Though a small but steady stream of Americans have given up their U.S. citizenship as a way to cut the ties between themselves and taxes, most of us would prefer a less extreme approach. Starting a business is costly at best, and in the US it can be extremely competitive, even if you’re in a niche industry.

Did you know about the various benefits to starting your business abroad, however? India is becoming a hot spot for American entrepreneurs — and with good reason.

Before you incorporate or start looking for American commercial space, stop and assess if that’s a smart move (financially and otherwise). Whether you vacation or volunteer in India, or choose to launch a business there, the country is a hub of activity.

Here are a few reasons why starting your business in India might be a smart move.

1. Foreign income tax exemption

The US has agreements with certain countries, including India, where you can work and do business abroad and be exempt from paying the majority of US taxes. You’ll still need to pay self-employment tax (which includes Social Security and Medicare) as well as a portion of federal taxes. But you don’t have to pay state taxes or a portion of federal taxes.

2. The dollar-to-rupee ratio

If you’ll still have American (or European) clients, you’ll be making a US salary in a country where that means you’re instantly wealthy. There’s no minimum wage in India, but if there were, the average fast food worker in Mumbai makes around $3-$4 per hour.

3. Lower overhead

Just like in the US, the cost of housing can vary tremendously. In certain areas of Mumbai, homes are more expensive than in Manhattan. If you go just a little off grid, however, you can find housing that’s unbelievably plush yet gratifyingly cheap.

4. Easy traveling

If your business requires global travel, India is easily accessible to many popular destinations, including the United Arab Emirates, Africa, and Europe. It’s a geographically large country, but unlike the US it’s not several hours away from the nearest financially stable foreign markets.

5. High-quality workers

Living in India means you have access to some of the most highly educated and committed employees you could ask for. You’ll also be living in a country which is accustomed to operating by bribery, like it or not, which means there are financial ways to get around red tape that don’t exist in the US at that level. You might regard this as a pro or con, but it’s something to consider.

Who says you have to start a business in your home country? Consider what India can do for your startup.

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Originally posted on June 30, 2014 @ 7:25 pm


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