India market entry for UK businesses and investors
Senior-led structuring support for UK companies, investors and professional firms entering India – including direct India, GIFT City / IFSC and carefully tested cross-border routes.
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India is more accessible to UK businesses than it has been in years – the UK–India CETA gives the corridor a stronger trade and services framework – but the operating route still needs structuring. For many UK businesses the question is not import duty at all; it is whether the India-facing service, platform, professional activity or recurring-revenue model creates licensing, tax, withholding, permanent-establishment, data, employment or payment issues. The first question is usually not “should we set up in India?” but what India is to you – a customer and revenue market, a delivery or talent base, an investment target, a technology market, an IFSC-facing financial platform, or part of a wider regional structure. This desk is written for UK companies, investors, founders, family offices and professional-services firms – a route that can be used, not a company-formation checklist.
What CETA and the corridor mean for UK businesses
The UK–India relationship has both a new commercial framework and a long-run strategic frame. The UK–India CETA – described by the UK as its largest bilateral trade agreement since leaving the EU – entered into force on 15 July 2026, together with the Double Contributions Convention: India removes or reduces duty on 90% of its tariff lines, covering 92% of UK goods exports, and the agreement opens a wide services package across IT and IT-enabled services, financial and professional services, business consulting, education, telecoms, architecture and engineering. It also eases mobility for contractual service suppliers, intra-corporate transferees and independent professionals – the part that matters most to UK services and professional firms. Alongside it, the India–UK Vision 2035 frames longer-run cooperation in technology, trade, investment and financial services.
The commercial base is already substantial: UK–India trade in goods and services reached around £48bn in the four quarters to Q4 2025, more than 600 UK companies operate in India, and the UK is a significant, long-standing investor. Government analysis projects a long-run uplift of about £25.5bn in bilateral trade and £4.8bn in UK GDP – useful direction, but government projections rather than guaranteed outcomes.
CETA is the hook, not the whole page. Trade-agreement benefit still depends on product classification, rules of origin, documentation, the specific services category, professional recognition, tax, licensing and the actual operating model. And for a large share of UK businesses – advisory, consulting, financial and finance-adjacent, education and training, SaaS, AI and digital platforms, design, engineering, recruitment and technology-enabled services – the issue is not tariffs at all, but whether the India-facing activity creates licensing, tax, withholding, PE, data, employment or payment exposure. The entry vehicle, FDI position and exchange-control route are worked through on India company setup and India structuring, with the exchange-control points on FEMA advisory; this page frames the corridor and links to the pages that carry the mechanics.
What are you trying to structure?
Key commercial and structuring points
Entry route and FDI position. A UK business may enter through a distributor or franchise, a joint venture, an LLP, a company, or a branch, project or liaison office. The route should follow the activity, the customers, the contracting model, the tax position and the degree of control needed – not be chosen first. → India company setup, India structuring and FEMA advisory.
CETA, rules of origin and services analysis. CETA changes the framework, not the obligation to model it. Benefit depends on product classification, rules of origin, documentation and the tariff schedule for goods; and on the services category, professional-recognition pathway and implementation rules for services. It has applied since 15 July 2026: the preference is claimed shipment by shipment, by an HMRC-registered UK exporter and an Indian importer holding the origin evidence. Treat it as an operating input, not a substitute for the analysis. For goods, the export, distributor or subsidiary choice is set out below.
India direct, GIFT City / IFSC, or a UAE-linked structure. Some UK businesses should enter India directly through an operating company, LLP, branch, project office, distributor or JV. Others may need a GIFT City / IFSC route for fund management, financial services, treasury, investment platforms, capital markets or structured finance. A UAE-linked structure may still be relevant where there is a genuine holding, regional contracting, Gulf operations, treasury, banking or investor-control rationale. The route should be tested against activity, IFSCA licensing, FEMA, tax, substance, PE, remittance, UK-side tax (management-and-control, CFC and anti-avoidance, with UK tax advisers where relevant) and implementation. → GIFT City & IFSC · India–UAE business structuring.
Partner, distributor, franchise and JV control. Partner risk is regularly underestimated. The structure should govern exclusivity, territory, pricing, customer ownership, data, IP, payment collection, audit rights, termination, non-compete, non-solicit and the dispute forum – set before the relationship is committed, not renegotiated after.
