By Manu Rao | Updated March 2026
The Scenario
A premium skincare and cosmetics brand based in Lyon, France, with EUR 12 million in annual revenue across Europe, wants to enter India. The brand is positioned between mass-market brands (like Lakme) and ultra-luxury (like La Mer) — targeting urban, mid-to-high income Indian consumers. The company has 60 employees in France and sells through its own e-commerce site and select retail partners across the EU.
They want to sell in India through both their own website (D2C) and marketplace platforms like Nykaa and Amazon India. The plan requires an Indian entity to handle warehousing, distribution, customer service, and regulatory compliance for cosmetic products. The initial investment is EUR 500,000 (about Rs 4.5 crore).
Why India?
India's beauty and personal care market reached $20 billion in 2025 and is growing at 10-12% annually. The premium segment is growing even faster at 15-18%, driven by rising disposable incomes in cities, social media influence, and a growing awareness of ingredient quality. India has 210 million women aged 20-45 in urban areas — the core demographic for premium skincare.
French cosmetics brands have a strong reputation in India. L'Oreal, Chanel, Dior, and Clarins are established players. But the mid-premium segment (products priced at Rs 800-2,500) is less crowded and growing rapidly. Korean beauty brands have captured some of this space, but French brands still carry a perception advantage around quality and heritage.
France-India economic ties are strong. Over 1,000 French companies operate in India, and bilateral trade crossed EUR 13 billion in 2024. The Jaipur-Paris direct flight launched in 2024 reflects growing people-to-people connections.
Entity Choice
A Private Limited Company (Wholly Owned Subsidiary) is necessary. Indian regulations on cosmetics (Central Drugs Standard Control Organisation — CDSCO) require a local entity to hold product registration certificates. A foreign company cannot directly import and sell cosmetics without an Indian authorized agent or subsidiary holding the registration.
The subsidiary will import finished products from France, hold them in a warehouse, and distribute through online and offline channels. If they later decide to manufacture in India (contract manufacturing or an owned facility), the Private Limited structure supports that too.
A Branch Office cannot engage in retail trading under FEMA rules. A Liaison Office can only act as a communication channel. Neither works for a company that needs to buy, stock, and sell products in India.
FDI Route and Sector Rules
This is where it gets specific. The cosmetics brand wants to sell through its own website (single-brand D2C) and through marketplaces. FDI rules for retail have specific conditions:
- Single Brand Retail Trading (SBRT): 100% FDI allowed under automatic route (up to 49%) and government route (49-100%). Since this is a single brand selling its own products, SBRT rules apply. For FDI above 51%, the company must source 30% of the value of goods from India within 5 years (the "local sourcing norm").
- E-commerce (marketplace model): 100% FDI under automatic route. The subsidiary can sell on Nykaa and Amazon as a seller on the marketplace. But inventory-based e-commerce (where the platform owns the inventory) has restrictions for FDI-backed companies.
For initial entry, the company should structure as a single-brand entity selling through its own website and through marketplaces as a third-party seller. Government approval is needed for FDI exceeding 49% in single-brand retail. Since the French parent wants 100% ownership, they will need to apply through DPIIT for approval beyond 49%.
France is a Hague Apostille Convention member. Documents are apostilled through the French Court of Appeal (Cour d'appel) or the Procureur de la Republique. Processing takes 3-5 business days.
Registration Process
- Board Resolution (France) — The French company's board passes a resolution to set up the Indian subsidiary.
- Apostille — French corporate documents (Extrait Kbis, board resolution, directors' passports) apostilled through the relevant Cour d'appel. French documents must be translated into English by a certified translator.
- DSC and DIN — For the appointed directors.
- SPICe+ Filing — Name reservation and incorporation.
- Post-Incorporation Registrations:
- CDSCO Registration — Cosmetic products imported into India require registration under the Drugs and Cosmetics Act 1940 and Drugs and Cosmetics Rules 2020. Each product must be registered, and the Indian entity must have a licensed cosmetics import facility.
- FSSAI License — If any products contain ingestible ingredients (lip products, oral care), FSSAI licensing may apply.
- BIS certification — Certain cosmetics may require BIS standards compliance.
- Legal Metrology Act compliance — All products sold in India must have labels in English/Hindi with MRP, ingredients, manufacturer details, and batch information.
- Trademark Registration — Register the brand in India (takes 6-12 months but application provides protection from filing date).
Timeline: Company incorporation takes 3-4 weeks. CDSCO product registration can take 3-6 months per product category. Plan for 6-8 months from start to first commercial sale.
Tax Structure
The India-France DTAA has been in force since 1994. Key rates:
| Income Type | DTAA Rate | Domestic Rate |
|---|---|---|
| Dividends | 10% | 20% |
| Interest | 10% | 20% |
| Royalties | 10% | 20% |
| FTS | 10% | 20% |
The Indian subsidiary pays 25% corporate tax under Section 115BAA. Imported cosmetics attract customs duty ranging from 10-20% depending on the HS code (most skincare falls under Chapter 33 at around 10-20% basic customs duty, plus IGST). The effective landed cost can be 35-45% higher than the ex-factory price in France.
Royalties and brand licensing fees paid to the French parent attract 10% withholding under the DTAA. These are legitimate business expenses for the Indian subsidiary and reduce its taxable profit. Transfer pricing documentation (Section 92) is required for all payments between the subsidiary and the French parent.
In France, corporate tax (Impot sur les societes) is 25% on profits above EUR 42,500. Credit for Indian taxes on dividends is available. The French parent includes the Indian subsidiary's dividends in its consolidated accounts under French GAAP or IFRS.
Ongoing Compliance
- MCA filings — Board meetings, AGM, MGT-7A, AOC-4
- Tax — Corporate tax, advance tax, TDS, transfer pricing report
- GST — Monthly returns; cosmetics attract 18-28% GST depending on the product category (skincare at 18%, color cosmetics at 28% for many items)
- Customs — Import documentation, customs valuation, duty payment
- CDSCO compliance — Periodic renewal of product registrations, post-market surveillance reporting, adverse event reporting
- Legal Metrology — Label compliance checks, MRP declarations
- RBI FLA Return — Annual filing
Common Pitfalls
- Underestimating CDSCO registration timelines — Each cosmetic product requires separate registration. If the brand has 40 SKUs, this means 40 registration applications. Prioritize the top 10-15 products for initial launch and file the rest in batches.
- Getting the retail FDI structure wrong — The difference between single-brand retail (SBRT) and multi-brand retail has real consequences. If the Indian subsidiary starts selling products from other brands (even accessories), it could trigger multi-brand retail restrictions where FDI above 51% requires government approval with additional conditions. Keep the entity focused on the single brand.
- Ignoring Indian labeling requirements — Products cannot be sold with only French or English labels. Indian regulations require specific information in English and/or Hindi, including MRP in Indian rupees, ingredients in INCI nomenclature, and the Indian entity's name and address. Redesigning labels takes time and must be factored into the launch timeline.
- Not planning for marketplace compliance — Nykaa, Amazon India, and Flipkart each have their own seller onboarding requirements, including GST registration, bank account verification, product listing standards, and quality certifications. Budget 4-6 weeks for marketplace onboarding per platform.
How Beacon Filing Helps
Beacon Filing assists French companies with subsidiary setup in India, including apostille coordination, SPICe+ filing, and the complex post-incorporation licensing required for cosmetics and consumer goods. We work with CDSCO consultants to manage product registration and with customs brokers for import compliance.
Our compliance packages for retail/e-commerce subsidiaries cover MCA, GST, customs, and CDSCO reporting — keeping the French parent informed through monthly reports aligned with the French fiscal calendar.