India entry strategy: joint venture, acquisition or greenfield? Choosing how to enter India

Short answer: Foreign ownership up to 100% is automatic in most Indian sectors, so an India entry strategy is usually a commercial choice between a greenfield subsidiary, an acquisition and a joint venture; the law decides it only in a few capped sectors such as multi-brand retail, news media and private banking [1][2]. In India an acquisition earns from closing but pays today's earnings multiple and inherits the target's history; a greenfield subsidiary keeps full control and a clean history but earns last; and a joint venture needs the least cash of the three but shares control, and a later buy-out of an Indian partner is at fair value [3]. The choice of India entry route turns on five questions, in order: whether the law forces a partner, what you cannot build or buy, when revenue must start, what the cash buys, and how you reach 100% or exit.

Who this is for: CEOs, CFOs, corporate-development heads and general counsel of UK, US and European groups deciding how to put equity into India.

How to enter the Indian market: greenfield vs acquisition vs joint venture

The table answers four of the five questions; the law answers the first (next section).

Staged and hybrid routes. Contract manufacturing or a distributor first, equity later, is the lightest way in, with the least control (see wholly owned plant, joint venture or contract manufacturing). In services, a partner can build and run the centre for two to three years before you take it over under an option, at no less than fair value if the seller is Indian-resident [3] (see GCC operating model and entity in India).

Whatever the route, decide first where the Indian shares will sit (Invest in India: choosing a holding company jurisdiction (hub)); the vehicle is normally a private limited company, not a branch (India corporate tax rate for foreign companies: subsidiary vs branch vs PE).

When the law chooses for you: sector caps and Press Note 2 (2026)

Manufacturing, telecom and most other sectors allow 100% foreign ownership without approval [1]. A partner is forced only where ownership is capped, mainly in multi-brand retail (51%), news media (26%–49%), private banking (74%) and foreign airlines' stakes in Indian carriers (49%), plus a few smaller sectors such as private security [2]. Defence above the automatic limit (74% for new licences) needs approval, not a partner [1][2]; insurance has been 100% automatic since 2 May 2026 [6].

Land-border shareholders. If someone from a country sharing a land border with India holds more than 10% of your group, or controls it, anywhere up the chain, every route needs government approval under Press Note 2 (2026) [7][8]. The target is 12 weeks [9], but such approvals were reported in 2023 to take about seven months [10]. This hits all three routes alike, so it rarely decides between them. The exception is the 60-day track for land-border stakes of up to 49% in specified manufacturing sectors, which requires resident Indians to keep majority ownership and control [9]: in effect, an Indian-majority joint venture. The rules are in FDI in India: rules, routes and approvals (2026) (ATB Legal).

Press Note 18 (1998), which in practice let an existing Indian partner block a new venture in the same or allied field, was abolished in 2011; a partner's hold over your other Indian plans is now only contractual [11].

Speed: when each route starts earning

Greenfield. Starting a company took 17–18 days in the World Bank's 2019 data [12], and the SPICe+ incorporation filing now typically completes within days; documents from abroad, the bank's checks and the share issue set the real start date (see the timetable for India company incorporation and foreign investment). A services centre is typically working in three to six months [4]. A plant takes far longer: state single-window clocks are short (15–30 days under Telangana's 2014 Act) [13], but construction permits alone took up to 113.5 days in Delhi in 2019 [12]. Plan on 18 months or more to first output (our planning assumption).

Acquisition. Revenue arrives at closing. Merger control rarely sets the pace: the deal-value test starts above INR 2,000 crore (about USD 208m), and targets with India assets up to INR 450 crore or turnover up to INR 1,250 crore are otherwise exempt [14]. Notified deals cleared in about 48 days on average on a short-form notice (Form I), or 85 on a long-form notice (Form II), in the year to June 2026 [15].

Joint venture. Revenue starts at formation, after the partner search, and the deal can fail before closing (Ford–Mahindra, below).

Cost: what the cash buys on each route

Acquisition: earnings already made. The median EV/EBITDA on Indian deals that disclosed one was 14.1x in 2024 (three-year rolling average) [16]; listed medians at 31 December 2025 included 11.5x for construction and engineering, 17.1x for auto parts and 23.1x for industrial machinery [17]. These are market data, not valuations. With Indian-resident sellers, at most 25% of the price can be deferred, escrowed or indemnified, for up to 18 months [3], which limits earn-outs.

