Doing Business with India: A Legal Guide for Russian Companies

  

Table of Contents

• Why Invest in India
• Legal Framework & Regulators
• Entry Modes for Foreign Companies
• FDI Policy & Sectoral Considerations
• Incorporation & Core Compliance
• Taxation, GST & Profit Repatriation
• Foreign Exchange & FEMA Controls
• Employment, Visas & Labour Laws
• Protecting Intellectual Property
• Contracts, Disputes & Arbitration
• Corporate Governance & Reporting
• 90-Day Compliance Playbook
• FAQs
• Related Guides

Why Invest in India

India offers a rapidly growing market, strategic geographic location, and government initiatives that attract Russian investors seeking long-term growth. Bilateral trade agreements and collaborations in sectors such as energy, defense, and IT further strengthen the investment climate.

• Access to a population exceeding 1.4 billion consumers.
• Strategic position connecting Asia, Middle East, and Europe.
• Government initiatives like Make in India and Startup India.
• Sector-specific incentives for Russian businesses.

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Legal Framework & Regulators

Foreign companies entering India must navigate a comprehensive legal and regulatory environment. Understanding these laws is crucial to ensure smooth operations, avoid penalties, and maintain credibility with local authorities. India’s regulatory framework is primarily overseen by central authorities, along with sector-specific regulators that govern specialized industries.

• Ministry of Corporate Affairs (MCA): Oversees company registration, statutory compliance, and corporate governance. All businesses, including foreign entities, must file annual returns, maintain statutory registers, and conduct board meetings in accordance with the Companies Act.

• Reserve Bank of India (RBI): Regulates foreign exchange, capital flows, and cross-border transactions under FEMA (Foreign Exchange Management Act). RBI approvals are required for certain investment types, profit repatriation, and external borrowing by foreign companies.

• Securities and Exchange Board of India (SEBI): Governs securities markets, investments, and public offerings. Foreign investors planning to participate in listed companies or mutual funds must comply with SEBI regulations, including reporting obligations and disclosure norms.

• Sector-Specific Authorities: Certain sectors have additional regulators to ensure industry-specific compliance:

  • Defense: Department of Defense Production and Ministry of Defence guidelines for foreign collaborations.

  • Telecom: Telecom Regulatory Authority of India (TRAI) for licensing, spectrum allocation, and service compliance.

  • Energy: Central Electricity Regulatory Commission (CERC) and state energy boards for investments in renewable and non-renewable energy projects.

  • Healthcare & Pharma: Central Drugs Standard Control Organization (CDSCO) for pharmaceutical licensing, clinical trials, and product approvals.

Understanding the interplay between these authorities is critical for Russian companies, ensuring that all corporate, financial, and sector-specific obligations are met.

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Entry Modes for Foreign Companies

Russian investors looking to establish a presence in India have multiple options, each designed to suit different business objectives, investment sizes, and regulatory requirements. Choosing the appropriate entry mode ensures legal compliance, operational efficiency, and alignment with strategic goals.

• Wholly Owned Subsidiary (WOS):

  • Provides complete ownership and full operational control to the Russian parent company.

  • Suitable for companies aiming to directly manage operations, branding, and strategic decisions.

  • Requires registration with the Ministry of Corporate Affairs (MCA), obtaining a Corporate Identification Number (CIN), and adherence to statutory reporting and audits.

• Joint Venture (JV):

  • Involves a partnership with an Indian company, combining local expertise, market knowledge, and regulatory familiarity.

  • Ideal for industries where local insights or approvals are critical, such as defense, infrastructure, or healthcare.

  • Requires a formal JV agreement outlining capital contributions, profit sharing, management control, and exit clauses.

• Branch Office:

  • A branch of the Russian parent company in India, permitted for service exports, executing contracts, or conducting research activities.

  • Cannot engage in direct manufacturing or sales within India without RBI approval.

  • Registration with the MCA and RBI approval under FEMA is mandatory, along with periodic financial reporting.

• Liaison Office (Representative Office):

  • A non-commercial presence in India to explore market opportunities, conduct promotional activities, or liaise with Indian partners.

  • Cannot earn revenue or engage in direct business operations.

  • Requires RBI approval and annual reporting of activities, expenses, and staffing.