Tax, withholding, GST and transfer pricing. The India position should be reviewed before contracts are signed: corporate tax, GST, withholding on royalties and technical-service fees, PE exposure, transfer pricing, management fees, cost-sharing, dividends and repatriation. → India tax.
FEMA, banking and remittance. India’s exchange-control rules shape investment, loans, guarantees, share transfers, royalties, technical fees, dividends and exit. FEMA is often where otherwise sound structures become difficult in practice; getting the remittance and banking route right early avoids issues surfacing at exit or share-transfer stage. → FEMA advisory.
Regulated activity and professional services. Financial services, insurance, fintech, education, healthcare and legal/accounting-adjacent activity may need separate regulatory analysis. CETA improves services pathways and points toward mutual-recognition arrangements rather than automatic recognition – it does not remove licensing. → financial services and GIFT City & IFSC.
IP, data, SaaS and technology contracts. For UK SaaS, AI, fintech, ed-tech, health-tech and professional platforms, the India route should control IP ownership, customer data, cybersecurity, local hosting and cloud, software licensing, support obligations and liability caps – and the royalty / technical-fee withholding that a licensing or subscription model can trigger. → software, IT & SaaS.
People deployment and social security. UK staff travelling to or seconded into India should be reviewed for immigration, payroll, tax residence, PE risk, employment law and social-security exposure – including contractor-classification and employer-of-record risk. The Double Contributions Convention is relevant, but its conditions should be checked for each assignment. → India tax.
EXPORT, DISTRIBUTOR OR SUBSIDIARY
Export, use a distributor or set up an Indian subsidiary: the decision for UK companies in India
For UK companies in India that sell physical goods, such as instruments, machinery, components, medical devices, spirits or consumer products, CETA has turned Indian import duty into a cost line that can be modelled and negotiated. The question it raises is commercial: keep exporting from the UK, sell through an Indian distributor, or build an Indian subsidiary that assembles locally.
The position at 12 October 2026. The UK–India Comprehensive Economic and Trade Agreement (CETA) and the Double Contributions Convention (DCC) have been in force since 15 July 2026. India removes or reduces duty on 90% of its tariff lines, covering 92% of UK goods exports; 64% of lines are duty-free from day one and 85% after staging. The lower rate applies only to goods that meet the rules of origin, where the UK exporter is registered with HMRC and the Indian importer claims the preference at clearance. CETA does not apply to direct taxes, so the UK–India double tax treaty is unchanged, and it has no investment chapter. For the legal detail (tariff schedules, rules of origin and the claim procedure), see India–UK trade deal (CETA) in force: what UK businesses can use now (ATB Legal).
Three questions decide the operating model:
- Who captures the duty saving? The Indian importer pays the duty, so a UK exporter selling through a distributor gains only if it re-prices the supply contract.
- Do public tenders matter? Under India's procurement rules, a bid with at least 20% UK content ranks as Class II. Indian Class I suppliers, with more than 50% Indian content, keep first preference and can often match a lower price. UK content can never reach Class I, so only Indian assembly can.
- Is the Indian tax, people and protection cost worth it? A subsidiary brings Indian corporate tax, dividend withholding, tax on exit and permanent-establishment questions for visiting UK staff. Since India terminated the 1994 UK–India bilateral investment treaty, new UK capital also has no investment-treaty cover.
Decision table: export under CETA, distributor or Indian subsidiary
| Export from the UK under CETA | Indian distributor or agent | Indian subsidiary (assembly) | |
|---|---|---|---|
| Indian import duty | Staged CETA rate, if origin is met | Same; borne by the distributor | Duty on imported UK components |
| Who keeps the saving | The Indian buyer, unless prices are re-set | The distributor, unless the supply price is re-set | The group |
| Government procurement | Class II (at least 20% UK content) | Uncertain; depends on the tender's local-content formula | Class I possible (more than 50% Indian content) |
| Indian income tax | None without a permanent establishment | Dependent-agent PE risk if the agent concludes contracts or habitually secures orders for you | 25.168% on profits, 10% treaty withholding on dividends, tax on exit |
| UK staff in India | Visits; count service days | Visits; count service days | Secondments: DCC, 30-day service-PE count, GST and withholding on recharges |
| Investment protection | Not needed | Contract | No investment treaty for post-March 2017 investments: contract, arbitration seat, insurance (a UK-owned UAE holding company adds no cover on a literal reading of Article 36.1 of the India–UAE BIT) |
| Best fit | Testing demand; low volumes | Established channel; limited control needed | Tender-led or high-volume business; local service and assembly |
Worked example: Albion Instruments Ltd
Illustrative only. Tax year 2026-27. Duty, surcharge and IGST rates are assumptions; check them by HS code on the date of import. Albion Instruments Ltd makes test and measurement equipment in the UK and sells £3m a year (CIF value) into India through a distributor.
