A Practical Guide for Korean Companies Entering the Indian Market
7/21/20266 min read
The strategic case for India is easy to make — fast growth, a young workforce, and a governments-on-both-sides push to hit $50 billion in bilateral trade by 2030. The harder part is execution: choosing the right legal structure, getting the tax elections right from day one, hiring under India's newly overhauled labour codes, and picking a location that actually fits your sector.
This guide walks through the practical decisions a Korean company needs to make, in roughly the order you'll need to make them.
1. Choose the Right Legal Structure First
This is the single decision that shapes everything downstream — tax rate, liability, hiring ability, and how fast you can start generating revenue. The main options:
Wholly Owned Subsidiary (Private Limited Company) — A separate Indian legal entity, up to 100% foreign-owned in most sectors. This is the route almost every operating business ends up taking: it can trade, hire, sign contracts, and access India's lower "domestic company" tax regimes. It requires at least one India-resident director.
Joint Venture — Same structure as above, but with a local partner, typically used in sectors where 100% FDI isn't permitted or where local market knowledge, distribution, or licenses are hard to build from scratch.
Branch Office — An extension of the Korean parent, not a separate legal entity, permitted only for specific activities (export/import trading, consultancy, R&D, IT services, and similar categories). It can generate revenue, but the parent carries unlimited liability and the effective tax rate is meaningfully higher — roughly 35% base, pushing close to 40% once surcharge and cess are added.
Liaison Office — Representational only. Can promote the parent's business and gather market intelligence, but cannot invoice, trade, or earn income in India. Costs must be funded entirely by inward remittance from Korea. Useful as a first foothold before committing to a full entity.
Project Office — A temporary structure for executing a specific contract (common for shipbuilding, infrastructure, or EPC-style engagements), which winds down once the project is complete.
Rule of thumb: if you're planning genuine manufacturing, sales, or long-term operations, incorporate a subsidiary from the start. Liaison and branch offices are best treated as short-term scouting tools, not end states — restructuring later is more expensive than getting the structure right the first time.
2. Understand the FDI and Approval Route
Most sectors relevant to Korean investment — manufacturing, electronics, autos, EVs, shipbuilding, IT services — fall under India's automatic route, meaning no prior government approval is needed and up to 100% foreign ownership is allowed. A smaller set of sectors (defense, certain financial services, multi-brand retail among them) require government approval or have ownership caps, so it's worth checking sector-specific limits before finalizing a business plan. Note also that India's Press Note 3 restrictions on investment from countries sharing a land border apply to entities like China — Korea is not affected by that specific rule.
Applications and approvals increasingly run through the National Single Window System (NSWS), which consolidates registrations that used to require separate applications across multiple ministries and state departments.
3. The Registration Sequence
Once the structure is decided, incorporation itself is largely digital:
Digital Signature Certificate (DSC) and Director Identification Number (DIN) for each proposed director.
Name reservation via the RUN/SPICe+ Part A process.
Incorporation filing (SPICe+ Part B), which bundles company incorporation, PAN, TAN, EPFO, ESIC, and GST registration into a single form.
Bank account opening and remittance of share capital from Korea.
FC-GPR filing with the RBI — this reports the foreign share allotment and must be filed within 30 days of allotment. Missing this deadline triggers penalties under FEMA, so it's worth calendaring immediately after your first capital infusion.
Branch and liaison offices follow a different track, requiring RBI approval routed through an AD Category-I bank rather than company incorporation.
4. Get the Tax Elections Right — They're Largely Irrevocable
India's corporate tax system for domestic companies runs on a few parallel tracks, and the one you pick early is hard to undo later:
Standard rate: 25–30% depending on turnover and company type.
Section 115BAA: an optional 22% base rate (effective ~25.17% with surcharge and cess) available to any domestic company willing to give up most exemptions and deductions in exchange for simplicity — a common choice for service subsidiaries, R&D centers, and shared-service operations.
Section 115BAB: a concessional 15% base rate (effective ~17.16%) specifically for new manufacturing companies — but note this benefit required production to have started by March 31, 2024, so it isn't automatically open to a company incorporating today. Whether the window is reopened or extended is a Budget-cycle question worth checking with a tax advisor before finalizing a manufacturing plan.
Both elections, where available, are made via a specific form filed with your first tax return and are generally irrevocable — this is not a "decide later" item.
