Why foreign companies need to think beyond incorporation
India has moved well beyond being simply a market opportunity for European and American companies. It is increasingly being considered as a strategic market, manufacturing base, engineering and R&D location, supply-chain hub and Global Capability Centre destination. This shift is changing the questions CEOs and CFOs need to ask before entering the country. The question is no longer simply, “How do we establish a company in India?” It is, “How do we create an Indian operation that is commercially effective, compliant, financially controlled and capable of scaling?”
The investment data supports this change in direction. India recorded total FDI inflows of approximately USD 81.04 billion in FY 2024–25, up 14% from the previous year, while manufacturing FDI increased 18% to USD 19.04 billion. The United States accounted for 11% of India’s FDI equity inflows in FY 2024–25. In FY 2025–26, FDI equity inflows reached USD 58.85 billion, with the United States contributing USD 11.17 billion, or 19% of the total. Computer software and hardware attracted USD 13.95 billion, services USD 10.01 billion, trading USD 4.01 billion, non-conventional energy USD 3.02 billion and food processing USD 3.01 billion.
European investment is equally significant, although it is more fragmented across individual countries. The European Union reports that around 6,000 European companies are already present in India and that EU FDI stock in India reached €132.8 billion in 2024. During FY 2025–26, the Netherlands alone contributed USD 3.37 billion of FDI equity, while Germany contributed approximately USD 495 million. More importantly, Invest India facilitated the grounding of 60 projects worth more than USD 6.1 billion during FY 2025–26, with approximately 42% of the investment value originating from European countries. These projects covered 14 states and were expected to generate more than 31,000 jobs.
This is therefore not simply a story of more foreign companies opening sales offices. The nature of investment is also changing. Invest India’s FY 2025–26 project data shows strong activity in chemicals, pharmaceuticals and biotechnology, food processing, electronics, aerospace and defence, and auto and electric vehicles. Together, chemicals, pharmaceuticals and biotechnology, and food processing accounted for approximately 65% of the value of the projects facilitated by Invest India during the year. At the same time, the broader FDI data shows technology, services, electronics, renewable energy and advanced manufacturing becoming increasingly important destinations for foreign capital.
India entry is becoming a strategic operating decision
For a foreign company, incorporation is only the beginning. The real complexity starts once the entity needs to invoice customers, employ people, import products, receive capital from the parent, transact with group companies, manage taxes, maintain statutory records and eventually move profits or other legitimate payments back to headquarters.
The choice of operating route therefore increasingly depends on the company’s India strategy. Some businesses begin with a sales and distribution subsidiary, while others establish manufacturing capacity from the outset. Engineering companies may build local engineering or R&D centres, while technology and professional-services businesses increasingly consider Global Capability Centres. Companies with an established Indian partner may also consider joint ventures, while businesses testing the market may initially operate through cross-border sales or a limited local presence, subject to tax and permanent-establishment considerations.
Invest India’s recent facilitation work illustrates this broader approach. The agency says it is supporting companies across the investment lifecycle, from early-stage advisory and site selection through regulatory facilitation and post-investment aftercare, while also supporting companies exploring alternative entry routes such as joint ventures with Indian partners.
The strategic question is therefore not simply which legal entity to incorporate. It is what the Indian operation needs to become over the next three to five years.
The emerging foreign-investor strategy: market, manufacture, engineer and export
The investment pattern between 2024 and 2026 points towards a more integrated India strategy. Foreign companies are increasingly looking at India not only as a market for imported products but as part of their global value chain.
The automotive sector provides one illustration. International automotive companies have continued to expand manufacturing and localisation, supported by India’s large domestic market and policy incentives for advanced automotive technologies and components. The automobile sector has attracted approximately USD 36 billion in FDI over the four years referenced by Invest India, while companies including Mercedes-Benz, Toyota and other global manufacturers have announced significant capacity investments.
Industrial engineering is following a similar pattern. German tunnelling technology company Herrenknecht, for example, moved towards establishing a manufacturing facility in Tamil Nadu after engagement with Invest India around site selection, state incentives and regulatory pathways. The project represents a shift from simply supplying equipment to building local manufacturing capability and reducing dependence on imports.
