Foreign companies and foreign nationals in India

1. How a foreign enterprise operates in India

• As an Indian company: a wholly owned subsidiary or a joint venture incorporated under the Companies Act, 2013, with foreign equity under the FDI rules. Legally it is an Indian company, not a foreign company.
• Without incorporating, through a branch office, liaison office or project office, governed by the Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016. Applications go through an authorised dealer bank, with RBI or Government approval in specified cases (sensitive sectors such as defence and telecom, and applicants from countries sharing a land border with India).
  • A liaison office may only represent the parent, promote exports and imports, facilitate technical and financial collaboration, and act as a channel of communication. It cannot carry on commercial activity or earn income in India; its expenses are met by remittances from abroad.
  • A branch office may export and import goods, render professional or consultancy services, carry out research, provide IT and technical support, and represent the parent, but generally may not manufacture or carry on retail trade.
  • A project office is set up to execute a specific contract in India.

Branch, liaison and project offices are places of business of a foreign company, so they bring it within the Companies Act.

2. Definition: section 2(42)

A foreign company is any company or body corporate incorporated outside India which (a) has a place of business in India, whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner. The reference to electronic mode brings foreign online businesses with an Indian place of business within the definition.

3. Chapter XXII: companies incorporated outside India

• Section 379: the Chapter applies to foreign companies. Where not less than 50 per cent of the paid-up share capital of a foreign company is held by citizens of India or companies incorporated in India, the company must also comply with prescribed provisions as if it were an Indian company.
• Section 380: within 30 days of establishing a place of business in India, it must deliver to the Registrar a certified copy of its charter or memorandum and articles (with an English translation), the address of its principal office abroad, a list of directors and secretary, the name and address of a person resident in India authorised to accept service, the address of its principal place of business in India, and particulars of opening and closing of a place of business. Changes must be reported.
• Section 381: it must prepare every financial year a balance sheet and profit and loss account as prescribed, with the documents required, and file them with the Registrar.
• Section 382: it must display its name and country of incorporation outside every office or place of business in India, and state them on its business letters, bill-heads and notices, with notice of limited liability where applicable.
• Section 383: service on the foreign company is effected on the person authorised to accept it.
• Section 384: provisions on debentures, annual return, registration of charges, and books of account and their inspection apply to foreign companies.
• Sections 387 to 391: prospectus requirements for offers of securities in India, Indian Depository Receipts (section 390), and the application of the provisions on fraudulent prospectuses and on winding up (Chapter XX) (section 391).
• Section 392: penalties on the company and its officers in default for contravention.
• Section 393: failure to comply does not affect the validity of contracts entered into by the company, but it cannot sue in India on such contracts until it complies.

The details are in the Companies (Registration of Foreign Companies) Rules, 2014. A foreign company is also subject to FEMA, tax (a permanent establishment in India is taxed on attributable income), and sectoral law.

4. Foreign nationals: constitutional position

A foreigner is a person who is not a citizen of India (Immigration and Foreigners Act, 2025, section 2). Some fundamental rights are given to all persons: equality before law (Article 14), protection in respect of conviction (Article 20), life and personal liberty (Article 21), protection against arbitrary arrest (Article 22, except enemy aliens), and freedom of religion (Article 25). Others are given only to citizens: Articles 15, 16, 19 and 29.

• Hans Muller of Nurenburg v. Superintendent, Presidency Jail, Calcutta, 1955 INSC 7, AIR 1955 SC 367: the Court upheld the provisions of the Preventive Detention Act and the Foreigners Act, 1946 authorising detention with a view to expulsion. The Foreigners Act gives the executive an unrestricted right to expel a foreigner; expulsion is distinct from extradition, which needs a formal procedure.
• Louis De Raedt v. Union of India, 1991 INSC 161, (1991) 3 SCC 554: foreign missionaries who had lived in India for decades had no right to reside and settle here; that right under Article 19(1)(e) belongs to citizens. A foreigner's fundamental right is confined to Article 21, and the power to expel is absolute and unlimited, subject only to a fair procedure.

5. The Immigration and Foreigners Act, 2025

Act 13 of 2025, in force from 1 September 2025, consolidates the law. Section 36 repeals the Passport (Entry into India) Act, 1920, the Registration of Foreigners Act, 1939, the Foreigners Act, 1946 and the Immigration (Carriers' Liability) Act, 2000, while saving action taken under them.

• Section 3: a person entering or leaving India must hold a valid passport or other travel document, and a foreigner a valid visa, unless exempted.
• Section 5: the Bureau of Immigration.
• Section 6: registration of foreigners with the Registration Officer on arrival, as prescribed.
• Section 7: the Central Government may issue orders regulating the entry, stay, movement and departure of foreigners.
• Sections 8 to 10: hotels and other keepers of accommodation, universities and educational institutions, and hospitals must report particulars of foreigners.
• Section 16: burden of proof that a person is not a foreigner lies on that person, continuing the rule of the 1946 Act.
• Sections 17 to 19: obligations and liability of carriers; sections 20 to 26: offences and penalties, including entry without a valid passport (section 21) and use of forged documents (section 22); section 29: power of removal.

6. Foreign nationals in business

A foreign national may work in India on an employment or business visa, may be a director of an Indian company (holding a Director Identification Number), and may invest under the FDI rules. Every company must have at least one director resident in India for a total of not less than 182 days during the financial year (Companies Act, 2013, section 149(3)). A foreign national resident outside India generally cannot acquire immovable property in India except by inheritance or on lease up to five years, and citizens of certain neighbouring countries need prior approval even when resident in India. Overseas Citizens of India are treated largely on par with NRIs for investment.

How this is examined

For “foreign companies” or “regulation of foreign companies”: definition (section 2(42)), the modes of doing business, then sections 379 to 393 in order, especially registration within 30 days (section 380), accounts, display of name, service, and the effect of non-compliance (section 393), and a line on the FEMA office regulations. For foreign nationals: constitutional rights with Hans Muller and Louis De Raedt, and the 2025 Act.