By Manu Rao | Updated March 2026
At a Glance
| Indian Diaspora | ~7,010 (January 2025 MEA data) |
| FDI Route | Government approval MANDATORY under Press Note 3 of 2020 |
| DTAA | 10% dividend withholding |
| Document Authentication | Apostille (Hague Convention member) |
| Realistic Timeline | 8-12 Weeks |
| Currency | BDT |
Why Bangladeshi Investors Look at India
Bangladesh and India share a 1,880-kilometer land border, the 5th longest international border in the world. They also share a $13.51 billion trade relationship. India exported $11.46 billion in goods to Bangladesh in FY 2024-25 per DGCIS data, making Bangladesh India's largest trading partner in the subcontinent.
The trade flow tells a clear story. India sends cotton yarn, fabrics, petroleum products, machinery, chemicals, and steel. Bangladesh sends back ready-made garments, jute, seafood, and leather goods. Bangladesh's garment industry — 84% of its total exports, worth over $40 billion annually — depends on Indian raw materials. Indian cotton and yarn feed Bangladeshi factories that clothe the world.
Cross-border connectivity is strong. Multiple land border crossings, direct flights between Dhaka and major Indian cities, and a functioning rail link. The Petrapole-Benapole crossing alone handles billions in trade value.
India extended $8 billion in Lines of Credit to Bangladesh between 2010 and 2017 for infrastructure development. Indian companies operate in Bangladesh across pharmaceuticals, cement, textiles, IT, and banking.
But investment in the other direction — from Bangladesh into India — is a different matter entirely. Press Note 3 of 2020 applies to Bangladesh because it shares a land border with India. Every rupee of Bangladeshi FDI into India requires prior government approval.
The Indian community in Bangladesh is small. About 7,010 Indians live there, mostly NRIs working in Dhaka. The relationship here is structurally about trade and geography, not diaspora.
Choose Your Entity Type
This choice matters more for Bangladeshi investors because Press Note 3 adds a government approval layer to every structure.
| Feature | Private Limited Company | LLP | Branch Office | Liaison Office |
|---|---|---|---|---|
| FDI Route | Government approval (Press Note 3) | Government approval (Press Note 3) | RBI approval + government screening | RBI approval + government screening |
| Minimum Directors/Partners | 2 directors, 1 resident | 2 partners, 1 resident | Authorized representative | Authorized representative |
| Residency Rule | Director: 120+ days in India in preceding calendar year | Partner: 120+ days in India in preceding calendar year | N/A | N/A |
| Annual Audit | Yes, mandatory | If turnover exceeds Rs 40 lakh or contribution exceeds Rs 25 lakh | Yes | Yes |
| Compliance Load | High (board meetings, AGM, multiple filings) | Moderate | Moderate | Low |
| Can Raise Equity | Yes | No | No | No |
A Private Limited Company remains the most practical option. It allows equity participation and has the clearest FDI compliance pathway. The government approval step under Press Note 3 applies equally to all structures, so the entity type does not help you avoid it.
LLPs face the same government approval requirement plus additional sector restrictions under DPIIT policy. Branch and Liaison offices need both RBI approval and government screening, adding another regulatory layer.
FDI Route and Sector Rules: Press Note 3 Explained
This section is the most important part of this page. If you are a Bangladeshi investor, Press Note 3 affects every aspect of your India entry.
What Is Press Note 3 of 2020?
On April 17, 2020, DPIIT amended India's FDI policy. The amendment stated that any entity from a country sharing a land border with India — or where the beneficial owner is a citizen of such a country — must obtain prior government approval before investing in India. The seven countries affected: China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan.
This applies regardless of the sector. Even sectors that allow 100% FDI through the automatic route for investors from the US, UK, or Singapore require government approval for Bangladeshi investors.
What Does Government Approval Mean in Practice?
Your FDI proposal goes to the relevant administrative ministry, which forwards it to DPIIT for inter-ministerial screening. The screening committee includes the Ministry of Home Affairs, Ministry of External Affairs, and the sector ministry. There is no guaranteed timeline for approval, though the March 2026 amendment introduced targets for certain sectors.
March 2026 Amendment: The 10% Carve-Out
On March 10, 2026, the Union Cabinet introduced a partial relaxation of Press Note 3. Here is what changed:
- Global investors with up to 10% Bangladeshi shareholding (non-controlling) can now invest through the automatic route, subject to sectoral caps. A multinational fund with, say, 7% Bangladeshi limited partners no longer needs government approval.
- Bangladeshi entities themselves still require government approval. The relaxation is designed for global funds and multinationals with minor border-country ownership — not for Bangladeshi companies directly.
- Majority ownership and control of the Indian investee must remain with resident Indian citizens or Indian-owned entities at all times.
