Why do most Indian developers prefer full-time jobs over contracting?

I have quite a few colleagues in the UK, Europe, and the US who work as independent contractors instead of full-time employees. Many of them have their own registered company where they are basically the only employee. They invoice clients, earn well, and also get some tax planning benefits through business expenses and company structures.

I’m curious why this model doesn’t seem very common in India, especially in tech.

Is it because of regulations, taxation complexity, or company hiring preferences? Or is it just cultural/job-security mindset where people prefer full-time employment?

Also, are there developers here in India who work as independent contractors for MNCs or foreign companies? If yes:

• How common is it in India?
• Do you work as a sole proprietor, LLP, OPC, or private limited company?
• Is it financially better compared to a full-time job after taxes and compliance?
• What challenges do you usually face (legal, payment, stability, etc.)?

Would love to hear real experiences from people doing this.