• Limited Liability Partnership (LLP):

  • Provides a flexible structure combining elements of partnership and corporate governance, with limited liability for investors.

  • Suitable for professional services, consultancy, or small-to-medium enterprises seeking operational simplicity.

  • Must comply with MCA registration, LLP agreement requirements, and statutory filings including annual returns and statements of accounts.

Key Considerations:

• Each mode has specific registration procedures, reporting obligations, and regulatory approvals.

• Russian investors should evaluate their business goals, risk appetite, sectoral FDI regulations, and capital requirements before selecting an entry mode.

• Combining market research with expert legal and financial advice ensures smooth establishment and long-term compliance in India.

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FDI Policy & Sectoral Considerations

Foreign Direct Investment (FDI) in India is regulated through a sector-specific policy framework, which allows Russian companies to identify opportunities, understand caps, and comply with approval processes. Proper knowledge of these policies is crucial for seamless investment and long-term growth.

• Automatic Route vs. Government Approval:

  • Many sectors in India allow 100% FDI under the automatic route, meaning Russian investors do not require prior government approval.

  • Certain sensitive sectors, such as defense, telecommunications, and broadcasting, require explicit government approval before investment can proceed.

• Sectoral Opportunities for Russian Investors:

  • Energy: Opportunities exist in renewable energy, power generation, and oil & gas. Government approvals may be required for strategic energy projects.

  • Defense: Investments are permitted but heavily regulated; projects often require security clearances and strategic approvals.

  • Manufacturing: Sectors like automotive, machinery, and electronics often benefit from high FDI limits and incentives under Make in India initiatives.

  • Technology & IT Services: Indian IT and software services sectors enjoy relatively straightforward FDI approval, making them attractive for joint ventures or wholly owned subsidiaries.

• Bilateral Agreements:

  • India and Russia maintain strong bilateral trade and investment treaties, providing additional guidance, dispute resolution frameworks, and investor protections.

  • These agreements can facilitate smoother entry into regulated sectors and strengthen investor confidence.

• Key Considerations:

  • Understand the FDI caps, sectoral limits, and compliance requirements before committing capital.

  • Evaluate whether the automatic route or government approval is required for your chosen sector.

  • Take advantage of bilateral trade agreements to optimize investment strategy and mitigate legal risks.

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Incorporation & Core Compliance

Setting up a legal entity in India requires careful planning to comply with regulatory and statutory obligations. Russian investors must understand each step to ensure smooth operations and avoid legal pitfalls.

• Registration with the Ministry of Corporate Affairs (MCA):

  • Submit incorporation documents to obtain the Certificate of Incorporation for your chosen entity type (Wholly Owned Subsidiary, Joint Venture, Branch Office, Liaison Office, or LLP).

  • Draft and file the Memorandum of Association (MoA) and Articles of Association (AoA) as part of the incorporation process.

  • Ensure all directors and shareholders are properly documented, and their consent forms are filed with the MCA.

• Tax Registrations:

  • Obtain a Permanent Account Number (PAN) for corporate tax identification.

  • Acquire a Tax Deduction Account Number (TAN) if the company is responsible for deducting taxes at source from employee salaries or payments to vendors.

  • Register for Goods and Services Tax (GST) if conducting taxable business activities within India.

• Compliance Filings:

  • File annual returns with the MCA detailing financial statements, shareholder information, and business activities.

  • Conduct statutory audits by a certified chartered accountant to ensure accuracy and regulatory compliance.

  • Hold regular board and shareholder meetings as required under the Companies Act, 2013, and maintain minutes for official records.

• Record Maintenance:

  • Maintain detailed records for tax compliance, foreign investment reporting, and employee documentation.

  • Ensure timely reporting to the RBI for foreign investment approvals and any repatriation of profits.

  • Keep documentation for licenses, contracts, and other regulatory approvals to facilitate inspections or audits.

• Key Takeaways for Russian Investors:

  • Understand specific obligations based on your chosen entity type.

  • Complete all registrations and filings promptly to avoid penalties.

  • Maintain well-organized records for taxation, employment, and regulatory compliance.

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Taxation, GST & Profit Repatriation

Russian companies operating in India must navigate the tax framework carefully to ensure compliance and optimize financial efficiency. Understanding corporate taxation, GST obligations, and profit repatriation guidelines is essential for smooth cross-border operations.

