka (Bengaluru) is the default for tech companies — the talent pool, the VC ecosystem, and the startup density are unmatched. Maharashtra (Mumbai/Pune) is the choice for financial services, FMCG, and manufacturing-adjacent businesses. Delhi NCR works well for government-facing businesses or companies with clients in North India. Telangana (Hyderabad) has become a compelling alternative for tech — lower cost of living, strong talent, and a proactive state government offering incentives for foreign-invested startups.
Think of India's registration requirements as a stack — you build from the bottom up, and each layer unlocks the next. Here's the sequence that matters for a private limited subsidiary.
The SPICe+ form (Simplified Proforma for Incorporating Company Electronically Plus) on the MCA portal is your starting point. This single integrated form covers company name reservation, DIN (Director Identification Number) allotment, company incorporation, PAN, TAN, EPFO, ESIC, and GST registration in one flow — at least in theory. In practice, GST and EPFO usually need separate follow-up, but the SPICe+ significantly streamlines what used to be 6–7 separate filings.
The Apostille requirement is the most commonly fumbled step for Australian founders. India and Australia are both signatories to the Hague Convention, which means Australian documents — passport copies, address proofs, director consent forms — need to be apostilled by the Australian Department of Foreign Affairs and Trade (DFAT), not merely notarised by a JP or solicitor. An apostille from DFAT and a notarised copy are not interchangeable; ROC will reject the latter. Budget 1–2 weeks for this step alone.
Each director also needs a Digital Signature Certificate (DSC) — a physical USB token or cloud-based signature — which is used to sign all MCA filings. For Australian-resident directors, DSCs can be obtained through authorised certifying agencies, often in coordination with your Indian CA or CS.
PAN (Permanent Account Number) is applied via Form 49A and is required for literally everything: opening bank accounts, filing taxes, signing high-value contracts, and receiving FDI. TAN (Tax Deduction Account Number) is equally mandatory if you'll be paying salaries, rent, or contractor fees — which is to say, from Day 1 of operations. TDS (Tax Deducted at Source) obligations trigger immediately when you make certain payments, and operating without a TAN while subject to TDS is a compliance violation with interest and penalty consequences.
GST registration is mandatory if your India entity's annual turnover exceeds INR 20 lakh (INR 10 lakh for special category states), or if you make any inter-state supply. For most Australian companies establishing an operational subsidiary, registering for GST from inception is the right call — waiting until you cross the threshold creates gaps in input tax credit claims and creates messy rectification work.
One nuance that catches many founders: if your Indian subsidiary is receiving services from your Australian parent— shared services, software licences, management fees — this may attract GST under the Reverse Charge Mechanism (RCM). The Indian entity must self-assess and pay GST on these import-of-services transactions. This is commonly missed in the first 6 months of operation, creating a significant tax demand with interest.
If your Indian entity will import goods or services from Australia, or export from India, you need an IEC from DGFT — a 10-digit code issued typically within 2–3 working days online, at minimal cost. Far slower and more overlooked is the Shops & Establishments registration, a state-level requirement that must be completed before you can legally hire employees. The Professional Tax registration (employer-side) also sits at state level. These are routinely skipped by founders focused on the central registrations — and they create labour compliance exposure from the first hire.
If there's one domain where Australian founders consistently get into trouble, it's FEMA compliance. The penalties are retrospective, the deadlines are tight, and the rules — particularly post the 2025–26 draft amendments — are less forgiving than they were even two years ago.
Once your Australian parent company remits capital into the Indian subsidiary's bank account — whether as share subscription or share premium — you have 30 days to file Form FC-GPR on the RBI's FIRMS (Foreign Investment Reporting and Management System) portal. This filing reports the FDI received, the shares allotted, and the valuation certificate. Missing this window results in a compounding penalty and requires a regularisation application (Form ODI for outbound, or specific FC-GPR compounding for inbound) that is time-consuming and expensive to resolve.
Additionally, every year by July 15th, your Indian subsidiary must file the Annual Return on Foreign Liabilities and Assets (FLA return) with RBI, disclosing all outstanding FDI, borrowings, and equity from the Australian parent. This is an online filing on the RBI's FLAIR portal and is mandatory even in years with no new FDI activity.
For founders who chose or are considering a branch or liaison office structure, the 2025 RBI draft regulations are essential reading. The draft proposes that: (1) the foreign parent must demonstrate a minimum net worth of USD 150,000 (up from USD 100,000) with an audited balance sheet; (2) branch offices must file an Annual Compliance Declaration directly with RBI — not just the annual activity certificate through the AD bank; (3) the permitted activities list has been narrowed, removing certain interpretive grey areas that branch offices had historically relied upon for revenue-adjacent activities.
