Business Setup

How Can UK NRIs Start a Business in India?

Updated on: April 27, 202617 mins Editorial Standards

With the growing interest of global entrepreneurs, foreign investors, and multinational ventures, India has emerged as one of the fastest-growing economies in the world. Additionally, the country also has an enormous consumer market and is popular as a powerhouse of digital innovation.

Considering this, with foreign nationals and entities, it has also attracted UK NRIs to start a business in India. However, the question is how can UK NRIs start a business in India. They can start a business by staying compliant with sector-specific RBI guidelines, choosing the right business structure, submitting essential documents, and registering the entity.

Further, to help you out, this blog provides detailed information on setting up a legal entity/ business in India. Additionally, the document and tax compliance requirements associated with it. So read on and clear all your doubts.

Key Takeaways

In many permitted sectors, NRIs can hold full ownership in a Private Limited Company or LLP under the automatic FDI route, subject to FEMA and sector-specific conditions.
A company should have at least two directors. Additionally, one of them should be residing in India for 182 or more days in a financial year.
Documents like a passport, address proof, should be apostilled and notarized by the Indian Embassy/ High Commission in the UK.
Every director should have a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
For capital contribution, NRIs should use an NRE or an NRO bank account, as using resident savings accounts is restricted by FEMA.

Why UK NRIs Are Starting Businesses in India?

Currently, India is the fastest-growing major economy in the world. For UK NRIs, starting a business in India is not only about an emotional connection but also a smart financial move. Considering this, here are the benefits for UK NRIs starting a business in India:

Massive Market: By setting up a business in India, NRIs get access to over 1.4 billion consumers.
Budget 2026 Perks: India has introduced select foreign investment and tax incentives in specific sectors, making the country more attractive for overseas entrepreneurs and long-term investors.
Digital Infrastructure: UPI and the digital stack of India make foreign business transactions seamless.
Skilled Workforce: In India, at competitive costs, there are high-quality employees available.
UK-India Trade Relations: Increasing economic and trade cooperation between India and the UK makes it simple for NRIs to expand their business across both countries.
Government Support for Investors and Startups: Initiatives of the Indian government, such as Digital India, Startup India, and an easy company registration process, encourage NRIs.
Opportunity to Diversify Investments: For many NRIs, starting a business from the UK in India offers diversification beyond the UK markets. Additionally, it also provides them with long-term investment options.

Further, these factors attract UK NRIs to start a business in India and participate in the growing business landscape of the country. Moving ahead, let's know if UK NRIs can legally start a business in India or not.

Can UK NRIs Legally Start a Business in India?

Yes, NRIs residing in the UK have permission to start a business in India. For attracting foreign direct investments (FDI), the Indian government allows NRI and foreign nationals to invest in the country. However, these specific guidelines are governed by the Foreign Exchange Management Act (FEMA), which they need to follow.

For UK NRIs starting a business in India, under the automatic route, investments are generally permitted. It means that before setting up a business, you do not need to obtain approval from the government.

However, for sectors like telecommunications, defense production, and some financial services, it is vital to take prior approval from the government.

Apart from this, NRIs should also ensure that investments and financial transactions in India comply with FEMA regulations and NRI banking rules. It includes having an NRE account or an NRO account to manage Indian investments and funds. Additionally, when establishing a business, UK NRIs should also maintain proper documents and work through authorized banking channels.

So, from the above information, it is clear that UK NRIs can legally start a business in India; however, for this, they need to comply with FEMA guidelines. Moving forward, let's know the best business structure for UK NRIs in India.

Best Business Structures for UK NRIs in India

One of the vital steps for UK NRIs to start a business in India is selecting a legal entity type. Considering this, the best business structures available for them in India are:

Private Limited Company

In accordance with the Companies Act, 2013, you can incorporate a company in India. It has a separate legal identity from its directors and shareholders. A private limited company, while enabling the owners to secure capital from investors, offers legal protection to them. To form a company, there should be a minimum of two directors and shareholders. Additionally, one of the directors should be a resident of India (stayed in the country for 182+ days).