Separately, GST 2.0, effective since September 2025, simplified India's tax slabs to three core rates — 5%, 18%, and 40% (for luxury/sin goods) — replacing the older four-slab structure. If you're planning manufacturing or import-heavy operations, it's worth mapping your product categories against the new slabs early, since input costs and pricing may shift versus older assumptions.
Any transactions with the Korean parent — royalties, management fees, intercompany goods — will also need arm's-length transfer pricing documentation from year one.
5. Hiring Under India's New Labour Codes
India replaced 29 separate labour laws with four consolidated codes — Wages, Industrial Relations, Social Security, and Occupational Safety — which came into force on 21 November 2025. Central rules were notified in May 2026, though state-level rules are still rolling out at different speeds, so practical enforcement varies by location.
The change every incoming employer needs to plan for is the 50% wage rule: basic pay plus dearness allowance must now equal at least 50% of total compensation (CTC). Since provident fund, gratuity, and bonus are all calculated off this wage base, companies with a lot of allowances and a thin "basic pay" component will see statutory costs rise — sometimes by 3–15% — once fully enforced. Build this into salary structuring and cost modeling before you make your first India hires, not after.
If you need people on the ground before your entity is fully operational, an Employer of Record (EOR) arrangement is a common bridge — it lets you hire compliant employees in India without waiting for incorporation to complete.
6. Choosing Where to Locate
Korean investment in India has clustered around a few well-established hubs, each suited to different priorities:
Chennai / Sriperumbudur, Tamil Nadu — India's original Korean industrial cluster, anchored by Hyundai since 1996, with a deep auto-components supply base.
NCR (Noida/Greater Noida) and Pune (Ranjangaon) — LG's manufacturing base, strong for electronics and home appliances, with newer expansion into Sri City, Andhra Pradesh.
Bengaluru / Devanahalli — increasingly the hub for Korean finance and tech: Hana Financial Group recently opened its first Bengaluru branch here, drawn by the area's growing IT, biotech, semiconductor, and aerospace ecosystem.
Odisha — the site of POSCO's expanded steel joint venture with JSW Group, reflecting the state's raw-material access and port infrastructure.
State governments compete actively on land, power, and capital-subsidy incentives, so it's worth running a comparative state analysis rather than defaulting to wherever a competitor already sits — proximity to your specific supply chain and customer base matters more than following the crowd.
7. Use the Facilitation Infrastructure That Already Exists
Unlike many first-time market entries, Korean companies aren't navigating India's bureaucracy alone:
Korea Plus, a joint India–Korea initiative housed within Invest India, acts as a single-window facilitator for Korean investors — handholding through site selection, approvals, and issue escalation.
KOTRA (Korea Trade-Investment Promotion Agency) supports outbound Korean investment from the Korean side.
The India–Korea Fast Track Mechanism exists specifically to escalate and resolve operational issues once a company is already on the ground.
A dedicated Korean industrial township was announced by Prime Minister Modi in 2026, aimed specifically at making entry easier for Korean SMEs that don't have the scale or in-house resources of a Samsung or Hyundai.
The Production-Linked Incentive (PLI) scheme offers performance-based incentives across 14 sectors including electronics, autos, and advanced manufacturing — worth checking against your product category before finalizing a manufacturing plan.
None of these replace the need for good local legal and tax advice, but they meaningfully shorten the learning curve compared to entering India cold.
A Simple Sequencing Checklist
Decide your entity structure and tax regime before incorporating — both are expensive to change later.
Contact Korea Plus and/or KOTRA early; they can shortcut months of independent research.
Match your location choice to your sector's existing cluster, not just to headline incentives.
Budget realistically for a multi-month registration and compliance runway, and file your FC-GPR the moment capital lands.
Model your India salary structures against the 50% wage rule before extending offers.
Set up transfer pricing documentation from your first intercompany transaction, not retroactively.
India rewards companies that treat the entry process as a structured project rather than a series of ad hoc decisions. Get the structure, tax election, and location right at the outset, and the operational runway from there is considerably smoother.
This guide is intended as a general overview and not as legal, tax, or regulatory advice. Rules — particularly around labour code implementation and tax incentive windows — are still evolving through 2026, so confirm current requirements with local counsel or Korea Plus before finalizing your entry plan.