Doing Business with India: A Legal Guide for UAE Companies
India Opportunity for UAE Businesses
India offers a vast consumer base, competitive costs, and deep technical talent. For UAE companies, proximity, strong bilateral ties, and logistics connectivity make India a compelling diversification and growth market. Success begins with choosing the correct entry route, complying with foreign investment rules, and maintaining clean, timely filings under Indian law.
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Market Entry Routes
Wholly-Owned Subsidiary (WOS) or Joint Venture (JV)
An Indian private limited company is the most common vehicle. A WOS gives complete control where sector rules permit; a JV leverages a local partner’s licenses, distribution, or market knowledge.
Branch Office (BO), Liaison Office (LO), Project Office (PO)
These are extensions of the foreign company (not separate Indian companies) and operate under the Reserve Bank of India (RBI) framework. An LO cannot earn revenue; BO/PO have defined activity scopes. Choose these where limited, specific activities are planned.
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FDI Policy: Automatic vs Approval
India permits foreign direct investment (FDI) either under the Automatic Route (no prior approval; post-facto filings apply) or the Approval Route (prior government approval required). Many sectors allow up to 100% FDI under the automatic route; regulated sectors (e.g., certain financial services, defense-related activities, multi-brand retail) have caps and/or approval conditions. UAE investors should map their sector’s cap and route before deal structuring, and ensure pricing, valuation, and KYC comply with applicable rules.
- Who files: Typically the Indian investee company (or its advisor) completes filings on designated portals.
- What’s covered: Primary issuances, certain secondary transfers, and subsequent rounds—subject to FEMA rules.
- Deal hygiene: Build regulatory conditions precedent and timelines into term sheets and share purchase/subscription agreements.
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Incorporation via SPICe+
Pre-requisites
- Directors: Minimum two; at least one resident in India. Obtain DIN and Digital Signature Certificates (DSC).
- Name clearance: Ensure availability and compliance with naming guidelines.
- Charter documents: Draft MoA and AoA aligned with business objects and any sectoral conditions.
SPICe+ Flow
- Reserve name through SPICe+ Part A.
- Complete SPICe+ Part B (e-MoA INC-33, e-AoA INC-34, AGILE-PRO-S for tax/labour options) with required notarised/apostilled documents.
- Receive Certificate of Incorporation with CIN; PAN/TAN are typically allotted simultaneously.
Timeline depends on document readiness and any sector-specific pre-conditions.
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Post-Incorporation Compliance
- FDI Reporting: Report eligible foreign inflows within prescribed timelines (e.g., equity allotment reporting) under FEMA.
- Banking Setup: Open current account with an AD Category-I bank; ensure inward remittances follow permitted modes.
- GST Registration: Obtain registration when thresholds/business model require; enable e-invoicing where applicable.
- IEC for trade: Apply for Importer-Exporter Code on the DGFT portal if you’ll import/export.
- Local registrations: Shops & Establishments and applicable state labour registrations; sectoral licenses where relevant.
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Tax, GST & Permanent Establishment (PE)
Corporate Tax & Withholding
Effective tax exposure varies by vehicle (company vs branch) and available regimes. Cross-border payments (royalties, fees for technical services, interest) may attract withholding under Indian law, subject to treaty relief where applicable.
GST Essentials
GST applies to most supplies of goods/services in India. Compliance requires correct classification, registration, timely returns (e.g., GSTR-1/3B), and documentation discipline.
Permanent Establishment
Independent of incorporation, a non-resident can create a PE in India through a fixed place, dependent agent, or project/site meeting threshold tests—triggering Indian tax on attributable profits. Structure functions, people deployment, and contracting to manage PE risk.
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Contracts, IP & Data
- Governing law & dispute forum: Clear governing law (often Indian law) with robust arbitration clauses consistent with Indian arbitration norms.
- Commercial contracts: Tighten specifications, milestones, payment terms, warranties, and compliance undertakings.
- IP Protection: File trademarks early; consider design/patent filings where relevant; record licenses if required.
- Employment: Written contracts, compliant payroll, and attention to local labour requirements.
- Data: Implement privacy and data-security controls aligned with India’s data protection obligations.
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Banking, FX & FEMA Reporting
Use authorised dealer (AD Cat-I) banks for remittances. Adhere to pricing guidelines, valuation norms for share issues/transfers, and timely filings. Maintain statutory registers, share certificates, and board/shareholder approvals in proper order. For BO/LO/PO, operate strictly within permitted activity scope and reporting cadence.
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Practical Tips for UAE Firms
- Map sector rules early: Confirm caps, route (automatic/approval), and any licensing.
- Term sheets with compliance buffers: Include conditions precedent, representations, and timeline cushions for approvals/filings.
- Local execution: Engage experienced Indian counsel, tax advisors, and a reliable company secretary.
- Documentation hygiene: Keep KYC, board resolutions, and contracts in standard formats to reduce processing queries.
- Governance: Hold timely board/AGMs, file MCA returns, and maintain registers to avoid penalties.
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FAQs
Can a UAE company own 100% of an Indian subsidiary?
Yes—where sectoral caps permit and the investment falls under the automatic route. Regulated sectors may require approvals or have equity limits.
Is prior government approval required for UAE investors?
Not by virtue of being from the UAE alone. Approval depends on the sector and specific policy conditions applicable to the activity.
Do we need GST registration immediately?
Register when your turnover or business model requires it (and to claim input tax credit where relevant). Many companies register early for operational ease.
What’s the quickest way to enter India?
A WOS via SPICe+ is common for speed and control, provided sectoral rules permit. For limited activities, consider BO/LO subject to RBI rules.
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Suggested Reading (Internal)
- Doing Business in India: A Complete Legal & Compliance Guide for Foreign Companies (2025 Edition) — Pillar Post
- 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
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