India Entry, GCC & Compliance Knowledge Hub

Incorporating a foreign-owned subsidiary in India is a structured process that requires careful preparation, qualified legal and tax advice, and attention to both company law and foreign exchange management requirements. This guide covers the key steps — from entity type selection to post-incorporation compliance — for foreign companies establishing a presence in India.

The most common structure for a foreign-owned Indian entity is a Private Limited Company (Pvt Ltd), which can be wholly owned by the foreign parent (a Wholly Owned Subsidiary, or WOS). Other options include a Branch Office, a Liaison Office, a Project Office, and a Limited Liability Partnership (LLP). Each has different regulatory requirements, permitted activities and tax implications. The right choice depends on the intended activities, the sector, the investment horizon and the applicable FDI policy.

The incorporation process in India is administered through the Ministry of Corporate Affairs (MCA) portal, MCA21. The key steps are: obtaining Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) for the proposed directors; reserving the company name through the RUN (Reserve Unique Name) facility or as part of the SPICe+ form; filing the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form with the required documents; and obtaining the Certificate of Incorporation from the Registrar of Companies.

Post-incorporation, the company must obtain a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) from the Income Tax Department; register for Goods and Services Tax (GST) if applicable; open a corporate bank account; and file an FC-GPR (Foreign Currency — Gross Provisional Return) with the Reserve Bank of India within 30 days of receiving foreign investment. The FC-GPR filing is a critical FEMA compliance requirement for foreign-owned entities.

Ongoing compliance obligations for a foreign-owned Indian entity include: monthly GST returns (GSTR-1 and GSTR-3B); monthly TDS payment and quarterly TDS returns; monthly PF and ESIC contributions; annual income tax return; annual ROC filings (AOC-4 for financial statements, MGT-7 for annual return); statutory audit; board meetings (minimum two per year for a private company); and annual FEMA reporting (FC-TRS for share transfers, annual return on foreign liabilities and assets).

The incorporation process typically takes six to ten weeks with proper preparation. Delays are most commonly caused by incomplete documentation, name reservation issues, or delays in obtaining DIN and DSC for foreign directors. Engaging a qualified Indian company secretary and legal advisor from the outset significantly reduces the risk of delays.

One of the most common questions from international companies entering India is whether to incorporate immediately or to use an Employer of Record (EOR) service for the first phase of their India operations. The answer depends on the company's timeline, risk appetite, commercial model and long-term India plans. This guide sets out the key differences and the factors that should drive the decision.

An Employer of Record is a third-party organisation that employs staff on behalf of a client company. In the India context, an EOR allows a foreign company to hire Indian employees — with full statutory compliance, including PF, ESIC, professional tax, TDS and employment contracts — without establishing an Indian legal entity. The EOR is the legal employer; the client company directs the work. EOR arrangements can typically be set up in two to four weeks, compared to six to ten weeks for incorporation.

The advantages of EOR are speed, simplicity and reduced upfront commitment. EOR is particularly well-suited for companies that want to test the India market with a first commercial hire before committing to incorporation; companies that need to hire quickly for a specific project or engagement; and companies that are not yet certain about their long-term India plans. EOR also avoids the ongoing compliance obligations of a local entity — ROC filings, statutory audit, board meetings, FEMA reporting — which represent a real cost and management burden.

The limitations of EOR are equally important to understand. An EOR arrangement does not provide a local legal entity for contracting, invoicing or regulatory purposes. For some products and customers — particularly in regulated sectors or for enterprise contracts — a local entity may be required. EOR costs are typically higher per employee than direct employment through a local entity, because the EOR provider's margin is included in the cost. And EOR arrangements are not suitable for all types of activity — certain regulated activities require a local entity.

Incorporation provides full commercial and operational control. A wholly owned Indian subsidiary can contract directly with Indian customers, invoice in Indian rupees, hold assets, employ staff and operate as a full legal entity. It is the right structure for companies with a validated commercial case and a plan to build a meaningful India presence. The trade-off is time, cost and compliance — incorporation takes longer, costs more upfront, and creates ongoing compliance obligations.