• Corporate Taxation:

  • Indian corporate tax rates vary depending on the entity type and turnover.

  • Standard corporate tax for domestic companies is generally around 25–30%, while new manufacturing companies may benefit from concessional rates.

  • Maintain accurate accounting records and statutory financial statements for annual filing with the Income Tax Department.

• Goods & Services Tax (GST) Compliance:

  • GST applies to the supply of goods and services in India.

  • Register for GST if conducting taxable activities domestically, and file monthly/quarterly returns as required.

  • Maintain detailed invoice records, input tax credits, and reconciliations to comply with GST regulations.

• Double Taxation Avoidance Agreements (DTAA):

  • India and Russia have a DTAA in place to prevent double taxation on income earned across borders.

  • Russian investors can claim tax credits in Russia for taxes paid in India on business profits.

  • Proper documentation and tax residency certificates are necessary to benefit from DTAA provisions.

• Profit Repatriation Guidelines:

  • The Reserve Bank of India (RBI) governs the remittance of profits abroad.

  • Profits, dividends, and royalties can generally be repatriated after fulfilling tax obligations in India.

  • Ensure timely filing of tax returns and submission of Form 15CA/15CB for approval of outward remittance.

  • Keep records of all repatriation transactions for RBI audits and compliance verification.

• Key Takeaways for Russian Companies:

  • Plan corporate structure and financial flows to optimize tax efficiency.

  • Stay compliant with GST filing deadlines and invoicing norms.

  • Leverage DTAA benefits to avoid double taxation and maximize profitability.

  • Follow RBI procedures strictly to ensure smooth repatriation of profits to Russia.

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Foreign Exchange & FEMA Controls

All foreign investments in India must comply with the Foreign Exchange Management Act (FEMA) regulations, which govern cross-border financial transactions. Russian companies must carefully adhere to these rules to ensure legal and operational compliance.

• Currency Repatriation Rules:

  • Capital investments, dividends, and profits can generally be repatriated to Russia after fulfilling Indian tax obligations.

  • Certain sectors may have restrictions or require prior approval for remittance.

  • Timely documentation of financial transactions is critical to avoid penalties or delays.

• Approvals for Cross-Border Fund Transfers:

  • RBI authorization is required for certain types of foreign direct investment remittances, especially in regulated sectors.

  • Filing forms such as Form FC-GPR, Form FC-TRS, or other RBI/FEMA forms may be necessary depending on the nature of the transaction.

  • Ensure bank compliance for remittance approvals to prevent regulatory issues.

• Monitoring Foreign Exchange Exposure:

  • Companies need to track currency fluctuations and their impact on revenue and costs.

  • Consider hedging strategies to minimize risk from currency volatility between the Indian Rupee (INR) and the Russian Ruble (RUB).

  • Maintain proper accounting and documentation for all hedging transactions as per FEMA guidelines.

• RBI Reporting Norms:

  • Submit regular reports to the Reserve Bank of India regarding foreign investment inflows and outflows.

  • Accurate reporting ensures transparency and compliance with Indian laws.

  • Retain all records of approvals, remittances, and foreign exchange transactions for audit purposes.

• Key Takeaways for Russian Companies:

  • Plan capital and profit repatriation according to RBI and FEMA rules.

  • Ensure all fund transfers have the necessary approvals and documentation.

  • Actively manage foreign exchange risk and maintain compliance with reporting requirements.

  • Work closely with authorized banks and financial advisors to streamline cross-border operations.

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Employment, Visas & Labour Laws

Russian companies establishing operations in India must fully comply with Indian labor regulations to ensure legal and operational stability. Understanding visa requirements, employment obligations, and dispute mechanisms is crucial for smooth workforce management.

• Employee Benefits and Social Security:

  • Comply with the Employees’ Provident Fund (EPF) contributions and other social security schemes.

  • Provide statutory benefits such as gratuity, maternity leave, and health insurance where applicable.

  • Maintain proper records for payroll, tax deductions, and employee contributions to government schemes.

• Visas and Employment Permits:

  • Employment Visa (E-Visa): Required for foreign nationals working in India for companies registered locally.

  • Business Visa (B-Visa): For exploring investment opportunities, attending meetings, or establishing a liaison office.

