Doing Business in India

A very large market growing quickly

India is the world’s most populous country, with about 1.46 billion people in 2025 on World Bank estimates, and roughly 35.7 per cent of them living in urban areas that year. The Ministry of Statistics puts nominal GDP for FY 2025-26 at Rs 346.36 lakh crore, up from Rs 318.07 lakh crore in FY 2024-25, with real growth of 7.7 per cent and nominal growth of 8.9 per cent. The IMF’s April 2026 World Economic Outlook values the economy at USD 3,916 billion for calendar 2025, placing India sixth in the world by nominal output and projecting USD 4,153 billion for 2026.

Scale is the headline, but so is unevenness. Per capita GDP for FY 2025-26 was Rs 2,27,447, so average incomes remain low by rich country standards. The consumer base is best understood as several markets stacked on top of each other rather than one, ranging from a small premium segment to a very large value-conscious majority. Businesses that price and distribute for only one of those layers usually struggle.

The reform picture

The last decade has produced real, measurable change. By November 2025 the government reported over 47,000 compliances reduced, made up of 16,108 simplified, 22,287 digitised, 4,458 decriminalised and 4,270 removed as redundant. The Jan Vishwas (Amendment of Provisions) Act, 2026 amended 784 provisions across 79 Central Acts administered by 23 Ministries, decriminalising 717 of them, following the 2023 Act which covered 183 provisions in 42 Acts. The National Single Window System, launched in 2021, now connects 32 Central ministries and 34 States and Union Territories, offering more than 686 central and 7,498 state approvals, and had granted over 8.29 lakh approvals by November 2025. Company formation itself is now a single integrated filing through SPICe+ on the MCA portal, which bundles eleven services including incorporation, PAN, TAN, EPFO, ESIC, GSTIN and a bank account. GST was restructured in September 2025 into a two rate structure of 5 per cent and 18 per cent with a 40 per cent de-merit rate.

The honest difficulties

None of that removes the day to day friction. The Economic Survey 2024-25 documented the problem in unusually blunt terms. It noted that only 644 working inspectors oversee 3,21,578 factories, that a firm on a 5,000 square metre plot can be required to give up as much as 69 per cent of that land to meet building rules at a cost of up to Rs 1.58 crore and roughly 509 forgone jobs, and that businesses can spend over 250 days getting approval for simple passageway access through protected forest land. It also found that factory rules make it cheaper to run two 150 worker units than one 300 worker unit, which is a direct tax on scale.

Labour and land remain the hardest parts. Overtime is discouraged because the law requires at least double wages, which pushes work informal. India’s ten most populous states together impose 139 prohibitions on women working in specific factory processes. Land acquisition, change of land use, and building plan approvals are state subjects, so timelines and costs vary sharply between Gujarat, Tamil Nadu, Maharashtra, Karnataka and the rest. Labour codes, electricity tariffs, stamp duty and factory inspection practice differ by state too, which means a national business plan almost always needs a state by state layer under it.

What this adds up to

Contract enforcement through the civil courts remains slow, and most experienced operators build in arbitration clauses and staged payment terms rather than relying on litigation. Working capital cycles are long, especially when selling to government or to large corporates. The practical advice is to budget more time for approvals than the published timelines suggest, choose the state before choosing the site, hire a competent local company secretary and tax adviser from day one, and treat central schemes as a genuine but paperwork heavy source of support rather than free money. India rewards patience and local partnership. It punishes assumptions.

India by the numbers

What India buys and sells

India ran total exports of goods and services worth USD 863.1 billion in FY 2025-26, a record, against USD 825.26 billion in FY 2024-25. Merchandise exports were USD 441.78 billion and services exports USD 421.3 billion. On the import side, merchandise imports were USD 774.98 billion and services imports USD 204.42 billion, giving total imports of USD 979.40 billion and an overall trade deficit of USD 119.30 billion, wider than the USD 94.66 billion deficit of FY 2024-25.

The shape of India’s trade is unusual. Services carry nearly half of all export earnings and are the healthier half. Services exports grew from USD 254.5 billion in FY 2021-22 to USD 421.3 billion in FY 2025-26. Telecommunications, computer and information services alone were USD 206.6 billion in FY 2025-26, about 49 per cent of services exports, with business services at USD 124.2 billion. Goods trade, by contrast, is where the deficit sits, driven by crude oil, gold and electronics.

The United States was India’s largest trading partner in FY 2025-26 with two way trade of USD 132.14 billion and an Indian surplus of USD 40.89 billion. China was second at USD 127.70 billion with an Indian deficit of USD 99.20 billion, the single biggest bilateral gap. The UAE followed at USD 100.04 billion, then Russia at USD 68.69 billion, where imports of USD 63.81 billion are almost entirely crude oil.

Trade agreements are becoming a live commercial factor rather than a diplomatic one. The India-EFTA Trade and Economic Partnership Agreement came into force on 1 October 2025. The India-UK Comprehensive Economic and Trade Agreement entered into force on 15 July 2026 and gives zero duty access on nearly 99 per cent of India’s tariff lines to the UK, covering almost 100 per cent of trade value, with 1,143 duty free lines in textiles and apparel and 1,659 in engineering goods. For an exporter, the practical work now is rules of origin documentation and certificate of origin filing, not tariff arbitrage.

