Doing Business in India in 2026: What's Actually Changed

The Ranking Everyone Quotes Is Six Years Out of Date

A striking number of “doing business in India” articles still cite India's position — 63rd — on the World Bank's Ease of Doing Business index. That number is real, but it's from the 2020 edition, built on 2019 data. The World Bank discontinued the Doing Business report entirely in September 2021, after an internal ethics review found data irregularities in how certain countries' rankings had been calculated.

Its replacement, the Business Ready (B-READY) framework, launched in 2024 with a broader set of measures across business entry, location, utilities, labor, finance, trade, taxation, dispute resolution, competition, and insolvency. India is part of the assessment cycle due for publication in 2026. Until that report lands, there is no current, official global ranking for India to point to — which means any source still asserting “India ranks 63rd” is working from data older than the current government's most recent full term.

GST 2.0: The Biggest Indirect Tax Reset Since 2017

On 22 September 2025, India rolled out what's being called GST 2.0 — the most significant restructuring of the Goods and Services Tax since it was introduced. The old four-slab structure was collapsed to essentially two working rates, 5% and 18%, with a 40% slab carved out specifically for luxury and sin goods. The separate Compensation Cess was discontinued and its incidence folded into the headline rate for the items that previously carried it.

A number of everyday goods, select insurance products, and household essentials moved to nil or 5% as part of the reset. For a foreign business already operating in India, or evaluating entry, the practical implication isn't abstract: product and service classifications, invoicing templates, and ERP tax codes set up under the old structure are worth re-checking against the new schedule rather than assumed to still be correct.

Four Labour Codes Are Now Law — But the Rules Are Still Catching Up

On 21 November 2025, India brought its four consolidated Labour Codes — the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code — into force, replacing 29 separate labour statutes that had accumulated over decades. It's the most significant overhaul of India's labour law framework in a generation.

The wrinkle worth knowing: the Central and most State-level rules that determine exactly how the codes apply in practice were still being finalised at the point of notification, with full rule-making expected to conclude around 1 April 2026. For any company employing people in India — directly or through an India entity — this is a live compliance item to track through the first half of 2026, not a change you can file away as already fully absorbed into payroll and HR policy.

A Record FDI Year — With a Catch in the Fine Print

Foreign investment into India hit a record in FY2025-26: gross FDI inflows reached approximately US$94.5 billion on RBI data, up 17% year-on-year, while DPIIT's narrower measure showed US$58.85 billion, up 18%. Equity inflows specifically rose to roughly US$62.3 billion from US$51 billion the prior year, with the RBI-reporting channel accounting for the bulk of the increase.

The number that gets less attention: net FDI — gross inflows minus repatriation, disinvestment, and outbound investment by Indian companies — came in at only around US$7.65 billion for the year, per RBI data. That gap between a record gross figure and a comparatively modest net figure is the real story. It doesn't mean foreign investor confidence is soft — the gross numbers argue otherwise — but it does mean repatriation, dividend mechanics, and exit planning deserve to be built into an India entity's structure from day one, rather than addressed only once profits are ready to move.

The Growth Backdrop Behind the Policy Changes

These regulatory shifts aren't happening in isolation — they're landing against a growth backdrop that has consistently outperformed forecasts. The National Statistical Office's first advance estimate put FY2025-26 GDP growth at around 7.4%, and the RBI revised its own projection upward over the course of the year, from an initial 6.8% to 7.3%. Actual quarterly prints have run ahead of even those revised numbers, with Q2 FY2025-26 GDP growth coming in at 8.2%, driven by domestic consumption, manufacturing, and services.

None of this guarantees a smooth entry — growth and regulatory ease are different things, which is precisely why the B-READY assessment exists as a separate measure. But it does mean the market a foreign company is evaluating in 2026 is, on the growth numbers at least, moving faster than most planning assumptions from a few years ago accounted for.

What This Means If You're Evaluating India Right Now

None of these developments changes the fundamentals of India market entry — but each one changes an input into how you should plan it:

• Don't plan tax classification or pricing off a pre-GST 2.0 assumption — verify against the current schedule
• Build repatriation and dividend planning into your entity structure now, not after profits accumulate — the net-versus-gross FDI gap is a real signal, not a technicality
• Treat labour-code compliance as an evolving requirement through at least mid-2026, and revisit your HR and payroll setup once the remaining rules are notified
• Discount any source still citing a specific global ease-of-doing-business rank for India — there currently isn't a current one, and the 2026 B-READY report will be the first credible replacement

If you're at the stage of actually working through entity selection, FDI eligibility, and which route to market fits your business, that's the strategic layer our Doing Business in India guide is built around — start with Why India if you haven't committed yet, or Pre-Incorporation Planning if you have.

How AU Corporate Can Support Your India Entry

We help global businesses track exactly this kind of regulatory shift as part of their India entry and ongoing compliance — not as a one-time briefing, but as part of how we structure, incorporate, and support your entity on an ongoing basis. Our services include entry strategy and entity structuring, incorporation and regulatory support, tax advisory and transfer pricing, GST and labour-law compliance management, and accounting and financial reporting support.

We focus on making sure your India structure reflects the current rules, not the rules that were current when the plan was first drawn up.

Frequently Asked Questions

Conclusion

The case for doing business in India hasn't changed — the market size, growth trajectory, and long-term opportunity remain the reasons companies look at it in the first place. What has changed is the regulatory detail underneath that case: a rebuilt GST structure, a new labour-law framework still finishing its rollout, an FDI picture that rewards careful repatriation planning, and a global ranking system that's mid-transition. Getting the current details right — not the details from whenever the last guide you read was written — is what actually determines how smoothly an India entry goes.

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If you are planning to enter India or would like to better understand how these recent changes affect your structure, our team would be happy to assist.

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