  • Follow visa issuance guidelines, duration, and extension procedures issued by the Ministry of Home Affairs.

  • Obtain necessary work permits in addition to visas for long-term employment.

• Labor Law Compliance:

  • Adhere to Industrial Employment (Standing Orders) Act, Shops and Establishments Act, and sector-specific labor laws.

  • Ensure fair wages, working hours, and workplace safety standards in line with Indian regulations.

  • Maintain employment contracts clearly outlining roles, responsibilities, remuneration, and termination conditions.

• Dispute Resolution Mechanisms:

  • Utilize labour courts or Industrial Tribunals for resolving employee disputes.

  • Encourage internal grievance redressal mechanisms for faster resolution.

  • Comply with collective bargaining agreements if engaging with unions.

• Local Hiring Regulations:

  • Foreign companies are encouraged to hire local talent to meet statutory compliance and facilitate operations.

  • Proper onboarding and documentation for Indian employees ensures adherence to employment laws.

  • Maintain transparent policies for promotions, transfers, and performance reviews.

• Key Takeaways for Russian Companies:

  • Understand visa types and work permit obligations before sending staff to India.

  • Implement all statutory employee benefits and maintain accurate records.

  • Be proactive in dispute resolution and maintain compliance with labor laws to minimize legal risks.

  • Engage local HR and legal advisors for smooth workforce management and regulatory adherence.

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Protecting Intellectual Property

For Russian companies entering the Indian market, safeguarding intellectual property (IP) is critical to maintaining competitive advantage, protecting investments, and building trust with local partners and consumers. Proper IP management ensures that innovations, brands, and creative works are legally secured.

• Trademark Registration:

  • Protect company logos, brand names, and slogans used in India.

  • Registration with the Office of the Controller General of Patents, Designs & Trademarks (CGPDTM) provides exclusive rights to use the mark.

  • Prevent unauthorized use or counterfeiting of the brand.

• Patent Protection:

  • Safeguard technological innovations, products, and processes developed in-house.

  • File patents with the Indian Patent Office to secure exclusive rights for a defined period.

  • Avoid infringement of existing Indian patents through careful due diligence.

• Copyright Registration:

  • Protect creative works such as software, literature, music, and designs.

  • Registration provides legal evidence of ownership and strengthens enforcement in case of disputes.

  • Covers both published and unpublished works under Indian Copyright Law.

• Legal Remedies for Infringement:

  • Seek civil remedies including injunctions, damages, and account of profits in cases of IP violation.

  • Criminal action may also apply for counterfeiting and piracy under Indian law.

  • Engage IP attorneys for enforcement and litigation when necessary.

• Compliance with International IP Treaties:

  • India is a member of treaties such as Paris Convention, TRIPS, and Berne Convention, which protect foreign investors’ IP rights.

  • Russian companies benefit from treaty provisions when enforcing patents, trademarks, or copyrights in India.

  • Align internal IP policies with both Indian law and international obligations to reduce cross-border legal risk.

• Key Takeaways for Russian Companies:

  • Proactively register trademarks, patents, and copyrights in India to secure business assets.

  • Conduct regular IP audits to ensure ongoing compliance and protection.

  • Develop clear contracts with Indian partners specifying IP ownership and usage rights.

  • Leverage legal remedies promptly in case of infringement to safeguard brand and technology.

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Contracts, Disputes & Arbitration

For Russian companies operating in India, effective contract management and dispute resolution are crucial to minimize risks, protect investments, and maintain smooth business operations.

• Drafting Contracts:

  • Ensure contracts comply with Indian Contract Act, 1872 and relevant sector-specific laws.

  • Clearly define roles, responsibilities, deliverables, payment terms, and timelines.

  • Include force majeure clauses, termination rights, and confidentiality obligations to reduce risk.

• Arbitration Frameworks:

  • India recognizes domestic and international arbitration, governed by the Arbitration and Conciliation Act, 1996.

  • Choose between institutional arbitration (e.g., ICADR, SIAC, LCIA India) or ad-hoc arbitration.

  • Clearly specify governing law, arbitration seat, and language in the contract.

• Minimizing Business Risks:

  • Include dispute escalation procedures such as negotiation, mediation, or expert determination before formal arbitration.

  • Draft IP, licensing, and supply agreements with unambiguous terms to prevent conflicts.

