How to Set Up a Company in India (2026): Registration, Costs & the EOR Alternative
Foreign companies can hire and operate in India in two very different ways: set up your own legal entity (full control, 4–6 months) or use an Employer of Record (EOR) to be live in 24–48 hours with no entity at all. This guide explains both, the real steps and costs of company registration in India in 2026, and how to choose.
Two routes to operating in India
| Set up your own entity | Employer of Record (EOR) | |
|---|---|---|
| Time to first hire | 4–6 months | 24–48 hours |
| Upfront work | Incorporation, PAN/TAN, GST, PF & ESIC registration, bank account, compliance setup | None — you hire, the EOR is the legal employer |
| Ongoing | In-house payroll, statutory filings, audits, annual ROC compliance | Bundled into one monthly EOR fee |
| Best when | Permanent India base, larger long-term headcount, IP/R&D centre | Testing the market, speed-critical hiring, smaller teams, GCC ramp-up |
Many companies start with an EOR to hire immediately, then incorporate their own entity once the India operation is proven. See our Employer of Record (EOR) in India service and the India Hiring Cost Index 2026 for the full cost picture.
How to set up a company in India (step by step)
The most common structure for a foreign parent is a Private Limited Company (a wholly-owned subsidiary). The typical sequence:
1. Choose the structure
Private Limited subsidiary (most common), or a Branch / Liaison / Project Office (more restrictive, RBI-approved). Most operating businesses choose Private Limited.
2. Get digital signatures & director IDs
Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for the proposed directors. At least one director must be resident in India.
3. Reserve the name & incorporate
Name reservation and incorporation are filed through the MCA’s SPICe+ form, which also bundles PAN, TAN, EPFO, ESIC and (in most states) GST and a bank account opening.
4. Register for tax & payroll compliance
PAN and TAN (tax), GST (if applicable), and the labour registrations — EPF (Provident Fund), ESIC (state insurance), and state-specific Professional Tax and Labour Welfare Fund where applicable.
5. Open a bank account & fund the entity
Open the corporate bank account and bring in share capital through proper FDI / FEMA-compliant channels, with the required RBI filings.
6. Stay compliant
Ongoing monthly payroll & statutory filings, annual ROC returns, statutory audit, and board compliance. This is where most foreign companies underestimate the workload.
What it really costs (2026)
Incorporation itself is relatively inexpensive; the real cost is time and ongoing compliance. On top of gross salaries, an Indian employer typically adds roughly 15–25% in statutory contributions (EPF, ESIC, gratuity accrual, bonus) before admin. Under India’s 2026 wage code, basic pay must be at least 50% of CTC, which raises the PF and gratuity base for allowance-heavy salary structures. Full breakdown: India Hiring Cost Index 2026.
Indicative ranges for guidance only. Verify current statutory rates and wage ceilings before budgeting; TMS will provide a costed estimate for your specific roles and states.
Do you actually need an entity?
If your near-term goal is to hire a few people quickly — a sales lead, an engineering team, a Global Capability Centre (GCC) pilot — you usually do not need to incorporate first. An EOR lets you employ compliantly in India from week one, carry zero penalty risk, and incorporate later only when the long-term case is clear.
Talk to TMS — compliance-first EOR & staffing in India since 2006. We’ll tell you honestly whether an EOR or your own entity fits your plan, and give you a costed estimate.
Get a free India set-up consultation
Frequently asked questions
How long does it take to register a company in India?
Incorporation can be a few weeks, but reaching a fully operational, payroll-compliant entity typically takes 4–6 months. An EOR removes this wait entirely (24–48 hours).
Can a foreign national own 100% of an Indian company?
In most sectors, yes — 100% FDI is permitted under the automatic route for a Private Limited subsidiary. A few sectors have caps or need approval. At least one director must be India-resident.
What’s the difference between an EOR and setting up an entity?
With an EOR, a licensed local employer hires your staff on your behalf — no entity, no setup, live in days. With your own entity, you are the employer and carry all registration and compliance directly. Compare EOR in India →