The technology sector presents another model. Rather than only establishing traditional sales offices, international companies are increasingly building engineering, software, data, R&D and GCC capabilities in India. Karnataka, Maharashtra, Telangana, Tamil Nadu, Haryana and Delhi-NCR continue to be important locations for technology and capability-led investments. India’s FY 2025–26 FDI data shows computer software and hardware as the largest recipient of equity inflows, with USD 13.95 billion invested during the year.
For European industrial companies, this creates an increasingly relevant model: sell in India, manufacture in India, engineer in India and potentially export from India. That is materially different from the traditional representative-office approach and requires a much stronger local operating infrastructure.
Incorporation is only the beginning
One of the most common misconceptions among foreign companies is that incorporation means the business is ready to operate. In reality, a newly incorporated Indian subsidiary still needs the infrastructure that allows it to function as a real business. PAN and TAN, banking arrangements, GST registration where applicable, import-export registrations, authorised-dealer banking arrangements, labour registrations and other local registrations need to be put in place in the appropriate sequence.
This operational readiness is where the quality of local execution becomes critical. Delays in registrations, incomplete documentation or unclear ownership of responsibilities can postpone invoicing, hiring, importing and customer activity. For headquarters, the cost is not limited to professional fees. It can mean delayed revenue, idle employees, blocked working capital and management time spent resolving issues that should have been addressed during setup.
Governance needs to be designed from the beginning
An Indian subsidiary also creates a local governance responsibility that cannot simply be delegated away. A private limited company requires an appropriate board structure, including an India-resident director, and directors carry statutory responsibilities connected with the company. For an overseas parent, having the right local governance arrangement therefore becomes an important part of risk management.
A resident or nominee director can provide local oversight and support the execution of statutory responsibilities, including corporate, tax, regulatory and government-facing documentation. However, this role needs to operate within a clearly defined governance framework. A four-eye principle, appropriate authorisation levels and prior alignment with the parent company can help ensure that local statutory responsibility does not become disconnected from headquarters’ control.
The objective is not simply to have a local name on the board. It is to create a governance bridge between the foreign parent and the Indian operation, with clear accountability for what needs to be reviewed, approved, signed and filed.
Shareholding infrastructure is part of operational readiness
For foreign-owned Indian companies, the infrastructure surrounding the company’s shares can also become a significant implementation requirement. Indian regulatory requirements around dematerialisation mean that the shareholding structure may involve processes relating to the depository, ISIN, registrar and transfer agent, shareholder PAN and demat accounts.
These activities are often treated as technical formalities, but they can require coordination between the Indian subsidiary, foreign shareholders, directors, professional advisers, banks and regulatory bodies. A delay in one part of the process can hold up the completion of another. Managing these requirements as part of the overall establishment process rather than as isolated administrative tasks can make the transition considerably smoother.
Financial control starts with the first transaction
Once an Indian operation begins trading, financial visibility becomes one of the most important responsibilities for headquarters. A subsidiary needs accounting records maintained under applicable Indian accounting requirements, supported by appropriate documentation and reconciliations. Bank transactions, receivables, payables, expenses, journals, intercompany transactions and supporting documents all need to form part of a reliable financial record.
For a CFO sitting outside India, the objective is not simply to receive an annual balance sheet. It is to have sufficient visibility to understand how the Indian operation is performing and whether local financial records can withstand statutory audit, tax review and internal scrutiny. Regular trial balances, profit-and-loss statements, balance sheets, bank reconciliations and supporting documentation create the foundation for that visibility.
This is also where a disciplined monthly accounting process becomes valuable. When books are maintained only with year-end compliance in mind, errors in classification, intercompany transactions or tax treatment can accumulate. When finance becomes a continuous operating process, the Indian subsidiary can provide management information rather than simply fulfilling a statutory requirement.