India’s biggest exports

India’s biggest imports

Biggest trading partners

Sectors worth building in

Each of these has real policy money behind it. The scheme names on each card are the actual central schemes you can apply to.

Government schemes that will back your business

These are the central schemes that give an Indian business money, credit, a guarantee, a tax break or market access. Every one links to its official page.

Which structure to register

How to actually set up, step by step

1. Choose the right entity. For most operating businesses and for anyone taking outside investment this is a Private Limited Company under the Companies Act 2013. Foreign parents who only want a representative presence should compare a Liaison Office, Branch Office or Project Office under FEMA, which need Reserve Bank of India or AD Category-I bank approval instead of MCA incorporation.
2. Get a Digital Signature Certificate (DSC) for every proposed director and subscriber from a Controller of Certifying Authorities licensed certifying agency. Nothing can be filed on the MCA21 portal without it, and for foreign nationals this step usually takes the longest because identity documents must be apostilled or consularised.
3. Reserve the company name using SPICe+ Part A on the MCA21 V3 portal at mca.gov.in. You can propose two names and one resubmission is allowed. Check the name against the MCA database and the trademark register first, because a name that clashes with an existing trademark will be rejected or challenged later.
4. Fill SPICe+ Part B, which is the single integrated incorporation application. It allots Director Identification Numbers to up to three first directors who do not already have one, and applies for PAN and TAN at the same time, so these are not separate filings.
5. Attach the linked forms to SPICe+ Part B: eMoA in Form INC-33 and eAoA in Form INC-34 for the memorandum and articles of association, Form INC-9 as the declaration by subscribers and first directors, and AGILE-PRO-S in Form INC-35. Foreign subscribers who cannot sign electronically file physical MoA and AoA instead.
6. Use the AGILE-PRO-S form to obtain the bundled registrations in one go: mandatory EPFO and ESIC registration, mandatory bank account opening, GSTIN if you opt for it, professional tax registration in Maharashtra, Karnataka and West Bengal, and Shops and Establishment registration in Delhi.
7. Pay the stamp duty and MCA fees, which vary by state and by authorised capital, and file the whole package. On approval the Registrar of Companies issues the Certificate of Incorporation carrying the Corporate Identity Number, with PAN and TAN printed on it.
8. Open the company current account with the bank chosen in AGILE-PRO-S and bring in the subscription money for the shares. Keep clean evidence of the inward remittance, because this is what supports the later FEMA reporting.
9. If any shareholder is non-resident, report the foreign investment to the Reserve Bank of India by filing Form FC-GPR on the FIRMS portal within thirty days of allotting the shares, along with the Foreign Inward Remittance Certificate, KYC from the remitting bank and a valuation certificate. Late filing attracts a Late Submission Fee.
10. File Form INC-20A, the declaration for commencement of business, within 180 days of incorporation, confirming that every subscriber has paid the value of shares agreed. The company cannot legally begin business or borrow until this is filed.
11. Register for GST on the GST portal at gst.gov.in if you did not take GSTIN through AGILE-PRO-S. Registration is compulsory once turnover crosses the threshold, and immediately for inter-state supply of goods, e-commerce operators and most exporters. Register in every state where you have a place of business.
12. Register the enterprise on the Udyam Registration Portal at udyamregistration.gov.in if it falls within the MSME limits. It is free, takes minutes with PAN, Aadhaar and GST details, and is the precondition for collateral free credit, the 45 day payment protection and reserved public procurement.
13. Apply for DPIIT Startup Recognition on startupindia.gov.in if the business is innovative, under ten years old and below the turnover threshold. This is what unlocks the Section 80-IAC tax holiday application, self certification, IPR fee rebates and the seed fund and credit guarantee schemes.
14. Obtain an Importer Exporter Code from the DGFT portal at dgft.gov.in if you plan to import or export. It is a one time online application using PAN, address proof and a cancelled cheque or bank certificate, is normally issued immediately, and must be updated on the portal every year even if nothing has changed.
15. Use the National Single Window System at nsws.gov.in and your state's single window portal to identify and apply for the sector and location specific approvals: factory licence under the Factories Act, consent to establish and consent to operate from the State Pollution Control Board, fire safety no objection certificate, building plan approval, trade licence from the local municipal body, and change of land use where needed.
16. Complete the labour registrations that apply once you begin hiring: EPFO and ESIC are already allotted through AGILE-PRO-S but must be activated once you cross the employee thresholds, and you will separately need professional tax registration, Contract Labour Act registration if you engage contractors, and shops and establishment registration in states outside Delhi.
17. Protect the brand and the technology. File a trademark application with the Controller General of Patents, Designs and Trade Marks on ipindia.gov.in, and consider patent or design filings. DPIIT recognised startups get an 80 per cent rebate on patent fees and 50 per cent on trademark fees, plus access to a panel of facilitators.
18. Set up the recurring compliance calendar from month one: appoint a statutory auditor within thirty days of incorporation, hold at least four board meetings a year, file the annual return in Form MGT-7 and financial statements in Form AOC-4, complete DIR-3 KYC for every director each year, file monthly or quarterly GST returns, deduct and deposit TDS, and file the corporate income tax return. Engage a practising company secretary and a chartered accountant rather than trying to track this internally.