  • Regularly review contracts to ensure compliance with changing Indian regulations.

• Knowledge of Indian Courts:

  • While arbitration is preferred for international contracts, Indian courts may become involved for enforcement of awards, injunctions, or interim relief.

  • Familiarize with jurisdiction clauses and procedural timelines to avoid unnecessary delays.

  • Ensure legal representation by firms experienced in cross-border disputes and Indian corporate law.

• Alternative Dispute Resolution (ADR):

  • Mediation and conciliation are encouraged under Indian law as cost-effective alternatives to litigation.

  • ADR mechanisms can preserve business relationships and reduce time and expenses.

• Key Takeaways for Russian Companies:

  • Invest in professionally drafted contracts that anticipate risks and protect interests.

  • Align arbitration clauses with international best practices and Indian regulations.

  • Utilize ADR mechanisms wherever possible to resolve conflicts efficiently.

  • Stay updated on changes in corporate, commercial, and arbitration law in India.

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Corporate Governance & Reporting

Effective corporate governance and accurate reporting are essential for maintaining credibility, ensuring regulatory compliance, and building trust with Indian partners and investors.

• Board Structure & Roles:

  • Establish a board of directors that meets Indian Companies Act, 2013 requirements.

  • Define clear roles and responsibilities for executive and non-executive directors.

  • Ensure independent directors are appointed where required to enhance oversight.

  • Conduct regular board and committee meetings with documented minutes.

• Corporate Governance Standards:

  • Adhere to corporate governance norms prescribed for private and public companies in India.

  • Follow guidelines for related-party transactions, disclosure of interests, and conflict-of-interest management.

  • Implement internal control frameworks for risk management and compliance.

• Periodic Financial & Operational Reporting:

  • Prepare and file annual returns, financial statements, and statutory audits with the Ministry of Corporate Affairs (MCA).

  • Maintain accounting records in accordance with Indian Accounting Standards (Ind AS).

  • Submit periodic reports to regulators such as RBI or sector-specific authorities if applicable.

• Transparency & Credibility:

  • Publish accurate, timely, and transparent reports for shareholders, regulators, and stakeholders.

  • Establish whistleblower policies, grievance mechanisms, and ethical conduct guidelines.

  • Compliance enhances reputation, supports investor confidence, and reduces legal risks.

• Key Takeaways for Russian Companies:

  • A well-structured board and adherence to Indian corporate governance standards ensure operational integrity.

  • Accurate and timely reporting builds trust with regulators, investors, and partners.

  • Implement internal policies and monitoring to mitigate compliance risks effectively.

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90-Day Compliance Playbook

Initial 90 days checklist for Russian investors:

• Entity registration and obtaining PAN/TAN numbers.
• Setting up Indian bank accounts and accounting systems.
• GST registration and initial tax compliance.
• Visa compliance for key personnel.
• IP protection registration (trademarks, patents).
• Initial reporting to regulators and sectoral authorities.

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FAQs

• Q: Can Russian companies invest in all sectors in India?
  A: Some sectors require government approval; most follow automatic FDI routes.
• Q: How soon can profits be repatriated to Russia?
  A: After compliance with RBI and tax guidelines, repatriation can be executed periodically.
• Q: Are there incentives for Russian tech companies?
  A: Certain technology sectors enjoy streamlined approvals and tax benefits.
• Q: Is arbitration preferred over litigation in India?
  A: Arbitration is faster and widely used, though court procedures are also available.

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Related Guides

• Doing Business in India: A Complete Legal & Compliance Guide for Foreign Companies
• Understanding India’s FDI Policy: Sectoral Caps & Approval Routes
• Setting Up a Wholly Owned Subsidiary in India as a Foreign Investor
• Forming a Joint Venture in India: Legal & Regulatory Requirements for Foreign Partners
• How to Register a Liaison Office in India: Rules for Foreign Companies
• Setting Up a Branch Office in India: RBI & MCA Guidelines for Overseas Firms
• Establishing an LLP in India: Process & Compliance for Foreign Nationals
• GST, Corporate Tax & Other Taxes for Foreign Businesses Operating in India

For more information visit the authorized government portals of India such as MCA (mca.gov.in), RBI (rbi.org.in), and SEBI (sebi.gov.in).