Register a Company in India from China

By Manu Rao | Updated March 2026

At a Glance

Why Chinese Investors Are Looking at India

The numbers are hard to ignore. India-China bilateral trade crossed $155.6 billion in calendar year 2025, a 12% jump from the previous year. That makes China one of India's top two trading partners. India imported $111 billion worth of Chinese goods in FY 2024-25 alone, per DGCIS data.

Chinese companies have already built deep roots in India's consumer economy. Xiaomi, Vivo, OPPO, OnePlus, and Realme together hold roughly 75% of India's smartphone market. BYD and MG Motor (SAIC) are pushing into the electric vehicle space. China supplies about 70% of India's Active Pharmaceutical Ingredients.

But here is the catch. Since April 2020, all Chinese FDI into India requires mandatory government approval under Press Note 3 of the DPIIT's Consolidated FDI Policy. No exceptions for automatic route sectors. No fast-track lane. Every single investment proposal from China goes through a screening committee.

On March 10, 2026, the Union Cabinet amended Press Note 3 to create a narrow opening. Global investors with up to 10% Chinese shareholding can now use the automatic route. But Chinese entities themselves? Still government approval only. We will break this down in detail below.

The Indian diaspora in China is small compared to other countries. Before COVID, roughly 35,000 to 48,000 Indians lived in mainland China, concentrated in Guangzhou, Shanghai, and Beijing. About 23,000 Indian students studied at Chinese medical universities in 2019. Hong Kong hosts a separate long-standing Indian community of 30,000 to 50,000.

No bilateral FTA or CEPA exists between India and China. India withdrew from RCEP in November 2019 over concerns about Chinese goods flooding the market. The only trade framework is the Asia-Pacific Trade Agreement (APTA), which offers limited tariff concessions on select products.

Choose Your Entity Type

The entity you pick determines your compliance burden, FDI approval path, and tax structure. For Chinese investors, this choice carries extra weight because of Press Note 3.

A Private Limited Company remains the most practical choice for Chinese investors planning to manufacture or sell in India. It allows equity investment, cleaner FDI compliance, and a structure that Indian regulators are comfortable with.

LLPs face the same government approval requirement under Press Note 3, plus additional sector restrictions under DPIIT policy for foreign-invested LLPs. The compliance is lighter, but the approval path is not.

Branch and Liaison offices need both RBI approval and government screening. A Liaison office cannot earn revenue in India; it can only act as a communication channel. A Branch office can earn revenue but faces higher scrutiny from RBI for Chinese applicants.

FDI Route and Sector Rules: Press Note 3 Explained

This section matters more for China than for any other country. Every Chinese investor must understand Press Note 3 before spending a single rupee on India plans.

What Is Press Note 3 of 2020?

On April 17, 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) amended India's FDI policy. The amendment stated that any entity from a country sharing a land border with India, or where the beneficial owner is a citizen of such a country, must obtain prior government approval before investing in India. This applies regardless of the sector and regardless of whether the sector is on the automatic route for other countries.

The seven countries affected are China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan. In practice, the rule was designed primarily with China in mind, coming weeks after the Galwan Valley military standoff.

What Does Government Approval Mean?

Your investment proposal goes to the relevant administrative ministry, which forwards it to DPIIT for inter-ministerial screening. The screening committee includes representatives from the Ministry of Home Affairs, Ministry of External Affairs, and the concerned sector ministry. There is no fixed timeline for approval, though the government has recently introduced a 60-day target for manufacturing proposals.

March 2026 Amendment: The 10% Carve-Out

On March 10, 2026, the Union Cabinet introduced a partial relaxation. Here is what changed:

• Global investors with up to 10% Chinese shareholding can now invest through the automatic route, subject to sectoral caps. So a multinational fund with, say, 8% Chinese limited partners does not need government approval anymore.
• Chinese entities themselves still require government approval. The government clarified on March 11, 2026, that this relaxation is not meant for Chinese companies. It targets global funds and multinationals with minor Chinese ownership stakes.
• Majority ownership and control of the Indian investee company must remain with resident Indian citizens or Indian-owned entities at all times.
• 60-day processing timeline for proposals in manufacturing segments: capital goods, electronic components, polysilicon, and ingot-wafer production.

This is a meaningful change for global VCs and PE funds that had Chinese LPs. Before March 2026, even a 1% Chinese stake triggered the government approval requirement.

Transfer of Ownership Rule

Press Note 3 also covers transfers. If an existing Indian company is transferring ownership from a non-border-country investor to a Chinese beneficial owner, that transfer requires government approval too. This means secondary market transactions involving Chinese buyers need the same screening.