Greenfield: assets and time, with no premium or inherited liabilities; whether that is cheaper than buying depends on the multiple. Treat incentives as upside.

Joint venture: half a business and an option on the rest, which is bought later at no less than fair value [3].

Joint venture vs acquisition: lessons from Indian cases

Practitioners at 30 S&P 500 companies estimated that as many as 40–60% of their joint ventures underperformed their potential [18], a global estimate rather than an Indian rate.

Price a joint-venture stake as equity risk: any put or call must work at fair value after a one-year lock-in, with no assured return [3]. A non-compete rarely binds a partner after exit [24]. A partner with 10% of the shares or of the members (any partner, in a venture of ten or fewer shareholders) can petition the National Company Law Tribunal for oppression and mismanagement [25]. The partners may agree a foreign arbitration seat, even as two Indian companies [24][26], which matters because an average Indian commercial dispute took 1,445 days in 2019 [12]. To plan the exit at entry, see Selling your Indian subsidiary: exit planning for foreign parents. The legal mechanics are in Joint venture in India or acquisition: deal structure and shareholder protections (ATB Legal).

Worked example (illustrative): USD 40m into India three ways

Hypothetical. FX: INR 96 = USD 1, INR 107 = EUR 1 (rounded exchange rates, October 2026). A European industrial-automation components maker has USD 40m (INR 384 crore, about EUR 35.9m) for India; automatic-route sector, no land-border shareholders. Operating figures are assumptions, pre-tax and undiscounted, over five years from the day each route's money goes in; months to revenue are counted from the board decision. Each stake is valued at 12x EBITDA in year 5, below the 14.1x deal median [16], because private mid-market targets often price lower (our view). INR crore unless stated.

A. Greenfield plant, 100%. 384 spent over two years; revenue from about month 20. EBITDA in years 1–5: 0, −5, 10, 22, 32 (cumulative 59). Year-5 value: 12 × 32 = 384 (USD 40m).

B. Acquisition, 100%. 384 at 12x buys EBITDA of 384 ÷ 12 = 32. Up to 25% (96, USD 10m) can be deferred for 18 months if the sellers are Indian-resident [3]; 288 (USD 30m) is paid at closing. Integration, assumed at 5%: 19.2. Cash: 384 + 19.2 = 403.2 (USD 42.0m). Revenue from about month 5. EBITDA growing 7% a year: 34.24, 36.64, 39.20, 41.95, 44.88 (cumulative 196.91). Year-5 value: 12 × 44.88 = 538.6 (USD 56.1m).

C. Joint venture, 51%. The partner contributes a business earning 15.3, valued at 12 × 15.3 = 183.6; the group subscribes 192 (USD 20m) for new shares: 192 ÷ (192 + 183.6) = 51.1%, taken as 51%. Revenue from about month 9. JV EBITDA: 16, 20, 26, 32, 38 (cumulative 132; the group's 51% = 67.3). Year-5 JV value: 12 × 38 = 456, of which the group's 51% is 232.6 (USD 24.2m). Buying the other 49% at fair value: 49% × 456 = 223.4 (USD 23.3m), so 100% costs 192 + 223.4 = 415.4 (USD 43.3m) in all.

What the numbers show.

• The acquisition earns most in five years because it buys earnings on day one; the risk is the multiple. At the 23.1x industrial-machinery median [17], 384 buys 384 ÷ 23.1 = 16.6 of EBITDA, which grows to 16.6 × 1.07⁵ = 23.3, worth 12 × 23.3 = 279.6: well below the 403.2 paid
• Greenfield earns least, but ends with a clean, fully controlled business earning what USD 40m buys today at 12x
• The joint venture halves the entry cash, but 100% costs 415.4 in the end, more than the acquisition's 403.2 and years later

Risks and common mistakes, ranked

1. Taking a partner for speed when the law does not require one: shared control now, fair value for the rest later.
2. Buying earnings without pricing their history. Tax assessments, Labour Code liabilities (in force since 21 November 2025; fixed-term staff now earn gratuity after one year) [27], land title and litigation stay with the company: price them through the 25% holdback, indemnities and conditions precedent, or walk away.
3. Fixed-return exit rights, which fail under FEMA pricing (Tata–DoCoMo) [20].
4. A cap-driven venture with no end-state plan (Walmart–Bharti) [22].
5. Timing a plant on statutory clocks rather than on land, permits, utilities and construction.
6. Leaving the exit until later: partner exits are negotiated, and India taxes gains on unlisted shares held over 24 months at 13.0%–13.65% [24][28].

