By Manu Rao | Updated March 2026
At a Glance
| Indian Diaspora | 2.9 million |
| FDI Route | Automatic route for most sectors |
| DTAA | 5% dividend withholding |
| Document Authentication | Embassy attestation (non-Hague) |
| Realistic Timeline | 6-8 Weeks |
| Currency | MYR |
Why Malaysian Investors Are Setting Up in India
Malaysia and India share more than trade numbers. They share people.
Nearly 2.9 million Persons of Indian Origin live in Malaysia, making up about 7-9% of the country's population. About 80% of them are Tamil. Many maintain property, family businesses, and financial ties in India. For this community, registering an Indian company is not entering a foreign market. It is formalizing a connection that already exists.
The commercial case is strong too. Bilateral trade reached $19.86 billion in FY 2024-25. India's exports to Malaysia grew 20.4% year-on-year in calendar year 2024. India has been Malaysia's largest palm oil buyer for 11 consecutive years, importing 3.03 million tonnes in 2024 alone — 17.9% of total Malaysian palm oil exports.
The relationship deepened in August 2024 when PM Anwar Ibrahim visited New Delhi and both countries elevated ties to a Comprehensive Strategic Partnership. A Malaysia-India Digital Council was formalized in January 2025 to promote digital trade and talent mobility. The semiconductor and electronics sectors — where Malaysia is a global hub — are a focus area.
Malaysian companies like Petronas (oil and gas), Sime Darby (palm oil, automotive), CIMB (banking), and Axiata (telecom) already have a footprint in India. Cumulative Malaysian FDI in India stands at $1.27 billion since April 2000 per DPIIT data. The actual number is likely higher, as some investments route through Singapore.
Two trade agreements — the ASEAN-India FTA (AIFTA) and the Malaysia-India CECA — give Malaysian businesses preferential tariff access to the Indian market. If you sell goods to India or source from India, these agreements affect your bottom line directly.
Choose Your Entity Type
Your entity choice affects everything from tax rates to annual filings. Here is the comparison:
| Feature | Private Limited Company | LLP | Branch Office | Liaison Office |
|---|---|---|---|---|
| FDI Route | Automatic (most sectors) | Automatic (some sectors) | RBI approval | RBI approval |
| Minimum Directors/Partners | 2 directors, 1 must be Indian resident | 2 partners, 1 must be Indian resident | Authorized representative | Authorized representative |
| Residency Rule | Director: 120+ days in India in preceding calendar year | Partner: 120+ days in India in preceding calendar year | N/A | N/A |
| Annual Audit | Yes, mandatory | If turnover exceeds Rs 40 lakh or contribution exceeds Rs 25 lakh | Yes | Yes |
| Compliance Load | High | Moderate | Moderate | Low |
| Can Raise External Equity | Yes | No | No | No |
For Malaysian investors planning active business operations in India, a Private Limited Company is the standard choice. It offers the most flexibility for equity investment, future fundraising, and profit repatriation.
If you are a Malaysian Indian looking to formalize a family business or property holding in India, a Private Limited Company also works well. It gives you a clean legal entity separate from personal holdings.
One note on the Malaysian side: Malaysia's Sdn Bhd (Sendirian Berhad) structure is conceptually similar to an Indian Private Limited Company, so Malaysian business owners will find the framework familiar. The key difference is India's mandatory annual statutory audit, which Malaysia does not require for smaller private companies.
FDI Route and Sector Rules
Good news: most sectors are open to 100% Malaysian FDI through the automatic route. No government approval required.
Sectors open under automatic route include IT, manufacturing, healthcare, e-commerce (marketplace model), financial services, food processing, construction development, and infrastructure. These cover the areas where Malaysian investment in India is most active.
Government approval sectors: defence above 74%, media and broadcasting, multi-brand retail, and a handful of others under DPIIT's Consolidated FDI Policy.
Prohibited sectors: atomic energy, lottery, gambling, chit funds, Nidhi companies, trading in TDRs, and real estate business. Same for all foreign investors regardless of nationality.
Press Note 3 of 2020 does NOT apply to Malaysian investors. Malaysia does not share a land border with India. Your investment comes through the automatic route without any additional government approval layer.
Malaysian FDI in India flows mainly into palm oil processing, oil and gas (Petronas), banking and financial services (CIMB), telecommunications (Axiata), electronics, and real estate development. With the new Comprehensive Strategic Partnership, expect increased flows into semiconductors, digital infrastructure, and green energy.
