Legal Framework – Doing Business in India

India offers European companies an open and attractive market for investments and expansion. The legal framework is largely liberalized, but specific rules apply to foreign investors. Switzerland Green Energy GmbH provides you with an overview of the most important regulations (as of January 2026).

Foreign Direct Investment (FDI) Policy The FDI policy of the Department for Promotion of Industry and Internal Trade (DPIIT) governs foreign direct investments.

  • Automatic Route: In most sectors, up to 100 % FDI is permitted without prior approval (e.g., manufacturing, IT, trading).
  • Government Route: In sensitive sectors (e.g., defense, telecommunications, multi-brand retail), prior government approval is required. Special rule: Investments from countries sharing a land border with India (e.g., China) always require government approval.

Important Agreements for Europeans The India-EFTA Trade and Economic Partnership Agreement (TEPA) has been in force since October 1, 2025. It includes Switzerland, Norway, Iceland, and Liechtenstein and provides:

  • Tariff reductions on many industrial goods.
  • Investment commitment by EFTA countries of up to 100 billion USD over 15 years.
  • Improved market access and investment protection.

Company Formation and Presence Forms

  • Wholly Owned Subsidiary (e.g., Private Limited Company): The most popular form – 100 % foreign ownership is possible. Registration is done through the Ministry of Corporate Affairs (MCA) using the SPICe+ form (online process, approximately 15–20 days).
  • Joint Venture: Partnership with an Indian company.
  • Branch / Liaison / Project Office: For limited activities, often requiring RBI approval. All forms are subject to the Companies Act 2013 and FEMA (Foreign Exchange Management Act).

Taxes and Incentives

  • Corporate Tax: Approximately 25–35 % (plus surcharge/cess) for foreign companies.
  • Incentives: Production Linked Incentives (PLI), tax benefits in SEZs, R&D deductions, and sector-specific promotions.
  • GST (Goods and Services Tax) and other indirect taxes apply uniformly.

Important Notes

  • Compliance: Annual reporting to MCA, RBI, and tax authorities is mandatory.
  • Risks: Be aware of bureaucratic hurdles and sector-specific caps. The government continues to improve the Ease of Doing Business – India ranks highly in global rankings.

Need support with compliance? We provide individual advice on FDI, company formation, and regulatory requirements. Contact us for an initial consultation.