1. The tariff saving. India's duty on test and measurement equipment falls from 10% to 5% under CETA, and to zero within five years.
| Per £1m CIF | Before CETA (BCD 10%) | From 15 July 2026 (BCD 5%) | From year 5 (BCD 0%) |
|---|---|---|---|
| Basic customs duty (BCD) | £100,000 | £50,000 | £0 |
| Social Welfare Surcharge (10% of BCD) | £10,000 | £5,000 | £0 |
| Non-creditable duty | £110,000 | £55,000 | £0 |
| IGST at 18% (creditable for a GST-registered importer) | £199,800 | £189,900 | £180,000 |
On £3m: £55,000 × 3 = £165,000 a year now, and £110,000 × 3 = £330,000 a year at zero duty. Assuming 5% in years 1–4 and zero in years 5–10: (4 × £165,000) + (6 × £330,000) = £2.64m over ten years. Two conditions apply. Imported circuit boards must not stop the instruments qualifying as UK origin under the product-specific rule. And the duty is the distributor's cost, so Albion gains only by re-pricing.
2. Localise? In Indian Railways tenders a Class I rival can match Albion's price. An Indian assembly subsidiary could reach Class I. On £1m of Indian profit under the 22% regime, Indian tax at 25.168% (22% plus 10% surcharge and 4% cess) is £251,680. The dividend of £748,320 bears 10% withholding (£74,832), so £673,488 reaches the UK: an Indian tax cost of 32.65%. That cost is usually final, because the UK exempts the dividend (CTA 2009 Part 9A) and so gives no credit for the withholding. The 10% rate needs beneficial ownership, a UK tax residency certificate and Form 41 (formerly Form 10F); otherwise 20% plus surcharge and cess applies. A later sale of the subsidiary is taxed in India at 12.5% plus surcharge above INR 1 crore (about £79,000) and 4% cess, so 13.0–13.65%. And there is no investment-treaty protection.
3. People. Two UK engineers each spend 45 days a year at the subsidiary. The DCC keeps them in UK National Insurance, but the UK–India tax treaty creates a service permanent establishment where an enterprise's services for an associated enterprise in India exceed 30 days in any 12 months, counted across all its staff. Albion UK is over that line. The options are to keep related-party service days below 30, hire locally, or second the engineers to the Indian company. Secondment has its own costs: GST under reverse charge on the salary recharge (Northern Operating Systems, Supreme Court, 2022), Indian salary withholding, and a risk that the recharge is taxed as fees for technical services (Ernst & Young U.S. LLP, Delhi High Court, 18 June 2026). The DCC also needs the UK employer to remain the employer, so the secondment documents must work for both purposes.
Read-out. For Albion, the first step is commercial: re-set the distributor's price to share a £165,000 annual saving, and collect the origin evidence. An Indian subsidiary is justified only if the tender pipeline outweighs a 32.65% Indian tax cost on distributed profit, the exit tax and the lack of treaty protection. Engineer days need controlling under every model.
Protecting an Indian investment without an investment treaty
CETA has no investment chapter. India terminated the 1994 UK–India bilateral investment treaty on 22 March 2017: investments made before then keep its protection until March 2032, and later ones have none. A new treaty remains unsigned: talks were reported stalled in April 2026, and September 2026 reports describe a restart once India's revised model text is approved by Cabinet. For new UK capital, protection is therefore contractual and insurance-based: change-in-law and tariff clauses, an arbitration seat outside India, a sovereign-immunity waiver and a state or sovereign guarantee where the counterparty is a state body, and political-risk insurance. Holding the Indian company through the UAE does not add treaty cover: Article 36.1 of the India–UAE BIT (in force since 31 August 2024) denies the treaty's benefits to an investor owned or controlled, directly or indirectly, by persons of a non-Party; read literally, a UAE holding company owned by a UK group is excluded whatever its substance, although no tribunal has yet ruled on the clause. Any intermediate holding company must also pass the principal purpose test and India's GAAR; after the Supreme Court's Tiger Global ruling (January 2026), a tax residency certificate alone is not enough. Because UK groups already get the 10% dividend rate holding directly, an intermediate holding company has to earn its place on exit or regional purpose, not on rate or treaty protection. The comparison is in Invest in India: choosing a holding company jurisdiction.