The EOR-to-subsidiary transition is a structured pathway that many companies follow. They start with EOR for the first one to three hires, validate the commercial model, and then incorporate and transfer the employees to the Indian entity. The transition requires careful planning — employment contracts, statutory registrations, payroll migration — but is a well-established process. Inaac Advisors supports both the EOR phase and the transition to a subsidiary.

The terms Nano GCC, Micro GCC and BOT are used frequently in the India GCC market, but they are not always used consistently. This guide explains what each model means, how they differ, and when each is the right choice for an international company building an India team.

A Nano GCC is a small, dedicated India capability team — typically one to twenty people — that is set up and operated with the same governance discipline as a larger GCC, but at a scale appropriate for companies that are in the early stages of their India build-out. A Nano GCC can be established on the client's own Indian entity payroll (if the company has already incorporated) or on Inaac-managed payroll/EOR (if the company has not yet incorporated or prefers to use a managed employment structure). The key characteristic of a Nano GCC is that it is a dedicated team — not shared services — with defined functions, governance, reporting and a clear route to ownership.

A Micro GCC is a mid-size dedicated India capability team — typically twenty to fifty people — with a more developed operating model, broader functional coverage and a more established governance structure. Like a Nano GCC, a Micro GCC can be established on the client's own entity payroll or on Inaac-managed payroll/EOR. The distinction between Nano and Micro is primarily one of scale and operating model maturity — not a fundamentally different structure.

BOT — Build, Operate, Transfer — is a transition pathway, not a size model. BOT can apply to a Nano GCC, a Micro GCC, or a scaled GCC team. In a BOT arrangement, Inaac builds and operates the India team — on the client's Indian entity payroll or on Inaac-managed payroll/EOR — and then transfers the team, processes, documentation, governance cadence, vendor relationships and operating controls to the client at agreed milestones. The transfer can be partial (transferring some functions while retaining others) or complete (full handover of the India operation).

The BOT model is particularly valuable for companies that want to build an India team but do not yet have the local management capability to operate it independently. It provides a structured pathway to ownership without requiring the client to build local management capability from day one. The transfer milestones are defined in advance and are tied to the development of the client's own India management capability.

The choice between Nano GCC, Micro GCC and BOT depends on the company's team size, timeline, management capability and long-term India plans. A company that is building its first India team of five to ten people and wants to own the operation from the outset would typically choose a Nano GCC on its own entity payroll. A company that wants to build a larger team but does not yet have local management capability would typically choose a BOT arrangement. A company that is scaling an existing India team from twenty to fifty people would typically move from Nano GCC to Micro GCC as the team grows.

Foreign-owned Indian entities face a complex and ongoing compliance calendar that spans company law, tax law, foreign exchange management, labour law and sector-specific regulation. Missing compliance deadlines can result in penalties, interest and reputational risk. This guide provides an overview of the key compliance obligations and their typical timing — but it is not a substitute for qualified professional advice, and the specific requirements for any entity will depend on its activities, sector, size and structure.

Monthly compliance obligations for a foreign-owned Indian entity typically include: GST returns — GSTR-1 (outward supplies) by the 11th of the following month, and GSTR-3B (summary return and tax payment) by the 20th of the following month; TDS payment — tax deducted at source must be deposited with the government by the 7th of the following month (30th April for March); and PF and ESIC contributions — Provident Fund contributions must be deposited by the 15th of the following month, and ESIC contributions by the 15th of the following month.

Quarterly compliance obligations include: TDS returns — Form 24Q (salary TDS) and Form 26Q (non-salary TDS) must be filed quarterly, with deadlines of 31 July, 31 October, 31 January and 31 May; advance tax — companies must pay advance tax in four instalments (15 June, 15 September, 15 December and 15 March) based on estimated annual tax liability; and professional tax — the filing frequency varies by state.

Annual compliance obligations include: income tax return — due by 31 October for companies subject to audit; ROC annual return (MGT-7) — due within 60 days of the Annual General Meeting; financial statements (AOC-4) — due within 30 days of the AGM; statutory audit — must be completed before the AGM; Annual General Meeting — must be held within six months of the end of the financial year (i.e., by 30 September for companies with a 31 March year-end); and FEMA annual return on foreign liabilities and assets — due by 15 July.

