The options at a glance
A foreign company can be present in India through an Indian company it owns (alone or with a partner), through an LLP, through an office of the foreign company itself, or without any entity at all. The choice drives approvals, the activities allowed, the tax rate and the compliance load.
| Vehicle | What it may do | Approval needed | Suits |
|---|---|---|---|
| Wholly owned subsidiary (private limited company) | Any lawful business within its objects and the FDI policy. At least 2 shareholders (up to 200) and 2 directors, one meeting the 182-day residence test | None on the automatic route without a land-border owner; otherwise government route. Incorporated with the Registrar through SPICe+ | Operating businesses that want full control and limited liability |
| Joint venture company | As a subsidiary, with an Indian partner; caps and conditions apply to the total foreign stake | As for the sector. Land-border investors taking up to 49% in a fast-track sector, where resident Indians keep majority ownership and control, have a 60-day decision target | Capped sectors, or where a partner brings licences, land or customers |
| Limited liability partnership (LLP) | Business with partnership-style governance and limited liability; at least 2 designated partners, one resident; LLP agreement filed within 30 days | Automatic route only in sectors fully open under the automatic route with no FDI-linked performance conditions | Service businesses in fully open sectors |
| Branch office | Activities RBI permits for branches, such as export and import, consultancy and research on behalf of the parent | Authorised dealer bank; parent needs a sound financial track record. RBI approval in specified cases, such as defence or telecom | Serving Indian clients directly without a subsidiary |
| Liaison office | Represents the parent in India; may not carry on business. Valid generally for three years | Authorised dealer bank, with the same track-record test and RBI referral cases as a branch | Market study and relationship building before committing capital |
| Project office | Executes a specific contract in India; valid for the tenure of the project | Authorised dealer bank under RBI’s project office rules | Contractors delivering a defined Indian project |
| No entity yet: distributor or employer of record | Sell through an Indian distributor or importer; engage staff through a third-party employer of record | None for the foreign company itself | Testing demand; review tax and contract exposure first |
A company or LLP is an Indian resident entity. Branch, liaison and project offices are extensions of the foreign parent.
Wholly owned subsidiary
The private limited company is the default vehicle. It can carry on any activity that is open to foreign investment and, as an Indian company, it may opt for the concessional corporate tax regime. It is incorporated through a single SPICe+ filing that also covers DINs, PAN and TAN, and can request GST, EPFO and ESIC registrations through the linked AGILE form. The ten steps are set out in the set-up roadmap.
Joint ventures
A joint venture company is a subsidiary with an Indian partner. Sector caps are applied to the total foreign stake, so two foreign partners together cannot exceed the cap for the sector.
A joint venture is also the structure used by the land-border fast track. A land-border investor taking up to 49% in a company in a listed sector, where resident Indians keep majority ownership and control, has a 60-day decision target. See land-border investors.
LLP
An LLP needs at least two designated partners, one of them resident in India, and its LLP agreement must be filed within 30 days of incorporation. FDI into an LLP is on the automatic route only where the sector is fully open under the automatic route and carries no FDI-linked performance conditions. Capital received into an LLP is reported in Form LLP (I) within 30 days.
Branch, liaison and project offices
These are offices of the foreign company itself, not separate Indian companies. They are opened through the authorised dealer bank under RBI’s directions on branch, liaison and project offices.
- A branch office is limited to export and import, consultancy, and research on behalf of the parent.
- A liaison office may not carry on business. It is valid generally for three years.
- A project office is tied to one contract and lasts for the project.
Branch and liaison offices file an Annual Activity Certificate; confirm the current due date with the authorised dealer bank.
No entity yet
A business can sell into India through a distributor or importer, or hire staff through a third-party employer of record, without forming an entity or seeking approval. Brands can also enter retail without FDI through an Indian franchisee or licensee; Lush did so in November 2025.
Note: Operating without an entity does not rule out a taxable presence. Payments from India above ₹2 crore a year, or interaction with 300,000 or more users in India, can create a significant economic presence, and control over Indian operations can create a permanent establishment (the Supreme Court’s Hyatt decision, July 2025).
How the choice affects tax
| Vehicle | Tax position for tax year 2026-27 |
|---|---|
| Subsidiary on the concessional regime (s.200) | 22% + 10% surcharge + 4% cess = 25.168% effective, at any income level |
| Subsidiary on the normal regime | 30%, or 25% if FY2024-25 turnover was up to ₹400 crore; top effective rate 34.944% |
| Branch or PE of a foreign company | 35% base; effective 36.40% (income up to ₹1 crore), 37.128% (₹1–10 crore), 38.22% (above ₹10 crore) |
A subsidiary’s profits reach the parent as dividends, which carry 20% withholding under domestic law before treaty relief. See corporate tax and withholding and capital gains.
What to check next
- Confirm the target activity is open to FDI on the automatic route before choosing an LLP or a branch.
- Identify a director who will meet the 182-day residence test from the start.
- Screen the full ownership chain for land-border beneficial owners, which changes the approval route for every vehicle.
- If staying without an entity, review the contracts and decision rights of any India-based people for PE and significant economic presence exposure.
- Compare the after-tax position of a subsidiary and a branch over the planning period, including dividend withholding.