Starting a business in India as a foreign entity involves more than just investment and incorporation—it also requires securing a series of business licenses and permits. These approvals ensure that the business operates within the legal framework and sectoral regulations of the country. Understanding this licensing landscape is essential for smooth market entry and ongoing compliance.
1. Business Structure and Initial Approvals
Foreign firms must first determine their legal structure—typically as a Wholly Owned Subsidiary, Joint Venture, or Branch/Liaison Office. This decision influences the types of licenses required.
After incorporation through the Registrar of Companies (RoC), foreign firms must apply for essential identifiers:
Permanent Account Number (PAN)
Tax Deduction and Collection Account Number (TAN)
Goods and Services Tax (GST) registration
2. Sector-Specific Licenses and Regulatory Approvals
India has a wide range of industries, many of which require sector-specific approvals from respective ministries and regulatory bodies. Examples include:
FSSAI License for food and beverage businesses
Drug License for pharmaceuticals
SEBI Registration for financial service providers
BIS Certification for electronics and consumer goods
Import Export Code (IEC) from the DGFT for companies involved in cross-border trade
Each of these licenses requires documentation such as incorporation certificates, address proof, identity details of directors, and in some cases, physical inspections or product testing.
3. State and Local Level Permits
In addition to central regulations, foreign companies must comply with state-specific laws depending on their place of operation. These include:
Shops and Establishment License from local municipal bodies
Trade License issued by the local urban development authority
Professional Tax Registration in certain states
Factory License if manufacturing is involved
Timelines and documentation requirements vary from state to state, so foreign firms often work with local consultants for accurate filings.
4. Environmental and Labour Compliances
Companies involved in manufacturing, construction, or infrastructure may need environmental clearances from bodies like the Central Pollution Control Board (CPCB) or State Pollution Control Boards (SPCBs).
For labour compliance, firms need to register under:
Employees’ Provident Fund Organization (EPFO)
Employees’ State Insurance Corporation (ESIC)
Labour Welfare Boards
5. Digital and Data Protection Licenses
For foreign firms in IT, fintech, or e-commerce, licenses related to data privacy and digital payments are crucial. These may include:
Payment Aggregator Licenses (RBI)
Information Technology Act compliance for platforms collecting personal data