Event-based compliance obligations arise when specific events occur: board meetings must be held at least twice a year (for private companies) with a gap of not more than 120 days between meetings; director changes, share allotments, registered office changes and other corporate events must be filed with the ROC within specified timeframes; and FEMA filings (FC-GPR for equity issuance, FC-TRS for share transfers) must be filed within 30 days of the relevant event.

Foreign-owned entities should maintain a compliance calendar that tracks all deadlines, assigns responsibility for each filing, and provides advance warning of upcoming obligations. The compliance calendar should be reviewed and updated at the beginning of each financial year and whenever there are changes to the entity's activities, structure or applicable regulations.

GST, TDS and payroll compliance are the three most operationally intensive compliance areas for foreign-owned Indian entities. Getting them right requires a combination of qualified professional support, well-designed processes and a compliance calendar that ensures deadlines are not missed. This guide covers the key requirements in each area — but is not a substitute for qualified tax and legal advice.

Goods and Services Tax (GST) is a comprehensive indirect tax that applies to the supply of goods and services in India. GST registration is mandatory for businesses with an annual turnover above the applicable threshold (currently INR 40 lakh for goods and INR 20 lakh for services in most states, with lower thresholds for special category states), and for businesses engaged in inter-state supply regardless of turnover. Foreign-owned entities providing services to Indian customers — including IT services, consulting, and professional services — are typically required to register for GST.

GST compliance involves monthly filing of GSTR-1 (outward supply details) and GSTR-3B (summary return and tax payment), annual filing of GSTR-9 (annual return), and reconciliation of input tax credit. Common GST compliance pitfalls for foreign-owned entities include: incorrect classification of services (which affects the applicable GST rate and the place of supply); failure to account for reverse charge mechanism (RCM) on specified services received from unregistered suppliers; and errors in input tax credit claims.

Tax Deducted at Source (TDS) is a mechanism by which the payer deducts tax at source before making payment to the payee. TDS applies to a wide range of payments — salary, professional fees, rent, interest, contractor payments and others — at rates specified in the Income Tax Act. Foreign-owned entities must deduct TDS on all applicable payments, deposit the deducted tax with the government by the 7th of the following month, and file quarterly TDS returns (Form 24Q for salary, Form 26Q for non-salary). Failure to deduct or deposit TDS on time results in interest and penalties.

Payroll compliance for Indian employees involves: Provident Fund (PF) — mandatory for establishments with 20 or more employees, with contributions of 12% of basic salary from both employer and employee; Employees' State Insurance (ESIC) — mandatory for employees earning up to INR 21,000 per month in establishments with 10 or more employees; Professional Tax — a state-level tax on employment income, with rates and filing requirements varying by state; and TDS on salary — deducted monthly based on the employee's estimated annual tax liability.

Common payroll compliance pitfalls for foreign-owned entities include: incorrect PF and ESIC contribution calculations; failure to register for professional tax in all states where employees are located; errors in TDS on salary calculations (particularly for employees with variable pay, perquisites or multiple income sources); and failure to issue Form 16 (TDS certificate for salary) to employees by the required deadline.

Bengaluru, Hyderabad and Pune are the three most commonly considered locations for GCC setup in India. Each has distinct advantages and trade-offs — and the right choice depends on the company's specific function, team size, talent requirements and cost structure. This guide provides a structured comparison of the three cities across the key location selection dimensions.

Bengaluru is India's largest technology talent market and the most established GCC location. It has the deepest pool of software engineering, AI/ML, data science and cloud talent, and the most developed GCC ecosystem — including technology parks, managed office providers, talent networks and professional services. The trade-offs are well-known: Bengaluru has the highest salary benchmarks and real estate costs of the three cities, and the highest attrition rates in technology roles. For large-scale technology GCCs with a broad talent requirement, Bengaluru remains the default choice. For smaller teams or teams with a more specialised talent requirement, the cost and attrition profile may make other cities more attractive.