- 60-day processing timeline for proposals in manufacturing: capital goods, electronic components, polysilicon, and ingot-wafer production.
Transfer of Ownership Rule
Press Note 3 also covers transfers. If an existing Indian company is changing ownership from a non-border-country investor to a Bangladeshi beneficial owner, that transfer needs government approval too. This applies to secondary market transactions as well.
Sector-Specific Patterns
Where could Bangladeshi investors realistically enter India? Given the trade profile, the likely sectors include textile manufacturing (leveraging shared supply chain knowledge), IT and BPO services, pharmaceutical distribution, agricultural trade, and real estate-adjacent services. The prohibited list remains the same: atomic energy, lottery, gambling, chit funds, Nidhi companies, trading in TDRs, and real estate business.
Step-by-Step Registration Process
Choose Entity Type and State Pick between Private Limited, LLP, Branch, or Liaison. Select the state. West Bengal, Delhi, and Maharashtra are common for Bangladeshi investors due to proximity and trade links.
Obtain a Digital Signature Certificate (DSC) Every proposed director needs a DSC. Foreign nationals need a passport and video verification. Takes 1-3 days.
Apply for Director Identification Number (DIN) DIN is part of the SPICe+ form. No separate application needed since MCA consolidated this under the Companies (Incorporation) Rules, 2014 as amended.
Reserve Your Company Name Use MCA's RUN service. Two name choices per application. Approval: 1-4 working days.
File for Government Approval Under Press Note 3 This step does not exist for investors from countries like the US, UK, or Australia. For Bangladeshi investors, it is mandatory. File your FDI proposal with the relevant administrative ministry. Prepare a detailed business plan, source of funds documentation, beneficial ownership declaration, and details of Bangladeshi ownership in the investing entity. Manufacturing proposals now have a 60-day processing target. Other sectors have no fixed deadline.
Prepare and Apostille Documents Bangladesh joined the Hague Apostille Convention on July 29, 2024, with the Convention entering into force on March 30, 2025. This is very recent. Before March 2025, all Bangladeshi documents needed full embassy/consular legalization, which took 2-4 weeks.
Now, submit documents to the Ministry of Foreign Affairs in Dhaka for apostille. Bangladesh has launched an e-Apostille portal. Processing times are still stabilizing — expect 3-7 working days based on early implementation. As of March 2026, 114 of 127 Convention signatories have accepted Bangladesh's accession.
Documents in Bangla must include certified English translations for MCA submission.
Receive Certificate of Incorporation MCA issues the Certificate with PAN and TAN. Your company exists from this date.
Document Checklist and Authentication
- Passport copy (all pages, notarized)
- Address proof (utility bill or bank statement, less than 2 months old)
- Passport-size photographs
- Bank reference letter or last 6 months' bank statements
- Board resolution or authorization letter (in Bangla with certified English translation)
- MOA and AOA (drafted and notarized)
- Director declarations (INC-9)
- Proof of registered office in India (lease agreement or utility bill)
- Press Note 3 government approval letter
- Beneficial ownership declaration
All documents from Bangladesh must be apostilled through the Ministry of Foreign Affairs in Dhaka. The apostille system is operational since March 30, 2025. If you processed documents before that date, embassy attestation would have been required.
Documents in Bangla require certified English translations. MCA accepts only English filings.
India-Bangladesh DTAA: Tax Rates at a Glance
The India-Bangladesh DTAA was signed on October 27, 1991 — one of India's older tax treaties. Here is what you pay:
| Income Type | Without DTAA | With India-Bangladesh DTAA |
|---|---|---|
| Dividends (10%+ capital ownership) | 20% | 10% |
| Dividends (below 10% ownership) | 20% | 15% |
| Interest | 20% | 10% |
| Royalties | 20% | 10% |
| Fees for Technical Services | 20% | No specific FTS article — taxed as business profits (if PE) or under domestic law |
A few things to know. The India-Bangladesh DTAA is an older treaty (1991) and does not include a separate article for fees for technical services. FTS income from a Bangladeshi entity may be treated as business profits — taxable only if the Bangladeshi entity has a Permanent Establishment in India. If there is no PE, the FTS may not be taxable in India under the treaty. However, interpretations vary, and some practitioners apply the broader royalty article. Get professional advice on this point.
Interest earned by government institutions and central banks is exempt under the treaty. Surcharge and cess are not levied on top of treaty rates.
To claim DTAA benefits, you need a Tax Residency Certificate from Bangladesh's National Board of Revenue (NBR).
Realistic Timeline: 8-12 Weeks
For Bangladeshi investors, the timeline is longer than for most other nationalities because of the Press Note 3 government approval step.