Step-by-Step Registration Process
Choose Your Entity Type and State Decide on Private Limited, LLP, Branch, or Liaison. Pick your registration state. Tamil Nadu is a natural choice given the Tamil diaspora connection. Maharashtra, Karnataka, and Delhi are also popular.
Obtain a Digital Signature Certificate (DSC) Each proposed director needs a DSC. Foreign nationals need their passport and a video verification call. Takes 1-3 days.
Apply for Director Identification Number (DIN) DIN is part of SPICe+ now. No separate application. Bundled into incorporation.
Reserve Your Company Name MCA's RUN service gives you two name choices per application. Approval takes 1-4 working days. Avoid names that sound like existing companies on the MCA registry.
Prepare and Notarize Documents Prepare MOA, AOA, director declarations under Section 152, and registered office proof. Malaysian directors get documents notarized by a Commissioner for Oaths or Notary Public in Malaysia.
Consular Legalization (NOT Apostille) This is where Malaysia differs from many other countries. Malaysia is NOT a member of the Hague Apostille Convention. You cannot simply apostille your documents.
Instead, you follow a three-step consular legalization process:
- Notarize — Get documents notarized by a Malaysian Notary Public or Commissioner for Oaths.
- Wisma Putra — Authenticate at the Malaysian Ministry of Foreign Affairs (Wisma Putra).
- Indian High Commission — Get attestation from the High Commission of India in Kuala Lumpur.
Timeline: notarization takes 1-3 days, Wisma Putra takes 3-7 business days, and the Indian High Commission takes 5-10 business days. Total: roughly 2-3 weeks. Third-party agents in KL can handle the running around.
This is slower than the apostille route available in countries like the US, UK, or Singapore. Plan for it.
Receive Certificate of Incorporation MCA issues the certificate with PAN and TAN. Your company is now a legal entity.
Document Checklist and Authentication
- Passport copy (all pages, notarized in Malaysia)
- 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)
- MOA and AOA (drafted and notarized)
- Director declarations (INC-9)
- Proof of registered office in India (lease agreement or utility bill)
Remember: all Malaysian documents go through the three-step process — notary, Wisma Putra, Indian High Commission. Not apostille. Malaysia's ICACs (Indian Consular Application Centres) in Penang, Ipoh, Melaka, Johor Bahru, and Kota Kinabalu handle visa and passport services but NOT document attestation for company registration. That goes through the High Commission in KL directly.
India-Malaysia DTAA: Tax Rates at a Glance
The India-Malaysia DTAA was revised on May 9, 2012, replacing the original 1970 agreement. It took effect in India from April 1, 2013. The revised treaty aligns with OECD standards and addresses modern commerce including digital services.
| Income Type | Without DTAA | With India-Malaysia DTAA |
|---|---|---|
| Dividends | 20% | 5% |
| Interest | 20% | 10% |
| Royalties | 20% | 10% |
| Fees for Technical Services | 20% | 10% |
That 5% dividend rate deserves attention. It is one of the lowest in India's entire DTAA network. Compare it: USA charges 15-25%, UK charges 10-15%, even Singapore is 10%. Malaysia gets 5% flat.
Why this matters in practice: Malaysia switched to a single-tier tax system in 2008. Dividends received by Malaysian residents are generally not taxed again at the shareholder level in Malaysia. So a Malaysian investor in an Indian company pays 5% withholding in India and nothing further in Malaysia. That is an effective dividend tax rate of 5% total. Hard to beat.
Covered taxes under the treaty — in India: Income Tax and Surcharge on Income Tax. In Malaysia: Income Tax and Petroleum Income Tax.
Surcharge and health and education cess are not added on top of treaty rates. This is an actual financial advantage over domestic rates where surcharge can push the effective rate above 20%.
To claim treaty benefits, obtain a Tax Residency Certificate (TRC) from Malaysia's Inland Revenue Board (Lembaga Hasil Dalam Negeri, or LHDN). Apply before your Indian tax filing deadline.
Realistic Timeline: 6-8 Weeks
Here is what actually happens, step by step:
- DSC + DIN: 1-3 days
- Name reservation: 1-4 working days
- Document preparation and consular legalization: 2-3 weeks (the bottleneck)
- SPICe+ filing to Certificate of Incorporation: 5-15 working days
- Bank account opening: 2-4 weeks (extra KYC for foreign-owned companies)
- GST registration: 1-3 weeks
Total realistic timeline: 6-8 weeks from start to operational bank account. The consular legalization step takes longer than apostille would — plan for it. Malaysia and India share a similar time zone (only 2.5 hours apart), which helps with back-and-forth communication during the process.