What to do now
| Your position | What to do now |
|---|---|
| Already exporting to India | Identify full-duty imports since 15 July 2026: the importer can reclaim the duty within one year of importation. Register with HMRC for origin declarations and check each top HS code against the rules of origin. |
| Selling through an Indian distributor or agent | Re-price the supply contract to share the saving; allocate origin evidence (the Indian importer bears the burden of proof); check the agent's role for dependent-agent PE risk. |
| Considering Indian assembly | Model the tender pipeline against the 32.65% Indian tax cost on distributed profit and the 13.0–13.65% exit tax; decide the holding route, arbitration seat and insurance before investing. |
| Sending engineers or managers to India | Obtain a DCC certificate of coverage for each employee; count related-party service days against the 30-day limit; price GST and withholding on any secondment recharge. |
| Bidding for Indian central-government tenders | Confirm Class II eligibility (at least 20% UK content) and the tender's local-content rules; assess a consortium or Indian assembly for Class I. |
Checklist to forward internally
- ☐ Top ten HS codes to India: staged CETA rate and the product-specific origin rule for each
- ☐ Full-duty imports since 15 July 2026 identified; refund claims in time; distributor prices re-set
- ☐ Secondments mapped: DCC certificate, visa category, 30-day PE count, GST and withholding on recharges
- ☐ Decision on whether tenders justify Indian assembly
- ☐ For any investment: holding route, arbitration seat, change-in-law clauses, insurance
- ☐ Dividend route ready: UK tax residency certificate, Form 41, beneficial-ownership file
How ATB Corporate can help. ATB Corporate advises companies and investors on entering, structuring and operating in India and the UAE: choosing the entry route and holding structure, tax and exchange-control planning, regulatory compliance, and setting up and running the local business. To discuss your plans, contact ATB Corporate.
- A UK company contracts directly with India customers and unintentionally creates permanent-establishment or withholding exposure.
- GIFT City / IFSC is assumed to solve an operating India issue when the business actually needs an onshore Indian licence, employees, customers or execution route.
- A UAE entity is inserted without commercial purpose, substance, banking or a real regional role.
- The distributor ends up controlling the customer, brand or channel more than expected.
- A professional or financial activity is treated as simple consulting when it in fact needs licensing.
- An IP or SaaS contract quietly creates royalty / technical-fee withholding exposure.
- FEMA restrictions are discovered only at the remittance, exit or share-transfer stage.
- Seconded staff create payroll, tax-residence, social-security or PE issues.
- A dispute forum is chosen without thinking through enforcement.
- The CETA duty saving stays with the Indian distributor because the supply price was never re-set.
- Engineers covered by the DCC are not counted against the tax treaty's 30-day service-PE limit.
- A UK investment made after March 2017 is assumed to have investment-treaty protection it does not have.
Points to confirm before committing the India route
- Entry route and control – direct India entity, distributor, JV, branch/project office, GIFT City / IFSC route, or a UAE-linked route where commercially justified.
- CETA and services position – goods classification, origin, services access, professional recognition and documentation – and, for goods, whether to export, use a distributor or assemble in India.
- Tax, FEMA and remittance – withholding, GST, PE, transfer pricing, royalties, fees, dividends and the exit route.
- Partner, IP and contract control – customer ownership, brand use, data, payment collection, termination and dispute forum.
- People and implementation – immigration, payroll, DCC / social security, local hiring, banking, licences and timeline.
ATB provides senior-led, corridor-specific structuring support for UK businesses and investors before capital, counterparties or operating responsibility are committed. The focus is a coordinated view across entry route, CETA position, tax and withholding, FEMA and remittance, regulatory perimeter, partner and contract control, IP and data, people mobility and implementation – a structure that can be licensed, contracted, banked, governed and put into use. Structures are reviewed with the failure scenario in mind: payment default, partner exit, IP misuse, customer poaching, termination and enforcement. With India execution capability through Bengaluru and cross-border structuring support through Abu Dhabi, the work is designed to reach a clear, decision-ready position before a wider transaction, tax or implementation workstream is launched.