Hong Kong and Macau

Entities registered in Hong Kong and Macau are treated the same as mainland Chinese entities under Press Note 3. There is no separate carve-out for Hong Kong or Macau companies.

Sector-Specific Patterns

Where are Chinese companies actually investing? Per DPIIT data, the top sectors include smartphones and consumer electronics (Xiaomi, Vivo, OPPO hold 75% of the market), automobile components and EVs (BYD, MG Motor), electronics manufacturing, technology startups (Alibaba invested in Paytm, BigBasket, Zomato before the restrictions tightened), and pharmaceutical ingredients.

Prohibited sectors remain the same regardless of nationality: atomic energy, lottery, gambling and betting, chit funds, Nidhi companies, trading in transferable development rights, and real estate business (not construction development).

Step-by-Step Registration Process

Prepare: a detailed business plan, source of funds documentation, beneficial ownership declaration, and details of any indirect Chinese ownership in the investing entity.

Submit documents to the Ministry of Foreign Affairs in Beijing or provincial foreign affairs offices. Timeline: 3-7 working days. For Hong Kong documents, the High Court Registrar handles apostilles.

Required documents: passport copies (notarized), address proof, board resolution, MOA and AOA, director declarations under Section 152 of the Companies Act 2013.

Document Checklist and Authentication

• Passport copy (all pages, notarized by Chinese notary public)
• Address proof (utility bill or bank statement, less than 2 months old, notarized)
• Passport-size photographs
• Bank reference letter or last 6 months' bank statements
• Board resolution or authorization letter (if corporate shareholder — in Chinese with certified English translation)
• MOA and AOA (drafted and notarized)
• Director declarations (INC-9)
• Proof of registered office in India (lease agreement or utility bill)
• Press Note 3 government approval letter
• Beneficial ownership declaration

All documents from mainland China must be apostilled by the Ministry of Foreign Affairs or a provincial foreign affairs office. This became possible only after November 7, 2023, when the Apostille Convention entered into force for China.

For Hong Kong documents, the High Court Registrar issues apostilles. For Macau, the Identification Services Bureau handles it.

Documents in Chinese must be accompanied by a certified English translation. MCA does not accept submissions in Chinese.

India-China DTAA: Tax Rates at a Glance

The India-China Double Taxation Avoidance Agreement was signed in 1994 and amended by protocol in 2018. Here are the withholding rates:

The India-China DTAA offers a clean, uniform 10% rate across all categories. That is a 50% reduction from the default 20% domestic rate for non-residents under the Income Tax Act.

Key details worth knowing. First, the treaty does not have a "make available" clause for fees for technical services. This means all FTS payments to Chinese entities are taxable at 10% in India, regardless of whether technical knowledge is transferred to the Indian recipient. Compare this with the India-US treaty where the "make available" test can exempt certain services entirely.

Second, interest or dividend income earned by the government of the other country, or by the Reserve Bank of India or the People's Bank of China, is exempt from taxation in the source country.

Third, surcharge and health and education cess are not levied on top of treaty rates. At domestic rates, surcharge can push the effective rate above 20%. Treaty rates cap it at a flat 10%.

To claim treaty benefits, you need a Tax Residency Certificate (TRC) from the Chinese tax authority (State Taxation Administration). Without this certificate, Indian tax authorities will apply domestic rates.

Realistic Timeline: 8-12 Weeks, Not 7 Days

For Chinese investors, the timeline is longer than for most other nationalities. The government approval step under Press Note 3 adds weeks to the process.

• DSC + DIN: 1-3 days
• Name reservation: 1-4 working days
• Government approval under Press Note 3: 4-12 weeks (60-day target for manufacturing, no fixed timeline for other sectors)
• Document preparation and apostille in China: 1-2 weeks
• SPICe+ filing to Certificate of Incorporation: 5-15 working days
• Bank account opening: 3-5 weeks (enhanced KYC for Chinese-owned companies)
• GST registration: 1-3 weeks

Total realistic timeline: 8-12 weeks minimum. Budget 14 weeks if the government approval process runs into queries. The timezone difference between China (UTC+8) and India (UTC+5:30) is only 2.5 hours, which actually helps with real-time coordination.

Anyone promising "register in 7-15 days" for a Chinese investor is either lying about Press Note 3 or excluding half the process.

