Traditionally, when Indian markets were not well known to foreign entities, they would establish a liaison office or a branch office of the business entity set up outside India. Now, under the new regime, they can form Private Limited Companies in India to do business with stability. Hence, foreigners now choose to form Joint ventures or private companies in India, depending on the vision of the firm wanting to set up business in India. Foreign investors have access to a broad range of company structures and business vehicles under India’s liberal regulatory regime. A foreign parent can incorporate an Indian company as a wholly- owned subsidiary (WOS) or a joint venture (JV). A WOS is a private (or public) company wholly owned by the foreign parent, and it enjoys the same legal and tax treatment as any domestic company. JVs (with Indian partners) are used when sectoral caps apply. India also permits 100% foreign direct investment under the automatic route in most sectors.
India’s FDI and corporate regulatory framework
It is managed by the Department for Promotion of Industry and Internal Trade (DPIIT) under FEMA rules. The government follows a largely “negative list” approach: except for a few prohibited sectors and activities requiring security clearance, FDI up to 100% is allowed. In fact, FDI up to 100% is permitted through the automatic route in most sectors. In recent years, the government has continuously liberalised caps and approvals. Key sectors opened up since 2014 include insurance, pension, coal mining, contract manufacturing, civil aviation, single-brand retail, digital media, and financial services. Telecom and defence, broadcasting, pharmaceuticals, and railways have also seen progressive relaxation. These reforms are codified through DPIIT Press Notes and the Consolidated FDI Policy. The cumulative effect is that, aside from strategic exceptions, foreign investors face very few sectoral restrictions. Approvals that once required Foreign Investment Promotion Board (FIPB) clearance, now abolished, are now either on the automatic route or processed via a unified portal: the Foreign Investment Facilitation (FIF) Portal has been integrated into the National Single Window System (NSWS) for end-to-end clearance, streamlining applications that still require approval.
General Advantages for setting up business in India
The Indian government has significantly improved the ease of doing business: recent reforms include digital integration of company registration (e.g. the SPICe+ online form for incorporation, linked to tax and labour registrations) and unified portals for approvals. Prime Minister Shri Narendra Modi noted that India’s stable government, “improved ease of doing business”, vibrant start-up ecosystem and next-generation digital infrastructure make it an attractive destination. In particular, India’s visa regime has been modernised: for instance, the new “Production Investment” (B-4) provides a five-year business visa for foreign experts in manufacturing projects, and can now be issued entirely as an e-visa via a digital sponsorship letter generated on the NSWS. This reform, launched in late 2025, means that Indian firms can quickly sponsor overseas engineers/technicians online, eliminating much of the old paperwork. Other practical advantages include India’s large English-speaking talent pool, wage-cost competitiveness, and world-class industry clusters.
India’s FDI Policy
Beyond tax and legal forms, India’s FDI policy itself incentivises investment. The government has repeatedly raised sectoral caps to attract global players. For example, in 2024, the insurance sector cap was increased from 49% to 74% automatic, triggering a surge in insurance inflows. Defence manufacturing FDI is now 74% automatic, and investments beyond 74% have been under consideration. Telecom allows 100% automatic FDI, and hundreds of other subsectors – from private medical colleges to power exchanges – have been opened up. In October 2023, India implemented the Budget’s corporate tax cuts and eased compliance via VAT and customs reforms. On the institutional side, India has robust investment protection: an India–Austria Bilateral Investment Treaty (1999) guarantees fair treatment and protection of Austrian investments. India also leverages free trade agreements: while India does not yet have a bilateral FTA with Austria, an India–EU FTA is slated for early 2026, which will eliminate many tariffs and boost market access for Austrian firms.
Conclusion
India presents a highly favourable environment for foreign business setup. It offers fully permissible equity ownership, a network of tax treaties, progressive liberalisations, and concrete incentives for targeted investments. Regulatory reforms like the National Single Window, digital visa processing, and simplified company laws further improve the operating landscape. For Austrian businesses in particular, bilateral cooperation mechanisms and the forthcoming India–EU trade pact should further ease market entry and expansion. As Indian government sources note, these reforms and incentives have made India “a preferred investment destination among global investors”, offering foreign companies legal clarity, tax efficiency, and growth prospects unmatched by many other emerging markets.