Where audit sign-off, formal tax opinions or local regulated advice are required, ATB helps frame the question and works with the appropriate specialists rather than overstating its own remit. UK-side tax, residence, CFC and anti-avoidance points should be reviewed with UK tax advisers where relevant; ATB’s role is to align the India and UAE side so the structure can be tested properly.
UK–India entry, answered
Often yes, at first – through direct contracting, a distributor, a reseller or a local agent – but it should be checked for permanent-establishment and withholding exposure, GST and place-of-supply treatment, the FEMA and payment route, local-representative risk, and contract enforcement and dispute forum before it becomes the operating model.
Sometimes, but a services or subscription model can still create withholding on fees, permanent-establishment risk if people or servers are involved, and GST and place-of-supply questions. The contract, the delivery model and the payment route should be structured before scaling, not after.
The UK–India CETA, in force since 15 July 2026, gives UK companies entering India lower Indian tariffs on UK goods meeting the rules of origin, wider services and procurement access and easier business mobility. The separate Double Contributions Convention keeps posted UK staff in UK National Insurance for up to 60 months. CETA leaves the UK–India tax treaty unchanged and gives no investment protection. Benefit depends on classification, origin, services category and who captures the duty saving, so model it, not assume it; see the export, distributor or subsidiary section.
No. CETA improves market access and points toward mutual-recognition pathways, but it does not remove licensing for regulated activity, or the need to review FDI position, tax, withholding, FEMA and the operating model.
Most UK companies selling goods to India should keep exporting under CETA and re-price distributor contracts so the duty saving is shared, rather than set up an Indian subsidiary at once. An Indian assembly subsidiary pays off mainly where public tenders reward Class I local content or volumes justify local service. It brings Indian tax of about 32.65% on distributed profit, a 13.0–13.65% tax on exit, service-PE questions for visiting staff and no investment-treaty protection for new capital. See the decision table and worked example above.
Direct India entry is usually cleaner for operating businesses with Indian customers, employees, distributors, manufacturing, delivery or local licences. GIFT City / IFSC may be relevant for financial services, fund management, treasury, private capital, investment platforms, capital markets and structured finance. A UAE-linked route may help where there is a genuine holding, regional contracting, Gulf operations, treasury, banking or investor-control purpose. Each route should be tested against tax, FEMA, IFSCA licensing, substance, PE, remittance, UK-side tax and implementation.
Corporate tax, GST, withholding on royalties and technical-service fees, permanent-establishment risk, transfer pricing and repatriation. The UK–India tax treaty, unchanged by CETA, sets India's withholding at 10% on dividends and 15% on royalties, fees for technical services and interest (10% for equipment royalties and bank loans), but access depends on beneficial ownership, a UK tax residency certificate, Form 41 and the anti-abuse analysis, including the treaty's principal purpose test and Indian GAAR. See our UK–India double tax treaty guide for UK companies.
India's exchange-control regime governs how investment, loans, guarantees, share transfers, royalties, fees, dividends and exits are made and remitted. Getting the FEMA and banking route right early avoids problems surfacing at remittance, exit or share-transfer stage.
Yes, UK employees seconded to India can usually avoid double social security: since 15 July 2026 the UK–India Double Contributions Convention keeps a UK employee sent temporarily to India by a UK employer in UK National Insurance for up to 60 months, without Indian provident-fund contributions, on a certificate of coverage. It covers social security only: services for an Indian group company exceeding 30 days in any 12 months can still create a permanent establishment under the UK–India tax treaty, and immigration, payroll and tax residence need checking per assignment.
Local hiring versus consultant or employer-of-record arrangements, contractor-classification risk, payroll and tax residence, and the confidentiality, data-access and IP-ownership terms for work created by Indian personnel.
Governing law, arbitration seat, and how a judgment or award is actually enforced in India (and, where a UAE entity is used, how ADGM/DIFC-linked enforcement fits) – structured for payment default, partner exit, IP misuse and termination, not only for launch.
Planning India entry from the UK?
CETA improves the framework, but the practical question remains: how will the India route be contracted, taxed, licensed, staffed, banked, protected and enforced? Tell us what India is to your business, and we can map the route – entity, tax, FEMA, partner control, contracts, IP, people and implementation – before capital or counterparties are committed.
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