Before the first invoice, confirm the selling entity, permitted activity, customer contract, tax registrations and treatment, payment arrangements and relevant licences. Check the people and data processes supporting delivery. Incorporation proves that an entity exists; it does not establish readiness for every proposed business activity.
The business situation
An Indian subsidiary is incorporated and the sales team receives its first order. The product requires a sector review, the customer contract names the foreign parent, and the payment instructions point to another group entity. The first invoice exposes an unfinished operating model.
India market entry is a sequence of decisions about activities, entity, ownership, people, money and regulatory permissions. Incorporation is one step in that sequence. Foreign-investment treatment depends on the actual activity and ownership structure, not merely the company's chosen description.
What needs examining
01. Follow the transaction from order to receipt
Identify who sells, who supplies, who invoices, who receives payment and who carries warranty or support obligations. Explain any differences between those entities. Align the customer contract, purchase order and invoicing record. A transaction diagram often reveals gaps that are hidden when incorporation, tax and contracts are handled separately.
02. Check permissions for the actual activity
Review foreign-investment conditions, sector licences, product approvals, local requirements and applicable registrations. Distinguish services from regulated activities and domestic sales from imports or exports. Do not infer permissions from the company's objects alone. Keep any pending approval visible in the launch decision.
03. Record the readiness decision and residual actions
Create a concise issue register identifying the condition, responsible owner and completion evidence. Separate requirements that must be met before trading from later periodic obligations. Where an uncertainty remains, record the legal assessment and approved scope. A launch checklist should guide the real transaction, not merely collect ticks from different departments.
Law, contract and recommended practice
FEMA, the Non-Debt Instruments Rules, the applicable foreign-investment policy, RBI directions, company law, tax rules and sector conditions may apply. Check current restrictions, beneficial ownership, pricing, reporting and banking documentation before accepting funds or making commitments.
Connect the control to the evidence
Use this table to scope the review. The legal basis and the practical control are identified separately.
| Obligation or objective | Practical control | Evidence to retain |
|---|---|---|
| Legal and regulatory assessment Operate within the permitted activity | Activity-specific readiness review | Licences, registrations and scope note |
| Contractual control Align the commercial and invoicing parties | Order-to-payment reconciliation | Executed terms and invoice basis |
| Recommended practice Close essential launch dependencies | Owner and evidence-based readiness register | Completion records and launch decision |
Records to prepare
Bring the complete, current record to the review. Preserve earlier versions where a change or disputed event makes them relevant.
Common questions
Is the certificate of incorporation enough to start every business?
No. The actual activity may require additional approvals, registrations or conditions. Confirm the complete operating requirements before the relevant transaction begins.
Should all group entities use the same invoicing arrangement?
Not automatically. The contract, supply, tax position and payment flow must support the arrangement for each entity and transaction type.
Run one representative customer transaction through the complete operating model. The first invoice should be the result of a coherent legal structure, not the point at which gaps are discovered.
Legislation & official resources
These references identify the governing frameworks. Confirm the current text, relevant amendments and applicable judicial position for the matter.
- Master Direction — Foreign Investment in IndiaReserve Bank of India · Official direction, displayed as updated to 15 June 2026 when reviewed. Read with the NDI Rules and applicable sector policy.
- Companies Act, 2013 — official legislative portalIndia Code · Government of India · Locate the current Act and applicable rules on India Code. Company category, exemptions and amendments matter.
This note is general information. The scenario is hypothetical and does not describe a client matter. The legal result depends on the facts, documents, jurisdiction and operative law. No individual lawyer review is represented by the preparation date.
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