Doing Business in India 2020

India as a Business and Investment Destination

India was among the world’s fastest-growing major economies, supported by structural reforms and increasing digitalisation across government and business processes.

The World Bank’s Doing Business 2020 report ranked India 63rd among 190 economies, reflecting a significant improvement in the country’s business environment. India recorded one of the largest improvements in the World Bank’s rankings over the preceding years, driven by reforms aimed at simplifying business processes and improving the ease of doing business.

India also improved its position in the United Nations E-Government Development Index, reflecting the increasing adoption of digital systems and online government services.

These developments contributed to India’s growing appeal for foreign investors, international companies, entrepreneurs and global business groups evaluating opportunities in India.

The opportunity in India is not only about entering a large market. It is about understanding how to establish, structure and operate a business effectively within the Indian regulatory and commercial environment.

Key Reforms Supporting Business in India

The Indian economy underwent several important legal, financial and institutional reforms. These changes were designed to improve transparency, simplify compliance, strengthen financial systems and create a more business-friendly environment.

Some of the significant reforms included:

1. Introduction of a Unified Indirect Tax System

The introduction of the Goods and Services Tax (GST) created a unified framework for indirect taxation across India. GST replaced several central and state indirect taxes and was intended to simplify the tax system and reduce the cascading effect of multiple taxes.

For businesses operating in India, understanding GST registration, input tax credit, invoicing, compliance and reporting requirements became an important part of financial and tax planning.

2. Insolvency and Bankruptcy Code

The Insolvency and Bankruptcy Code (IBC) introduced a structured framework for resolving insolvency and stressed assets within a defined process.

The reform aimed to improve the resolution of distressed businesses, strengthen credit discipline and facilitate more efficient recovery of capital within the financial system.

3. Foreign Investment Reforms

India progressively liberalised its framework for Foreign Direct Investment (FDI) across various sectors.

Alongside changes to foreign investment rules, greater emphasis was placed on creating a more predictable and transparent environment for overseas investors considering business in India.

For foreign companies, understanding applicable FDI rules, sector-specific conditions, ownership structures and regulatory approvals remained critical before investing or establishing an Indian presence.

4. Real Estate Regulation

The introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA) established a regulatory framework for the real estate sector.

RERA sought to improve transparency, accountability and regulatory oversight in a sector that had historically been fragmented and less organised.

5. Digitalisation of Government Processes

Government departments at both the central and state levels increasingly adopted online systems for registrations, filings, approvals, reporting and other compliance requirements.

The movement toward digital government interfaces helped reduce physical interaction and improve accessibility to several business and regulatory services.

For companies entering India, digital compliance systems became an increasingly important part of managing ongoing business obligations.

Establishing a Business in India

For an international company, entering the Indian market involves more than identifying a commercial opportunity.

Businesses need to evaluate a range of legal, tax, financial and operational considerations before establishing an Indian presence.

Depending on the business model and investment objectives, an overseas company may consider structures such as:

• Private Limited Company
• Public Limited Company
• Limited Liability Partnership (LLP)
• Branch Office
• Liaison Office
• Project Office

The appropriate structure can depend on factors such as foreign ownership, business activities, funding requirements, taxation, regulatory conditions and long-term expansion plans.

A well-considered market-entry structure can provide a stronger foundation for future growth and compliance.

Taxation and Regulatory Considerations

Businesses considering Invest in India opportunities also need to understand the country’s direct and indirect tax framework.

Key areas may include:

Corporate taxation – applicable tax rates, deductions and business-related tax obligations.

Personal taxation – relevant tax considerations for employees, expatriates, promoters and management.

Indirect taxation – GST registration, taxability, input tax credit and compliance.

Withholding tax – applicable tax deductions on certain payments, including cross-border transactions.

Regulatory compliance – company law, labour regulations, foreign exchange requirements and sector-specific rules.

These considerations can have a direct impact on the cost, structure and ongoing operations of a business in India.

Why Local Knowledge Matters

India offers substantial opportunities, but its business environment can also involve multiple layers of central and state-level regulations.

For international investors, decisions relating to company incorporation, FDI, taxation, accounting, compliance, payroll, finance and regulatory requirements should ideally be assessed before entering the market.

Professional guidance can help businesses evaluate their proposed structure, identify regulatory requirements and develop an appropriate India market entry strategy.

This is where India Entry Services can provide value to international businesses by bringing together market-entry planning, entity setup, regulatory coordination, taxation and ongoing compliance considerations.

A Practical Guide for Global Businesses

Doing Business in India 2020 was developed as a broad reference for overseas investors, international businesses and professional advisers seeking to understand the fundamentals of establishing and operating a business in India.

The guide is intended to support decision-making around areas such as:

• Investing in India
• Choosing an appropriate business structure
• Setting up a legal entity
• Understanding taxation
• Managing regulatory requirements
• Navigating employment and labour regulations
• Planning ongoing business operations

Rather than replacing professional or legal advice, the guide is designed to provide a practical starting point for evaluating business opportunities in India.

Supporting Informed India Entry Decisions

India’s economic scale, growing market and evolving regulatory environment made it an important destination for international business and investment.

For companies considering Business in India, the quality of decisions made before entry can have a significant impact on the efficiency and sustainability of future operations.

From selecting the right entity to understanding tax exposure and regulatory obligations, early planning can help businesses establish a stronger foundation for growth.

Conclusion

Doing Business in India 2020 provides a broad overview of the key legal, tax, regulatory and business considerations relevant to international investors and companies exploring the Indian market.

For global businesses considering an investment or expansion into India, understanding the market is an important first step. Building the right structure, assessing regulatory requirements and planning for ongoing compliance are equally important.

Enter India informed. Structure thoughtfully. Build for long-term growth.

Kreston SNR
Business Advisory | India Entry Services | Tax & Regulatory Advisory