Post-Registration Compliance
Your annual obligations after incorporation:
- Within 30 days of share allotment: File FC-GPR with RBI through your Authorized Dealer bank. This is non-negotiable under FEMA.
- Board meetings: Minimum 4 per year. Not more than 120 days between meetings.
- AGM: By September 30 annually.
- AOC-4: Within 30 days of AGM (financial statements).
- MGT-7: Within 60 days of AGM (annual return).
- Statutory audit: Mandatory every year. No exceptions.
- Income tax return: Due October 31 for audited companies.
- GST returns: Monthly GSTR-3B and GSTR-1. Quarterly option below Rs 5 crore turnover.
- Transfer pricing: If your Indian entity transacts with a Malaysian parent or affiliate, maintain documentation under Section 92D of the Income Tax Act.
Malaysian business owners familiar with the Companies Commission of Malaysia (SSM) filings will find India's compliance calendar more demanding. India requires more frequent filings and a mandatory audit regardless of company size.
Bank Account Opening
Budget 2-4 weeks for this step. Indian banks run extra KYC on foreign-owned companies. You will need the Certificate of Incorporation, PAN card, board resolution authorizing the account, KYC documents for all signatories, and FATCA/CRS self-certification.
Private banks — HDFC, ICICI, Kotak — generally process faster than public sector banks for foreign-owned entities. At least one director typically needs to visit the branch in person for the initial account opening.
Malaysian ringgit (MYR) is freely convertible. Fund transfers from Malaysian banks to Indian company accounts are straightforward through standard banking channels. No special settlement mechanism is required (unlike Russia). Bank Negara Malaysia's liberal FX policy means Malaysian residents without domestic ringgit borrowing face no limits on outward investment.
Profit Repatriation
The process for sending profits back to Malaysia: TDS deduction at DTAA rates (5% on dividends, 10% on interest/royalties/FTS), Form 16A issuance, CA certificate in Form 15CB, Form 15CA filed online, and then your AD bank processes the wire transfer to Malaysia.
The 5% dividend withholding rate is your best friend here. Combined with Malaysia's single-tier system that does not tax dividends again at the shareholder level, the total tax on dividend repatriation is just 5%. Structure your profit distribution around dividends to maximize this advantage.
For royalties and management fees, the rate is 10% under the treaty. Still lower than the 20%+ domestic rate. Make sure your transfer pricing documentation supports the arm's length nature of any intercompany payments.
Exit Strategy
Strike-off under Section 248: For dormant companies with no assets, liabilities, or business activity for two preceding financial years. Apply to the Registrar of Companies. Public notice, 30-day objection period, then strike-off.
Voluntary liquidation under IBC Section 59: For active companies wanting a clean wind-down. Special resolution, insolvency professional appointed as liquidator, structured process taking 6-12 months.
Know your exit before you enter. Neither option is fast, but both are well-defined under Indian law.
How Beacon Filing Helps
We handle the complete India entry process for investors based in Malaysia. 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 Singapore
- Register a Company in India from Kingdom of Thailand
- Register a Company in India from Indonesia
- Register a Company in India from Philippines
Get in Touch
Setting up an Indian company from Malaysia? 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
Frequently Asked Questions
- Non-Hague country: Malaysia is NOT a Hague Apostille Convention member. Documents need consular legalization (notary → Wisma Putra → Indian High Commission), not apostille.
- 5% dividend rate: One of the lowest in India's DTAA network. Combined with Malaysia's single-tier tax system, total effective dividend tax is 5%.
- ASEAN-India FTA: Eliminates tariffs on 75% of goods traded. Additional preferences under Malaysia-India CECA.
- Comprehensive Strategic Partnership: Elevated in August 2024. Covers digital cooperation, semiconductors, green energy, and defense.
- Malaysia-India Digital Council: Formalized January 2025 for digital trade and talent mobility.
- Bank Negara liberal FX policy: Malaysian residents without domestic ringgit borrowing can invest unlimited amounts abroad.
Indian Embassy / Consulates
High Commission of India, Kuala Lumpur. Indian Consular Application Centres in Penang, Ipoh, Melaka, Johor Bahru, and Kota Kinabalu.
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