Tax and GST are operating processes, not year-end exercises
India’s tax environment requires ongoing attention. Direct tax compliance includes withholding tax, advance tax, annual tax filings, tax audit requirements where applicable and documentation for cross-border payments. When an Indian entity pays its foreign parent for services, royalties, interest or other permitted transactions, withholding-tax considerations can arise, with treaty treatment depending on the specific circumstances and supporting documentation.
GST creates another layer of recurring operational responsibility. The business needs to correctly determine its GST treatment, manage output and reverse-charge liabilities where applicable, file periodic returns and reconcile input tax credits. For companies importing products or equipment from overseas, GST and customs also interact with the overall landed cost and working-capital position.
For foreign companies, this means tax should not sit separately from finance and commercial operations. Product pricing, intercompany charges, contracts, invoicing, imports and payment flows can all influence the tax position. The CFO material similarly emphasises that documentation expectations are particularly important for intercompany transactions and that the substance of the transaction matters alongside the contractual structure.
Government support is becoming part of the India-entry equation
Foreign investors entering India today are operating in a significantly more developed investment-promotion ecosystem than companies entering the market a decade ago. Invest India acts as the national investment promotion and facilitation agency and provides support across the investment lifecycle, including project facilitation, site selection, regulatory coordination, state-level engagement and aftercare. The Foreign Investment Facilitation Portal has also been integrated with the National Single Window System, creating a more coordinated route for investment applications requiring government approval.
For manufacturing-led investments, the Production Linked Incentive programme has become particularly important. Across 14 sectors, PLI schemes had attracted more than ₹2.16 lakh crore of actual investment by December 2025, generating more than ₹20.41 lakh crore in production and sales and more than 14.39 lakh direct and indirect jobs. Incentive disbursements had reached ₹28,748 crore by that point. By March 2026, reported actual investment under the PLI schemes had exceeded ₹2.40 lakh crore.
The policy environment is also expanding beyond traditional manufacturing. New initiatives in areas such as semiconductor manufacturing, mobile-phone manufacturing and specialised chemical parks are designed to deepen domestic value addition and global supply-chain integration. For a foreign company, the opportunity is therefore not simply to obtain a tax or production incentive; it is to understand how its India investment model can align with national and state priorities around localisation, exports, technology transfer, employment and supply-chain development.
At the same time, government facilitation should not be confused with outsourced compliance. Schemes such as PLI, Make in India, the National Single Window System and Invest India’s investor facilitation reduce certain investment and regulatory frictions, but the foreign subsidiary remains responsible for its own corporate, tax, accounting, GST, labour, customs and foreign-exchange compliance. This is where specialist local execution remains important.
Trade agreements are changing the investment case
The trade environment is also becoming an increasingly important part of the India investment story. The India–EFTA Trade and Economic Partnership Agreement entered into force on 1 October 2025. It includes an investment objective of USD 100 billion over 15 years and facilitation of one million direct jobs in India, alongside wider market access for goods and services. The agreement explicitly identifies opportunities around areas including precision manufacturing, clean technologies, life sciences, AI, education and tourism.
For Swiss companies in particular, this creates an important shift in the strategic logic of India. TEPA is not simply a tariff agreement. The investment commitment and focus on value-chain integration create a framework in which Swiss companies can look at India as both a market and a potential production, technology and export base.
The United Kingdom has moved further, with the India–UK Comprehensive Economic and Trade Agreement entering into force on 15 July 2026. The agreement provides a framework for broader market access and services integration, including IT, business, professional, education and healthcare services.
The EU relationship is also entering a new phase. India and the European Union concluded negotiations for their Free Trade Agreement on 27 January 2026. However, as of September 2026, the agreement is not yet legally binding because the signature and internal approval procedures still need to be completed. The European Commission reports that EU–India goods trade reached €118 billion in 2025 and that around 6,000 European companies are already present in India.
For foreign investors, the implication is important. Trade agreements can change the economics of sourcing, manufacturing and exporting, but their real value depends on how companies configure their India operations around rules of origin, tariff preferences, local value addition, supply chains and market access.
What could 2027–28 look like?