Limited Liability Partnership (LLP)

A limited liability partnership (LLP) is ideal for small businesses and professional services. It combines the benefits of a company and a partnership with fewer compliance costs. There should be at least two partners in it. Under this, the liability of the partners is limited as per their agreed contribution. Additionally, it is set up in accordance with the Limited Liability Partnership Act, 2008.

One Person Company (OPC)

A one-person company provides the structure of a private limited company, but does not require multiple owners. It is an ideal business structure for NRIs who independently want to operate a business in India but want the perks of a legally recognized entity. Additionally, for NRIs, Budget 2026 has relaxed the rules to form an OPC. Additionally, recent MCA regulatory relaxations have made OPC incorporation more flexible, making it a viable option for certain NRIs planning solo business ownership.

This was all about the different business structures available for UK NRIs to start a business in India. Moving forward, let's know the process of registering a company in India by an NRI.

Steps for UK NRIs to Start a Company in India

Here is how NRIs can do a company registration in India from the UK:

Step 1: Choose the Company Type

According to your investment goals and risk tolerance, identify whether your desired business requires registration as Pvt Ltd, LLP, OPC, etc.

Step 2: Obtain DSC and DIN

For all proposed directors, obtain a digital signature certificate (DSC) and a director identification number (DIN). Every director should have a DIN issued by the Ministry of Corporate Affairs (MCA).

Step 3: Apply for Reservation of Name

On the MCA portal, through the RUN (Reserve Unique Name) service, you can fill out the name reservation application. The Registry will only accept the unique name of the company. It means that your suggested name should not be identical to any other existing company in India.

Step 4: SPICe+ Form

To incorporate the company, fill out Form INC 32 and submit it through the SPICe+ system. Upon the form submission, for tax registration, your PAN and TAN numbers will be generated automatically.

Step 5: Draft Incorporation Documents

It includes drafting of the MoA (memorandum of association), AoA (articles of association), declaration of directors, and address proof.

Step 6: Acquire the Certificate of Incorporation

Once all your details, forms, and documents are verified by the Central Registration Centre (CRC), you will get a certificate of incorporation (COI). It is issued by the Registrar of Companies (ROC) along with the corporate identification number (CIN).

Step 7: Post-Incorporation Compliance

It includes the following things:

Open an NRE/NRO account or a dedicated current account for the company in an Indian bank.
Additionally, transfer the share subscription amount.
If applicable, apply for GST registration.
Within 30 days, appoint an auditor.
File annual tax returns and maintain statutory registers.
Filing out the FC-GPR return with the Reserve Bank of India (RBI).

This is how UK NRIs can start a business in India. Further, simplify this process with professional assistance. Now, moving ahead, let's know the documents required by them to start a business in India.

Documents Required for UK NRIs to Start a Business in India

Documents required for UK NRIs to start a business in India are as follows:

For Directors & Shareholders

Identity Proof: Scanned photocopy of a valid passport (mandatory).
Address Proof: Latest electricity bill, bank statement, or telephone bill (not older than two months).
Photos: Recent passport-sized colored photographs.
PAN Card: If you have an Indian PAN card, then provide a photocopy of it; otherwise, submit a declaration.

For the Office Registration in India

Proof of ownership or a rental agreement.
No Objection Certificate (NOC) from the property owner.
A recent utility bill (Gas/, water/electricity).

Additionally, all the foreign documents should be apostilled and notarized in your country of residence. Furthermore, let's know the tax and compliance requirements for UK NRIs starting a business in India.

