Setting Up or Running a Business in India as an Australia-Based NRI — Done Right

The first decision an Australia-based NRI investor makes — the legal form the business will take — quietly shapes everything after: liability exposure, how easily you can raise outside capital later, the annual compliance burden, and how cleanly you can exit or repatriate profits back to an Australian bank account. Getting this right at the outset avoids a costly restructuring exercise later, which is far more common than first-time NRI entrepreneurs expect, and it also determines how the entity is treated for Australian tax purposes once it is operating — a question your Australian accountant needs answered early, not after incorporation.

For most Australia-based NRI-owned businesses, the realistic choice narrows to three structures — a Private Limited Company, a Limited Liability Partnership (LLP), or, in narrower circumstances, a Branch or Liaison Office of an Australian company you already run. Each suits a different investment goal.

A note on Branch and Liaison Offices: a Liaison Office cannot undertake commercial activity or earn local income — it exists purely for representation and market research — while a Branch Office may undertake a defined set of commercial activities but not manufacturing or retail trading directly, both requiring prior RBI/AD Category-I bank approval to establish. This route matters mainly to NRIs who already run a company in Australia wanting a limited Indian foothold; an NRI starting a genuinely new venture is almost always better served by a Private Limited Company or an LLP.

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Section 149(3) of the Companies Act, 2013 requires every company incorporated in India — regardless of whether every other director or shareholder is an NRI or foreign national living in Sydney, Melbourne, or anywhere else in Australia — to have at least one director who has stayed in India for a total period of not less than 182 days during the previous financial year. This single requirement surprises many first-time Australia-based NRI founders who assume an entirely overseas board is possible; it is not, and structuring around it correctly from day one avoids an incorporation held up at the last stage while you are managing the process from an AEST or AWST time zone.

• DSC & DIN: A Digital Signature Certificate and Director Identification Number are obtained for every proposed director, including you as the Australia-based NRI/OCI director.
• Appointing Your Resident Director: A trusted India-based family member, professional nominee director, or associate who meets the 182-day residency test is appointed, with the role and its limits documented in board resolutions and, where appropriate, a separate indemnity or nominee agreement to protect your control — see the dedicated section below on coordinating this appointment and its supporting Power of Attorney from Australia.
• Name Reservation & SPICe+ Incorporation: Company name approval and incorporation are filed through the MCA's SPICe+ integrated form, typically completed within 7–10 working days once documentation, DIN, and DSC are in place.
• Bank Account & FDI Reporting: Opening an Indian current account and, where foreign capital is infused from Australia, filing Form FC-GPR within the prescribed window after share allotment.
• Quarterly & Annual Board Compliance: Board meetings at prescribed intervals, an AGM within six months of financial year-end, and statutory registers maintained on an ongoing basis — meeting timings scheduled to allow your participation from Australia by video call where you wish to attend.
• Annual ROC Filings: AOC-4 (financial statements) and MGT-7/7A (annual return) filed within their statutory windows after the AGM, along with DIR-3 KYC for every director.
• Ongoing FEMA & Tax Coordination: The annual FLA return to the RBI where applicable, coordinated closely with your Indian Chartered Accountant for income tax and GST filings, and — separately — with your own Australian accountant on your ATO obligations.

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Setting up an Indian company is not only an India-law exercise. Once you hold a significant stake in an Indian Private Limited Company as an Australian tax resident, the structure can also attract attention on the Australian side — most notably under the Australian Taxation Office's Controlled Foreign Company (CFC) attribution rules. In broad terms, where a foreign company (your Indian Private Limited Company, for instance) is "controlled" by a small group of Australian residents — commonly where five or fewer Australian residents, together with their associates, hold a controlling interest — certain categories of the foreign company's income can be attributed back to you and taxed in Australia on an accruals basis, even before any dividend is actually paid out or repatriated to your Australian bank account.

Layered on top of this is the India-Australia Double Taxation Avoidance Agreement (DTAA), which is directly relevant once dividends or profits from your Indian company are eventually repatriated. The DTAA is designed to prevent the same income being taxed in full twice — Indian withholding tax paid on a dividend can generally be claimed as a credit against your corresponding Australian tax liability on that same income — but it does not remove the underlying Australian disclosure obligation, and it interacts with the CFC attribution rules in ways that depend heavily on your specific shareholding percentage, the company's income mix, and your personal Australian residency position.

Practically, this means the entity structuring conversation at the start of this page is not purely an Indian-law decision. Whether you hold your stake personally, whether other Australian-resident family members or associates will also hold shares (which affects whether the "five or fewer" CFC control test is met), and how dividends are timed can all matter to your Australian tax position. Raising this with your Australian accountant while the Indian company is still being structured — not after it is trading — is the difference between a clean position and a retrospective compliance headache on both sides.

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Not every Australia-based NRI client we advise is starting a new company. Many already hold a stake — 15%, 30%, sometimes an equal one-third — in a family business back home that a parent, sibling, or cousin runs day to day, while they have built a career and a life in Sydney, Melbourne, or Perth. This is one of the most common and least discussed corporate legal needs among Australia's Indian diaspora: not building something new, but making sure what you already own is properly documented and protected before informal family understandings quietly break down across the distance.

Family businesses in India are frequently run for years on trust rather than paper — no shareholder agreement, no clarity on who can allot new shares or draw what remuneration, no succession plan if a promoter passes away, and no agreed mechanism for an Australia-based NRI shareholder to exit or be bought out fairly if the relationship sours. None of this is a problem while everyone gets along; it becomes an expensive one the moment they don't, and being an ocean away makes it considerably harder to notice a problem developing until it has already escalated.

This is advisory, preventive work — putting protection in place before a dispute exists. If a dispute has already crystallised in a company you hold shares in — information being withheld, dividends stopped, a dilutive share allotment, or exclusion from the board — that is a litigation matter handled by our separate NCLT and shareholder dispute practice for NRIs, which represents minority shareholders before the National Company Law Tribunal. The two are deliberately different services: this page is about getting the paperwork and governance right early; that one is about fighting for your rights once things have already gone wrong.

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