- DSC + DIN: 1-3 days
- Name reservation: 1-4 working days
- Government approval under Press Note 3: 4-12 weeks (60-day target for manufacturing, no fixed timeline for other sectors)
- Document preparation and apostille in Bangladesh: 1-2 weeks
- SPICe+ filing to Certificate: 5-15 working days
- Bank account opening: 2-4 weeks (enhanced KYC)
- GST registration: 1-3 weeks
Total realistic timeline: 8-12 weeks minimum. Budget 14 weeks if the government approval runs into queries. The one advantage: the time zone difference between Bangladesh (UTC+6) and India (UTC+5:30) is only 30 minutes. Real-time coordination is easy.
Post-Registration Compliance Calendar
- Within 30 days of share allotment: File FC-GPR with RBI through your Authorized Dealer bank. Mandatory under FEMA.
- Board meetings: Minimum 4 per year. Not more than 120 days gap.
- AGM: By September 30 each year.
- AOC-4: Within 30 days of AGM.
- MGT-7: Within 60 days of AGM.
- Statutory audit: Mandatory every year.
- Income tax return: Due by October 31.
- GST returns: Monthly GSTR-3B and GSTR-1 if registered.
- Transfer pricing: Maintain documentation under Section 92D if transactions occur with the Bangladeshi parent. India's tax authorities pay close attention to cross-border transactions with neighboring countries.
Bank Account Opening: 2-4 Weeks
Opening a current account for a Bangladeshi-owned Indian company takes 2-4 weeks. Banks apply enhanced KYC. You need FATCA/CRS declarations, Authorized Dealer bank verification, and potentially a visit by one director.
Private banks like HDFC, ICICI, and Kotak tend to process faster than public sector banks. That said, the geographic proximity helps — a director in Dhaka can visit India more easily than someone in Santiago or Buenos Aires.
Profit Repatriation
Standard FEMA process with Press Note 3 compliance verification. Methods: dividends, royalties, management fees, share buyback.
Process: TDS deduction at DTAA rates (10% for dividends if 10%+ ownership, 10% for interest and royalties), Form 16A, CA certificate in Form 15CB, Form 15CA filed online, then wire through your Authorized Dealer bank.
Dividend Distribution Tax was abolished April 2020. Bangladeshi shareholders holding 10% or more of capital pay 10% on dividends. Those holding below 10% pay 15%.
Exit Strategy
Two paths out if needed.
Strike-off under Section 248 of the Companies Act, 2013: Dormant companies, no assets or liabilities, inactive for two years. Apply to the Registrar.
Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016: Active companies, special resolution, insolvency professional, 6-12 months.
For Bangladeshi-owned companies, the Registrar may take additional time to verify Press Note 3 compliance history before processing a strike-off.
How Beacon Filing Helps
We handle the complete India entry process for investors based in Bangladesh. From initial structuring through post-incorporation compliance, here is what we cover:
- Foreign Direct Investment advisory — route selection, sector analysis, RBI compliance, and FC-GPR filing
- Resident Director services — appointment of a qualified Indian resident director who meets the 120-day requirement
- Company setup and incorporation — SPICe+ filing, DSC, DIN, name reservation, and Certificate of Incorporation
- Tax and DTAA advisory — treaty benefit structuring, transfer pricing documentation, and annual compliance
- Accounting and statutory audit — bookkeeping, financial statements, ROC filings, and GST returns
Related Country Guides
Setting up from a different country? These guides cover similar territory:
- Register a Company in India from Singapore
- Register a Company in India from United Arab Emirates
- Register a Company in India from United Kingdom
- Register a Company in India from Sri Lanka
Get in Touch
Setting up an Indian company from Bangladesh? Talk to us. No commitment, no generic sales pitch. We will walk you through the structure, timeline, and costs specific to your situation.
WhatsApp: +91 874 501 3644 | Email: hello@beaconfiling.com
Frequently Asked Questions
- Press Note 3 of 2020: All Bangladeshi FDI requires mandatory prior government approval. No automatic route for any sector.
- March 2026 Amendment: Global investors with up to 10% Bangladeshi shareholding (non-controlling) can invest via automatic route. 60-day approval timeline for manufacturing FDI proposals.
- India-Bangladesh DTAA (1991): Dividends 10%/15%, Interest 10%, Royalty 10%. No specific FTS article.
- India-Bangladesh BIT (2009): Active with 2017 Joint Interpretative Notes. One of few Indian BITs still in force.
- Apostille available since March 2025: Bangladesh joined Hague Convention July 2024. Ministry of Foreign Affairs issues apostilles.
- SAFTA: Both countries are SAARC members with preferential tariff access.
Indian Embassy / Consulates
High Commission of India, Dhaka. Consulates in Chittagong, Rajshahi, Sylhet, Khulna. High Commission of Bangladesh, New Delhi. Consulates in Kolkata, Agartala, Guwahati, Mumbai.
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