The outlook for 2027–28 is therefore less about a single investment number and more about the continued integration of India into global value chains. The World Bank’s current projections put India’s real GDP growth at approximately 6.5% in FY 2026–27 and 6.7% in FY 2027–28, while the IMF has projected growth of around 6.4% for FY 2026–27 and 6.7% in 2027. Both institutions continue to highlight trade integration, productivity, investment and reforms as important elements of India’s medium-term growth story.
There are already indications of a strong investment pipeline. RBI commentary citing fDi Markets data reported approximately USD 65 billion of greenfield project announcements into India during April 2025–January 2026, compared with USD 73 billion during the corresponding period of the previous year. Major announcements in technology and banking included projects associated with Amazon, Microsoft, Google, General Catalyst and MUFG.
The next phase is likely to see greater emphasis on localisation, manufacturing depth, engineering capability, digital infrastructure, clean energy, electronics, semiconductors, pharmaceuticals, advanced mobility and export-oriented operations. The combination of India’s domestic demand, supply-chain diversification, government incentives and expanding trade agreements creates an environment in which foreign companies can increasingly consider India as a multi-purpose operating platform rather than a standalone sales market.
That does not eliminate execution risk. State-level regulatory differences, documentation requirements, tax disputes, customs valuation, transfer pricing, employment compliance and foreign-exchange reporting will continue to require active management. The World Bank has also highlighted the importance of reducing trade costs, lowering barriers and deepening India’s integration into global value chains, while noting that global trade tensions remain a downside risk.
From market entry to an integrated India platform
The emerging model is therefore becoming more sophisticated. A foreign company may enter through a wholly owned subsidiary, joint venture or another permitted structure, establish sales operations, gradually localise manufacturing, create engineering or R&D capabilities, develop a GCC and eventually export from India. The operational route can evolve as the business matures.
This makes the initial design particularly important. A company that enters India only to sell imported products may eventually find itself needing a manufacturing entity. A company that begins with a small sales team may later require a larger finance, HR and compliance infrastructure. An engineering organisation may evolve into a global capability centre. A manufacturing operation may eventually become an export hub. The structure needs enough flexibility to support that evolution.
Where M+V Altios fits in
This is where M+V Altios can play a role beyond conventional incorporation or compliance support. Foreign companies need a local operating layer that connects establishment, governance, finance, tax, regulatory compliance and day-to-day administration with the strategic objectives of the parent company.
M+V Altios supports foreign companies with company establishment and operational setup, shareholding and dematerialisation requirements, resident or nominee director arrangements, bookkeeping and financial reporting, direct and indirect tax compliance, corporate secretarial responsibilities and regulatory filings. The value lies in bringing these activities together rather than treating them as isolated administrative assignments.
For a European or American company entering India, this creates a bridge between headquarters and the Indian subsidiary. The parent retains strategic control and visibility, while the local operation receives the execution capability required to operate within India’s regulatory and commercial environment.
The real India-entry milestone is operational readiness
The India opportunity between 2024 and 2026 has increasingly moved from simple market access towards deeper participation in India’s economy. The numbers show growing FDI, strong U.S. participation, significant European investment, rising manufacturing investment and increasing activity across technology, services, pharmaceuticals, chemicals, food processing, automotive, electronics, renewable energy and engineering.
The next stage is likely to be defined by how effectively foreign companies combine market access with local capability. TEPA is already in force for EFTA, the UK CETA is now operational, and the EU–India FTA has concluded negotiations and is moving through the remaining legal process. Together with India’s domestic investment programmes, PLI schemes, single-window facilitation and broader manufacturing and technology policies, these developments are creating a stronger framework for companies considering long-term India strategies.
For CEOs and CFOs, the implication is straightforward: India entry should be viewed as an operating-model decision rather than an incorporation exercise. The companies that build governance, finance, tax, compliance, people and operational capability alongside their commercial strategy will be better positioned to adapt as their India presence grows.
Ultimately, the real India-entry milestone is not incorporation. It is operational readiness — having the people, governance, finance, tax, compliance and processes in place to allow the Indian business to operate with confidence, capture the opportunities created by India’s changing trade and investment environment, and scale with control.