Checklist to forward internally

• Sector cap and route confirmed; cap table screened for land-border holders (above 10%, or control)
• What the group cannot build or buy, listed: licences, land, approvals, customers, people
• Revenue date the board needs, against each route's realistic date
• Acquisition: price tested against market multiples; red flags priced; holdback within 25% and 18 months
• Joint venture: the partner's contribution in writing; reserved matters; buy-out modelled in the success case
• Greenfield: land, permits, utilities and hiring timetable; incentives treated as upside
• Holding jurisdiction, exit route and exit tax settled before funding

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.

FAQ

What is the best India entry strategy for a foreign company?

The best India entry strategy for most foreign companies is a wholly owned greenfield subsidiary where time allows, an acquisition where earnings and a team are needed at once, and a joint venture only where a partner brings licences, land or customers that cannot be bought or built in time, or a sector cap requires one. Because 100% foreign ownership is automatic in most sectors, the choice is usually commercial [1].

Greenfield vs acquisition in India: which is faster, and which is cheaper?

An acquisition is faster, because revenue starts at closing, and whether it is also cheaper than a greenfield subsidiary depends on the multiple paid. In the worked example, buying at 12x EBITDA beats building over five years but buying at the 23.1x listed industrial-machinery median does not [17]; Indian deals that disclosed a multiple had a median of 14.1x in 2024 [16].

Joint venture vs acquisition: when is a joint venture the better way into India?

A joint venture is the better way into India when the Indian partner brings licences, land, regulated approvals or customers you cannot buy or build in time, or when a sector cap requires Indian shareholders. Otherwise an acquisition gives control at once, while a joint venture shares it and leaves the rest to be bought later at fair value [3].

Is it cheaper to start with a joint venture and buy out the Indian partner later?

Starting with a joint venture and buying out the Indian partner later is usually not cheaper than buying 100% at the start, because a later purchase from an Indian-resident partner must be at no less than fair value at the time [3]. The better the venture does, the more full ownership costs: in the worked example, reaching 100% through a joint venture costs INR 415.4 crore against INR 403.2 crore for an outright acquisition, and arrives years later.

How long does it take to enter the Indian market by each route?

Entering the Indian market takes from a few months to 18 months or more: an acquisition earns from closing, a services centre is typically working within three to six months [4], and a new plant usually needs 18 months or more, because land, permits and construction set the pace (our planning assumption). A land-border shareholder above 10% adds months to every route [10].

Does Press Note 2 (2026) change the choice between a joint venture, an acquisition and greenfield?

Press Note 2 (2026) rarely changes the choice, because a land-border shareholder above the 10% threshold, or with control, puts every route on the government approval route alike [7][8]. The exception is DPIIT's 60-day track in specified manufacturing sectors, which requires an Indian majority and so is in effect a joint venture [9].

Related reading

• Invest in India: choosing a holding company jurisdiction (hub)
• Selling your Indian subsidiary: exit planning for foreign parents
• Permanent establishment in India (employees, EOR, agents)
• India withholding tax rates 2026 and how to repatriate profits
• Wholly-owned, joint venture or contract manufacturing: the foreign manufacturer's India structure
• EU–India trade deal (FTA): what European businesses should do before it takes effect
• PLI and manufacturing incentives for foreign companies
• India SEZ and incentive structures
• Global capability centres in India

Sources

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Disclaimer: This article is general information, not legal, tax or investment advice; the worked example is hypothetical, and the article reflects our understanding of Indian law, policy and market data at 15 October 2026, so verify against current law and take advice on your specific facts before acting.