Critically, the draft also proposes that existing branch and liaison offices will need to re-validate their compliance posture against the new requirements within 12 months of the final regulations taking effect. If you set up a branch office in 2023 or 2024 under the old rules, the 2026 review could require structural changes.
Once your Indian subsidiary is profitable, you'll want to return earnings to your Australian parent through dividends. This is permitted — Indian subsidiaries can declare dividends from after-tax profits, and the Australia–India Double Tax Avoidance Agreement (DTAA) caps withholding tax on dividends at 15% (compared to the standard 20% rate). Repatriation happens through your Indian AD bank with supporting documentation: board resolution, CA certificate, and Form 15CA/CB.
More complex, and more often mishandled, are intra-group transactions — management fees, royalties, software licences, and shared services paid by the Indian subsidiary to the Australian parent. These are transfer pricingtransactions under Sections 92–92F of the Income Tax Act and require arm's length pricing documentation. India's transfer pricing enforcement is among the most active in Asia-Pacific; the Australian Tax Office and Indian Income Tax Department have a mutual information-sharing arrangement under the DTAA. Document everything, price at arm's length, and maintain a contemporaneous TP study.
No bank account means no payroll, no vendor payments, no FDI receipt. Yet the Indian bank account opening process is consistently the most frustrating operational bottleneck for foreign founders — because it's document-intensive, partially manual, and varies significantly by bank and branch.
For Australian companies, the recommended banks are multinational institutions with Indian operations — HSBC India, Standard Chartered India, and Citibank India — because their KYC teams are experienced with foreign-incorporated entities and cross-border documentation. Among Indian banks, ICICI Bank and HDFC Bank have the most efficient processes for foreign-invested companies.
You'll need: Certificate of Incorporation, PAN card, Memorandum & Articles of Association, board resolution authorising account opening, KYC documents of all directors and shareholders with more than 25% ownership (passport copies, address proof, apostilled as required). Some banks insist on physical presence of at least one director for the account opening meeting — this is the primary reason founders should plan their first India trip to coincide with the bank account activation stage.
India's labour compliance landscape underwent its biggest reform in decades with the consolidation of 29 central labour laws into four Labour Codes — on Wages, Industrial Relations, Social Security, and Occupational Safety. As of 2026, implementation is partial and state-specific (several states have issued draft rules; implementation timelines continue to shift), so you need to work with a payroll advisor who tracks this in real time.
• Employees' Provident Fund (EPF): Mandatory once you cross 20 employees. Employer contributes 12% of basic salary; employee contributes 12%. EPF is a significant employee retention tool in India — many employees treat their EPF accumulation as a long-term savings instrument.
• Employees' State Insurance (ESIC): Mandatory for employees earning up to INR 21,000/month. Employer contributes 3.25%; employee contributes 0.75%. Provides health and disability coverage.
• Professional Tax: A state-level payroll tax — rates vary by state and salary slab. Maharashtra, Karnataka, and Telangana all have different PT schedules. Employer deducts and remits monthly.
• TDS on Salaries (Section 192): Employer must deduct income tax from employee salaries at estimated annual tax rates and remit monthly to the government. Form 16 is issued annually to employees.
If you're planning to send Australian founders or executives to India, visa planning is critical. The Employment Visa (E-visa) requires a minimum annual salary of USD 25,000 (or equivalent) — a threshold designed to protect Indian workers from being undercut by foreign labour. The application requires the Indian company's employment contract, ROC documents, and the applicant's professional background.
Tax residency is a careful calculation: under Indian domestic law, a person who spends 182 days or more in India in a financial year (April to March) becomes an Indian tax resident, triggering taxation on global income in India. Under the Australia–India DTAA, tie-breaker rules apply — but the practical advice is: track days carefully, especially if the founder intends to maintain Australian tax residency while building the India operation.
💡 Branch and Liaison Office Cost Note
Branch and liaison office structures incur significantly higher costs due to RBI application complexity, legal opinion requirements, and enhanced compliance post the 2025 draft rules. Budget AUD 8,000–20,000+ for setup alone, and higher annual compliance costs thereafter.
• The Apostille vs. Notarisation Trap: Submitting notarised (JP-signed) documents instead of DFAT-apostilled documents to ROC. The filing is rejected; you lose 2–3 weeks. Always apostille Australian documents for Indian regulatory use.
• Treating the Liaison Office as a Sales Office: Any revenue-generating activity — even a purchase order signed by an LO employee — is a FEMA violation. The LO is strictly for market observation, not commercial operations.
