/// Set Up a Subsidiary Company in India
India presents an exciting market for foreign businesses eager to expand their global footprint. With a rapidly growing economy and an increasingly business-friendly environment, India offers countless opportunities for international companies to invest, set up a business, and explore diverse industries. However, before diving in, it’s crucial to assess all available options and make informed decisions that align with your company’s strategic goals and market potential.
Many foreign businesses already engaged with Indian distributors are now considering establishing a direct presence in India. For such companies, it’s important to have a well-thought-out approach. Whether it’s through a joint venture, acquisition, or establishing an independent entity, the process of doing business in India has been significantly streamlined, especially with relaxed foreign direct investment (FDI) regulations in key sectors.
Understanding the Indian Labor Market
India offers a vast pool of skilled and educated workers.
However, the competition for employment opportunities is intense, and
businesses must navigate through a large number of candidates for each open
position. To streamline the hiring process, foreign companies should establish
a well-defined recruitment strategy that effectively filters the best talent
from a broad pool of applicants.
Business Entry Options for Foreign Companies in India
India offers various legal structures for foreign companies seeking to establish a business presence. These include:
Wholly-Owned Subsidiary (WOS)
One of the most common ways for foreign businesses to enter the Indian market is by setting up a wholly-owned subsidiary (Private Limited Company). The process is relatively quick for most sectors and is often facilitated via the Automatic Route, which does not require prior government approval. However, for certain industries, approval from the Foreign Investment Promotion Board (FIPB) may still be necessary. This model allows foreign companies to operate across various business domains—such as trade, services, consulting, and manufacturing—and is taxed similarly to domestic Indian companies.
To register your company in India, the following documents are required:
- A commercial register excerpt of the parent company
- The parent company’s articles of association
- Proof of trademark registration (if applicable)
All documents must be in English or accompanied by English translations and notarized. They must also be certified by the relevant authorities in the parent company’s home country and by the Indian consulate.
Branch Office
A branch office can be established with approval from the Reserve Bank of India (RBI), and must be registered with the Registrar of Companies (ROC). This office can provide consulting, technical support, and liaise between the parent company and local clients. Branch offices are allowed to import and export goods, serve as sales or purchasing agents, but cannot directly engage in manufacturing or processing within India. It’s important to note that taxes imposed on branch offices are higher than those on wholly-owned subsidiaries.
Project Office
If your company is involved in executing a project in India, a Project Office may be the ideal structure. The RBI grants approval for project offices when certain conditions are met, such as securing a project contract with an Indian company, receiving direct financing from abroad, or the project being promoted by a bilateral or multilateral financing agency. Project offices, like branch offices, face higher tax obligations compared to subsidiaries. Once the project concludes, the office must be closed.
Liaison Office
A Liaison Office is primarily used for non-commercial purposes such as market research, promoting the parent company’s products, and establishing local business connections. While it requires approval from the RBI and registration with the ROC, a liaison office cannot engage in revenue-generating activities. Its purpose is purely representational and operational in nature.
Limited Liability Partnership (LLP)
A relatively newer business model in India, the LLP is ideal for foreign companies looking for flexible partnership structures. However, forming an LLP requires the approval of the FIPB and registration with the ROC. Additionally, LLPs in India must have at least one Indian resident partner. Foreign companies should be aware that LLPs are not allowed to raise external commercial borrowings (ECB), which limits their access to foreign loans secured by the parent company.
Understanding the Indian Labor Market
India offers a vast pool of skilled and educated workers.
However, the competition for employment opportunities is intense, and
businesses must navigate through a large number of candidates for each open
position. To streamline the hiring process, foreign companies should establish
a well-defined recruitment strategy that effectively filters the best talent
from a broad pool of applicants.
Understanding the Reporting Obligations for Foreign Companies in India
Foreign companies must adhere to specific reporting requirements, similar to Indian businesses. The nature of these obligations depends on factors such as:
- Type of business (manufacturing, services, trade)
- Legal structure (LLP, private limited company, joint-stock company)
- Location of operations (certain states like Maharashtra or Gujarat have unique reporting rules)
- Industry segment (pharmaceuticals, textiles, banking, etc.)
Reporting falls into two categories:
- Periodic Reporting: Regular reports (monthly, quarterly, or annually) that must be submitted as per Indian corporate and tax laws.
- Event-Based Reporting: One-time reports triggered by specific events, such as changes in management or ownership, business activity, or financial events.
Understanding the Indian Labor Market
India offers a vast pool of skilled and educated workers.
However, the competition for employment opportunities is intense, and
businesses must navigate through a large number of candidates for each open
position. To streamline the hiring process, foreign companies should establish
a well-defined recruitment strategy that effectively filters the best talent
from a broad pool of applicants.
Navigate the Path to Success in India with Expert Guidance
Setting up a business in India may seem complex, but with the right legal and financial support, foreign companies can successfully expand their operations. Whether you are exploring market entry options, legal structures, or compliance requirements, partnering with a trusted business consultancy in India will simplify the process and help you make well-informed decisions.
Our firm specializes in assisting foreign businesses—especially from Australia, Europe, Russia, and the USA—to navigate the Indian market. We offer tailored solutions that ensure your company’s smooth entry, successful establishment, and continued growth in India.
Understanding the Indian Labor Market
India offers a vast pool of skilled and educated workers.
However, the competition for employment opportunities is intense, and
businesses must navigate through a large number of candidates for each open
position. To streamline the hiring process, foreign companies should establish
a well-defined recruitment strategy that effectively filters the best talent
from a broad pool of applicants.
“Ready to Expand Your Business in India?”
Our team of expert consultants is passionate about helping businesses like yours successfully establish and grow in the Indian market. With our in-depth knowledge and local expertise, we ensure your business gets off to a strong and seamless start in India.