Tax and Compliance Requirements for NRI Businesses

Once you set up a business in India, the work does not end here. According to FEMA and RBI rules, NRIs' investments are considered FDI. Further, the compliance requirements associated with NRI businesses in India are as follows:

Capital Infusion: NRIs should remit their funds through NRE or NRO accounts or via wire transfer from overseas.
FC-GPR Filing: Within 30 days of issuing shares, you should report the allotment of capital instruments after receiving foreign investment to the RBI through the prescribed reporting system.
Indian Resident Director: In a company, one of the directors should be a resident of India, i.e., stay in India for 182 days or more in a financial year. A relative, reliable friend, or policy member could be someone to depend on for the same purpose.

This was all about the compliance requirements for NRIs starting a business in India. Moreover, let's know the tax implications for NRI businesses.

Tax Implications

On setting up a business, NRIs face several tax obligations. It includes withholding tax, return filing, advance tax, etc. Depending on the entity type set up by an NRI, the tax obligations vary. Additionally, the taxability of income earned by the NRI and the entity also depends on the entity type.

For instance, the tax imposed on the income earned in a sole proprietorship is payable by the NRI. However, for other entity types, income tax is paid at the entity level. Further, tax on distributed income such as dividends, remuneration, or profit withdrawals from the entity, other than a sole proprietorship, is payable by an NRI and may also be subject to withholding tax obligations.

Apart from this, the NRI may also be eligible for benefits under the Double Tax Avoidance Agreement (DTAA) between India and the UK.

So, these are some tax and compliance requirements that NRIs need to fulfill after setting up a business in India.

Final Thoughts

Lastly, for UK NRIs, starting a business in India needs proper planning and understanding of FEMA rules and regulations. You need to select the right entity type, understand FEMA requirements, obtain DIN/DSC, and obtain an incorporation certificate.

Further, Indian government programs like "Startup India" support new businesses. However, to successfully set up a business in India, it is important to understand legal guidelines. If you are facing issues in this and looking for assistance, connect with Savetaxs. Our financial experts will help you in fulfilling all the legal considerations and easily start your business in India.

Glossary

Capital: Capital, a Financial Term Used for Business Operations, Like Bank Accounts, Stocks, Assets, Etc.
Double Taxation Avoidance Agreement (DTAA): DTAA, an Agreement Signed Between the Countries to Avoid Double Taxation.
Foreign Exchange Management Act: FEMA, an Act to Manage and Simplify the Foreign Transactions, Remittances, Investments, Etc.
Withholding Tax: Withholding Tax, Imposed u/s 195, Levied on Payments Made to Non-residents.
Digital Signature Certificate: Digital Signature Certificate, an Online Version of a Signature, Used as Identity Proof and to Verify Itr.
Document Identification Number: DIN, a Unique Code Assigned to the Documents by Itd, Enhances Security and Efficiency in the Departments of Income Tax.

Disclaimer

Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

About Author

Hatim Dudhiyawala Certified Public Accountant (CPA)

Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio

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Frequently Asked Questions

Yes, an NRI can set up and operate a company in India as the Indian government, through liberal FDI policies, encourages foreign investments. Considering this, through automatic routes, NRIs can hold 100% equity generally in most sectors and can incorporate firms without an Indian partner. However, one director there should be a resident of India.

For the UK founders aiming for investment, growth, or personal liability protection, a private limited company is the best business structure. It provides a separate legal entity from personal finances, enhanced credibility with stakeholders, and, through dividend distribution and salary offers, superior tax efficiency.

Yes, you can register an Indian company from the UK remotely. It generally takes 7-10 business days. The registration process is completely digitized through the Ministry of Corporate Affairs (MCA) using digital signatures. Additionally, the company should have a minimum of two directors, one of whom should be a resident of India, along with a registered office address in the country.

Yes, according to the Indian Companies Act, 2013, when setting up a company in India, there should be at least one director who is a resident of India. However, it does not mean you require a local Indian partner who has control over your company or owns shares.

Generally, registering a company in India takes 7 to 15 working days, assuming all documents are correct and there are no queries from the Registrar of Companies (RoC).