Hyderabad has emerged as a strong alternative to Bengaluru over the past decade. It has a large and growing technology talent pool, lower salary benchmarks and real estate costs than Bengaluru, and strong government support for GCC setup through the Telangana government's GCC policy. Hyderabad is particularly strong in software engineering, data and analytics, cloud and infrastructure, and financial technology. The city has a well-developed technology park ecosystem — HITEC City, Gachibowli and Nanakramguda — with a range of managed office and coworking options. For companies seeking a Bengaluru alternative with a lower cost profile and strong government support, Hyderabad is a compelling choice.

Pune offers a different talent profile from Bengaluru and Hyderabad. It has a strong engineering and automotive ER&D talent pool — reflecting its history as a centre for manufacturing, automotive and industrial technology — as well as a growing software and IT services sector. Pune's salary benchmarks and real estate costs are lower than Bengaluru and broadly comparable to Hyderabad. The city has good quality of life — a factor that affects talent retention for senior professionals — and proximity to Mumbai, which is useful for companies with financial services or corporate functions. For companies in engineering services, automotive ER&D, industrial technology, finance and operations, Pune is often the strongest choice.

The location decision should be made on the basis of a structured scorecard that reflects the company's specific priorities — not on the basis of where other companies have gone or where the company's existing contacts happen to be located. The scorecard should be weighted by the company's priorities, validated with on-the-ground market intelligence, and reviewed against the company's growth plan for the India team.

For Nano GCC and Micro GCC teams, the location decision is particularly important because the team is small enough that the talent pool in the chosen city needs to be deep enough to support the specific roles required — and the company needs to be able to attract and retain talent without competing with the largest GCCs in the market. In some cases, a Tier-2 city — Nagpur, Nashik, Coimbatore, Kochi — may offer a better combination of talent availability, cost and operating environment for a small, specialised team.

Maharashtra has introduced a GCC policy framework designed to attract foreign companies to set up Global Capability Centres in the state. The policy offers a range of incentives for eligible GCCs — covering stamp duty, electricity duty, employment subsidies and other support. This guide provides an overview of the key features of the Maharashtra GCC policy for foreign companies considering Pune, Mumbai, Nagpur or other Maharashtra locations for their India GCC.

The Maharashtra GCC policy is part of a broader effort by the state government to position Maharashtra as a leading GCC destination in India. The state has a strong existing base of GCCs — particularly in Pune and Mumbai — and the policy is designed to accelerate this growth by reducing the cost and complexity of GCC setup for eligible companies.

The key incentives under the Maharashtra GCC policy framework include: stamp duty exemption or reduction on lease agreements for GCC office space; electricity duty exemption for a specified period; employment generation subsidies for creating jobs in the state; and single-window clearance support for regulatory approvals. The specific incentives, eligibility criteria and application process are defined in the policy document and may be updated — companies should verify the current terms from official Maharashtra government sources before making decisions.

Eligibility for the Maharashtra GCC policy incentives typically requires meeting minimum thresholds for team size and investment. The thresholds vary by incentive and by the tier of the location (Tier-1 cities such as Pune and Mumbai have different thresholds from Tier-2 and Tier-3 locations such as Nagpur, Nashik and Aurangabad). Companies that are setting up a Nano GCC or Micro GCC may qualify for some incentives but not others — the specific eligibility should be verified with the Maharashtra government or a qualified advisor.

The application process for Maharashtra GCC policy incentives typically involves: registering the GCC with the Maharashtra government through the designated single-window portal; submitting the required documentation (incorporation certificate, lease agreement, employment plan, investment plan); and obtaining the incentive approval before the relevant expenditure is incurred. The timeline for approval varies — companies should factor this into their GCC setup planning.

For foreign companies considering Maharashtra as a GCC location, the policy incentives are one factor in the location decision — but not the only one. The talent market, real estate costs, infrastructure quality and operating environment are equally important considerations. The incentives should be evaluated in the context of the overall location scorecard, not in isolation.

Hiring in India is both an opportunity and a challenge for global companies. India has one of the world's largest and most diverse talent pools — deep in software engineering, AI and data, finance, operations, engineering and professional services. But the hiring market is competitive, the talent quality varies significantly, and the employment compliance requirements are complex. This guide covers the key steps for global companies hiring in India for the first time.

