Most foreign companies that call us have already half-decided. They want to sell in India. Hire in India. Invoice in India. They just need someone to confirm which structure the law actually expects them to use. Nine times out of ten, it is the subsidiary. Let me show you why - and when it is not.

Here is the analogy I use on every first call. A subsidiary is your child, grown up, with their own house and their own PAN number. They earn their own money. Their debts are theirs. A branch office is your extended arm. It reaches into India, but it is still your arm - and anything it touches touches you. A liaison office is a scout. It can look. It can listen. It cannot sign a deal.

Keep that picture in your head. Now the law.

What is a wholly owned subsidiary?

A subsidiary is a separate Indian company - usually a private limited company - owned by your foreign parent company. It is its own legal person under Indian law. That one fact changes everything. It can sell products. Provide services. Hire employees. Sign contracts. Open bank accounts. Own assets. Anything an Indian company can do, it can do.

The setup needs a minimum of two directors. At least one must be a resident director - someone who has stayed in India for 182 days or more in the previous calendar year. That resident director does not need to own a single share. The parent company can hold 100% of the shares wherever India's FDI policy allows it. That covers most sectors under the automatic route. Some sectors need government approval first. The rules here are sector-specific and they change over time. Get current advice before you act. Seriously.

There is no minimum share capital requirement. The subsidiary files its own taxes. It does its own annual filings. And its liability stays inside the subsidiary - it does not flow straight up to the parent. That is the whole point of the grown-up child. For a foreign company planning real operations in India, this is the default choice. Our company registration in India for foreigners page walks through the remote process, the documents, and the timelines.

When does a branch office make sense?

A branch office is not a separate company. It is an extension of your foreign parent, operating on Indian soil. Because of that, it needs prior approval from the Reserve Bank of India before it can be set up. That is a regulatory step a subsidiary simply does not have.

A branch can only do business in the same line as the parent company. Its activities are narrower than a subsidiary's. It suits one specific situation: a foreign company that wants a formal presence to support its existing business - executing projects, servicing clients in India - without creating a separate Indian entity. Remember the arm. It reaches, but it is still you. The trade-off is less freedom and a direct legal connection back to the parent.

What is a liaison office actually for?

A liaison office - sometimes called a representative office - is for representation only. It can explore the market. Build relationships. Act as a communication channel between the parent company and Indian parties. That is the full list.

It cannot do commercial business. No selling. No invoicing. No earning income in India. Like a branch, it needs RBI approval. It fits companies that are still studying the Indian market and want a listening post before committing to real operations. The scout again. If you already know you want to trade, hire, or bill customers in India, a liaison office is the wrong vehicle. You will outgrow its limits within months. I have seen it happen.

Where does an LLP fit in?

Quick detour, because someone always asks. A Limited Liability Partnership can receive up to 100% FDI in sectors where it is permitted. Its ongoing compliance is lighter than a company's. It suits professional services and smaller operations well.

The trade-off is perception and structure. A private limited company is still the more recognised vehicle for operating businesses, raising capital, and building a team at scale. If you plan to grow big, start as the thing big companies recognise.

Subsidiary vs branch vs liaison office: the practical differences

  • Separate legal entity: a subsidiary is one. A branch and a liaison office are extensions of the parent.
  • RBI approval needed: yes for a branch and a liaison office. No for a subsidiary - though FDI reporting still applies after the capital comes in.
  • Can do commercial business: a subsidiary, fully. A branch, within the parent's line of business. A liaison office, not at all.
  • Ownership: a subsidiary can be 100% foreign-owned where FDI policy permits. Branches and liaison offices belong to the parent by definition.
  • Liability: a subsidiary's liability stays inside the subsidiary. A branch's exposure connects straight back to the parent.
  • Typical use: subsidiary for real operations. Branch for project or service support presence. Liaison office for market exploration only.

How do you make the call?

Ask yourself one question. Do you want to do business in India, or do you want to look at India? If the answer is business - revenue, customers, employees - set up a subsidiary. If the answer is a limited support presence tied to the parent's existing work, consider a branch. If the answer is purely exploratory, a liaison office does the job.

Most foreign companies we speak to already know they want to operate. They just are not sure which structure the law expects. The honest answer, in the large majority of cases, is the subsidiary. It gives you the most freedom with the cleanest compliance path. If you want to go deeper on that route, our guide to setting up a company in India as a foreigner covers it step by step.

What to do next

The structure decision shapes everything that follows. Approvals. Documents. Timelines. Ongoing compliance. Get it right at the start and the rest is straightforward. Tell us what your company does and what you want the India presence to achieve. We will tell you plainly which structure fits, and give you a fixed written quote for the setup. Start the conversation with our team - call us on +91 7982659624, write to info@complykart.com, or reach us on WhatsApp. It is free, and there is no obligation.