• Missing the FC-GPR 30-Day Window: The 30-day clock starts from the date of receipt of remittance in the Indian bank account, not from the date of share allotment. Compounding penalties apply retroactively.
• No GST at Inception: Invoicing Indian clients or incurring RCM liability without a GSTIN creates retrospective GST demands with 18% interest per annum from the liability date.
• Single-Director Incorporation Attempt: The Companies Act 2013 is unambiguous — you need at least two directors. Founders who try to incorporate with just themselves as director hit a wall at the SPICe+ stage.
• Transfer Pricing Without Documentation: Paying management fees or royalties to your Australian parent without a contemporaneous TP study is an open invitation for an Indian Income Tax audit disallowance.
• DTAA Overconfidence: The Australia–India DTAA reduces withholding tax rates and prevents double taxation — but it does not eliminate Indian tax obligations. Your Indian subsidiary is a domestic Indian taxpayer on Indian-source income.
Yes — Australian citizens can establish and operate a business in India through several structures: a private limited subsidiary (wholly owned), a branch office, a liaison office, or an LLP. The private limited subsidiary under the automatic FDI route is the most straightforward for most commercial purposes. There are no citizenship-based restrictions on ownership in most sectors, though FEMA and RBI regulations apply to all foreign investors regardless of nationality.
Partially yes. The SPICe+ incorporation filing, PAN/TAN applications, and GST registration can all be completed remotely with properly apostilled documents. The primary exception is bank account opening — several banks (including preferred foreign-invested company banks like HSBC India and Standard Chartered) require at least one director to appear in person for KYC. Plan your first India trip around this milestone to avoid a trip being forced on you at an inconvenient time.
A private limited company requires a minimum of two directors, of whom at least one must be an Indian resident — defined as a person who has stayed in India for at least 182 days in the preceding calendar year. The resident director can be an Indian national or a foreign national who meets the residency criterion. Many Australian founders hire a professional director (provided by CA firms) initially to satisfy this requirement while they work on bringing an Indian co-founder or senior hire on board.
For a private limited subsidiary with clean documents and parallel processing: 6–10 weeks from document preparation to an operational bank account. This assumes no name objections at MCA, no queries from ROC, and a cooperative bank. Branch and liaison office structures require 3–6 months due to mandatory RBI prior approval. Note that the 2025–26 draft RBI regulations may extend branch/LO timelines further if additional documentation requirements are finalised.
No — for a private limited subsidiary under the FDI automatic route (which covers most sectors including IT, EdTech, FinTech, AgriTech, and most services), you do not need prior RBI approval. FDI is reported to RBI post-facto within 30 days of the first capital remittance via Form FC-GPR on the FIRMS portal. Government approval route applies only to specific sensitive sectors like defence, telecommunications, and certain media categories.
The Indian subsidiary is taxed as a domestic Indian company. Corporate income tax applies at 22% (plus surcharge and cess, effective ~25.17%) for existing companies, or 15% (effective ~17.01%) for new manufacturing companies qualifying under Section 115BAB. Additionally: GST on goods and services, TDS obligations on all eligible payments, and advance tax instalments on estimated annual income. The Australia–India DTAA caps withholding tax on dividends at 15% and on royalties/technical service fees at 10%.
Setting up an Australian business in India in 2026 is genuinely achievable — but it rewards founders who do their structural homework upfront and move quickly on compliance once incorporated. The private limited subsidiary remains the right structure for the vast majority of Australian companies entering India commercially, and the 6–10 week timeline is realistic if you start the apostille process in Week 1 and process registrations in parallel.
The 2025–26 RBI draft regulations have made branch and liaison offices meaningfully more complex and costly. If you were previously considering a branch structure for its apparent simplicity, the updated compliance burden may push the calculus decisively toward a subsidiary. Consult a FEMA-specialist CA before committing to any non-subsidiary structure in 2026.
The three highest-risk compliance areas — FC-GPR deadline management, GST at inception, and transfer pricing documentation — account for the majority of regulatory problems that foreign-invested Indian subsidiaries face in their first two years. Get these right from Day 1, and the rest of your India operation will be on solid ground.
India and Australia have never had a stronger bilateral commercial foundation. ECTA, deepening VC linkages, talent mobility, and shared sectoral expertise in AgriTech, FinTech, and clean energy mean that the founders who build properly structured India operations in 2026 will have a meaningful first-mover advantage as the market matures over the next decade.
Ready to Incorporate in India?
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Co‑founder @ Jordensky | Chartered Accountant | Virtual CFO | Helped raise ₹400Cr+ for 30+ startups | Passionate about finance, tech & books.
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