The India talent market is characterised by high demand for skilled professionals, particularly in technology, AI, data and engineering roles. Salary benchmarks have risen significantly in recent years, driven by the growth of GCCs, the expansion of global technology companies in India, and the increasing sophistication of Indian startups. Companies entering India for the first time often underestimate the compensation required to attract and retain quality talent — particularly at senior and specialist levels.

The hiring process for senior and specialist roles in India typically involves: defining the role requirements and compensation benchmarks (using market data, not headquarters benchmarks); sourcing candidates through a combination of direct sourcing, employee referrals, professional networks and recruitment partners; structured interview panels with defined assessment criteria; background verification (standard practice for senior and specialist roles); offer negotiation; and onboarding.

Employment contracts in India must comply with applicable Indian labour law — which is a complex and evolving framework covering central legislation (the Industrial Disputes Act, the Shops and Establishments Act, the Contract Labour Act, the Maternity Benefit Act, and others) and state-specific legislation. Employment contracts should be reviewed by a qualified Indian employment lawyer before use. Key provisions include: notice period (typically one to three months for senior roles); non-compete and non-solicitation clauses (enforceability varies); confidentiality and IP assignment; and termination provisions.

Onboarding in India involves statutory registrations — PF, ESIC, professional tax — and documentation — employment contract, appointment letter, Form 11 (PF declaration), Form 1 (ESIC declaration). Background verification should be completed before or during the onboarding period. For senior roles, the onboarding process should also include an introduction to the company's governance framework, reporting structure and performance management process.

Common hiring mistakes for global companies in India include: using headquarters compensation benchmarks rather than India market benchmarks; underinvesting in the employer value proposition (why should a talented Indian professional choose your company over a larger, more established employer?); using unstructured interview processes that fail to assess the right competencies; failing to complete background verification; and underestimating the time required to hire quality talent at senior and specialist levels.

Building an AI-ready India GCC requires more than deploying AI tools. It requires a data foundation that supports AI adoption, a governance framework that manages AI risk, an operating model that embeds AI in workflows, and a measurement framework that tracks business value. This guide covers the key components of an AI-ready GCC — from data readiness to governance to operating model design.

Data readiness is the foundation of AI adoption in a GCC context. AI tools — large language models, retrieval-augmented generation systems, AI-assisted workflows — are only as good as the data they work with. A GCC that does not have clean, accessible, well-governed data cannot deploy AI effectively. Data readiness assessment covers: data quality (completeness, accuracy, consistency); data access (can the AI system access the data it needs?); data governance (who owns the data, how is it classified, how long is it retained?); and data security (what access controls are in place, what data can be transmitted to external AI services?).

AI governance for a GCC covers: AI system inventory and risk classification; model risk management (how are AI model errors detected and corrected?); responsible AI controls (fairness, transparency, explainability); human oversight (where are human-in-the-loop controls required?); data privacy (how is personal data handled in AI workflows?); IP and licensing (what are the IP implications of AI-generated outputs?); vendor risk (what are the data handling and security practices of AI tool providers?); and incident management (how are AI errors and incidents reported and resolved?).

The AI-enabled GCC operating model embeds AI in workflows across the GCC's functions — not just in a dedicated AI team. This means: identifying the highest-value AI use cases in each function (finance, operations, engineering, HR, compliance, market entry support); designing human-in-the-loop workflows for each use case; selecting and deploying appropriate AI tools; training the team to work effectively with AI; and measuring the business value delivered by each use case.

AI use cases in a GCC context typically fall into three categories: AI-assisted knowledge work (document summarisation, knowledge search, policy retrieval, report generation); AI-assisted process automation (invoice classification, transaction matching, exception detection, workflow routing); and AI-assisted decision support (variance analysis, risk scoring, candidate screening support, market intelligence). The highest-value use cases are typically in areas where the GCC handles large volumes of structured or semi-structured data, repetitive decision processes, or knowledge-intensive work.

Business value tracking for AI adoption requires defining KPIs for each use case — cycle time reduction, error rate improvement, knowledge access speed, decision quality — and tracking them consistently. The most common mistake in GCC AI programmes is measuring activity (number of use cases deployed, number of users trained) rather than outcomes. Outcome metrics require more discipline but are the only reliable indicator of whether the AI programme is delivering value.