Post-Registration Compliance Calendar

Once incorporated, here is what hits your compliance desk every year:

• Within 30 days of share allotment: File FC-GPR (Foreign Currency Gross Provisional Return) with RBI through your Authorized Dealer bank. This is mandatory under FEMA. Miss the deadline and you risk compounding penalties.
• Board meetings: Minimum 4 per year for Private Limited companies. No more than 120 days between consecutive meetings.
• AGM: By September 30 each year.
• AOC-4: File within 30 days of AGM (financial statements to MCA).
• MGT-7: File within 60 days of AGM (annual return to MCA).
• Statutory audit: Mandatory every year. No exceptions for any company with foreign shareholders.
• Income tax return: Due by October 31 for companies that require audit (all foreign-owned companies do).
• GST returns: Monthly GSTR-3B and GSTR-1 if GST registered. Quarterly option available below Rs 5 crore turnover.
• Transfer pricing: If your Indian subsidiary transacts with the Chinese parent, you must maintain transfer pricing documentation under Section 92D of the Income Tax Act. Indian tax authorities are aggressive on transfer pricing for India-China transactions. Keep your arm's length pricing documentation thorough.
• Annual compliance certificate: Chinese-owned companies face additional scrutiny. Be prepared for queries from ED, income tax, and customs authorities.

Bank Account Opening: Expect Extra Scrutiny

Opening a current account for a Chinese-owned Indian company takes 3-5 weeks. This is longer than the 2-4 weeks for most other foreign investors.

Banks run enhanced KYC checks on companies with Chinese directors or shareholders. You will need FATCA/CRS declarations, Authorized Dealer bank verification, and beneficial ownership documentation that traces back to the ultimate Chinese shareholder.

Private banks like HDFC, ICICI, and Kotak are generally smoother for foreign-owned companies than public sector banks. But even private banks add extra compliance layers for Chinese-owned entities.

Post-opening, your Authorized Dealer bank will monitor all inward and outward remittances under FEMA regulations. Expect questions about every large transaction.

Profit Repatriation

Getting money out of India to China follows the standard FEMA process, but with the extra layer of Press Note 3 compliance verification.

Methods include dividends, royalties, management fees, and share buyback. For each outward remittance, the process runs as follows: TDS deduction at DTAA rates (10% for Chinese entities), issuance of Form 16A, obtain a CA certificate in Form 15CB, file Form 15CA on the Income Tax portal, and take these documents to your Authorized Dealer bank.

Dividend Distribution Tax was abolished in April 2020. Chinese shareholders now pay tax on dividends at the DTAA rate of 10%.

One practical note. Chinese companies that have faced ED or customs investigations may experience delays in repatriation. Banks and the RBI cross-reference ongoing regulatory actions before processing large outward remittances. Keep your compliance record clean.

Exit Strategy: What Nobody Tells You Upfront

If your India venture does not work out, you have two paths. Neither is quick.

Strike-off under Section 248 of the Companies Act, 2013: This works for dormant companies with no assets or liabilities. The company must not have conducted business for the two preceding financial years. You apply to the Registrar of Companies, who publishes a public notice, waits 30 days for objections, then strikes off the name. For Chinese-owned companies, the RoC may take additional time to verify Press Note 3 compliance history.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016: For active companies wanting a clean wind-down. Requires a special resolution, appointment of an insolvency professional as liquidator, and a structured process taking 6-12 months.

In both cases, final repatriation of capital to China requires RBI and FEMA clearance. Budget extra time for the bureaucratic tail end.

How Beacon Filing Helps

We handle the complete India entry process for investors based in People's Republic of China. From initial structuring through post-incorporation compliance, here is what we cover:

• Foreign Direct Investment advisory — route selection, sector analysis, RBI compliance, and FC-GPR filing
• Resident Director services — appointment of a qualified Indian resident director who meets the 120-day requirement
• Company setup and incorporation — SPICe+ filing, DSC, DIN, name reservation, and Certificate of Incorporation
• Tax and DTAA advisory — treaty benefit structuring, transfer pricing documentation, and annual compliance
• Accounting and statutory audit — bookkeeping, financial statements, ROC filings, and GST returns

Related Country Guides

Setting up from a different country? These guides cover similar territory:

• Register a Company in India from Hong Kong
• Register a Company in India from Singapore
• Register a Company in India from United States of America

Get in Touch

Setting up an Indian company from People's Republic of China? Talk to us. No commitment, no generic sales pitch. We will walk you through the structure, timeline, and costs specific to your situation.

WhatsApp: +91 874 501 3644 | Email: hello@beaconfiling.com