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/ 01DECISION MAP™AVAILABLE · REVIEWED 12 NOV 2026

Entering India: subsidiary, LLP, branch or liaison office

Which vehicle should a foreign company use for its first presence in India? Compare the four common entry vehicles on what each may do, how it is approved, how it is taxed and how money moves.

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Written for: Foreign companies planning a first presence in India, and their finance and legal teams. A Decision Map is a structured comparison, not a professional opinion: each point shows its source and the date it was checked.

/ 02COMPARE
ROUTES CATEGORIES
Category Private limited subsidiary
Companies Act 2013		 LLP
LLP Act 2008		 Branch office
RBI approval		 Liaison office
RBI approval
Permitted activities
What may it do?		 Any lawful business, subject to sector rules under the FDI policy. General information Business in sectors where 100% FDI is allowed under the automatic route without performance conditions. General information Only activities permitted for branches (for example export/import, consultancy, representing the parent); manufacturing is not allowed. [1] Liaison activities only: a channel of communication with the head office. It cannot undertake business or earn income in India. [1]
Approval route
Who approves it?		 Incorporation with the Registrar of Companies; FDI reporting through an authorised bank. Government approval only in approval-route sectors. General information Registration with the Registrar; FDI reporting through an authorised bank. General information Application through an Authorised Dealer Category-I bank under FEMA rules; the RBI allots a unique identification number. [1] Same route as a branch; approval is initially granted for three years and may be extended. [1]
Income tax
What headline rate applies?		 Domestic company: 22% under the concessional regime of section 115BAA (about 25.17% with surcharge and cess), or 30% under the regular regime. [3] [4] Taxed as a firm at 30% plus surcharge and cess; profit shares are not taxed again in partners' hands. [4] Taxed as a foreign company at 35% (reduced from 40% from 1 April 2024), plus surcharge and cess. [4] No taxable business income, as it may not earn income; annual filings still apply. [1]
Funding and repatriation
How does money move?		 Equity and debt under FDI and external commercial borrowing rules; dividends paid after tax. General information Capital contribution and profit share; transfers reported through the bank. General information Profits may be remitted to the head office after tax, through the bank. [1] Expenses met entirely by inward remittances from the head office. [1]
Liability and substance
Who carries the risk?		 Separate legal entity with limited liability; resident director required. General information Separate legal entity with limited liability; at least one resident designated partner. General information Not separate from the parent: the foreign company is directly exposed in India. [1] Not separate from the parent; a permanent establishment risk arises if activity goes beyond liaison. General information
UNCERTAINTIES

What the evidence cannot settle

  • The RBI consulted in October 2025 on draft regulations to replace the 2016 regulations for branches and offices; check whether they have been notified before relying on the current rules.
  • Concessional tax regimes have conditions and cannot be withdrawn once chosen.
  • Sector caps and approval-route sectors change through FDI policy updates.
FOR YOUR ADVISERS

Questions needing qualified advice

  • Is the planned activity in an automatic-route sector?
  • Will the Indian presence earn income from Indian customers from day one?
  • How will transfer pricing apply to services between the parent and India?
  • What resident director or designated partner arrangements are needed?
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Take it further

/ 03SOURCES4 SOURCES · CHECKED 12 NOV 2026
  1. Master Direction: Establishment of Liaison/Branch/Project Offices in India by Foreign Entities · Reserve Bank of India · 2016-01-01 · checked 12 Nov 2026
  2. Draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025 (consultation) · Reserve Bank of India · 2025-10-03 · checked 12 Nov 2026
  3. Tax rates for companies · Income Tax Department, Government of India · checked 12 Nov 2026
  4. Memorandum explaining the provisions of the Finance Bill · Ministry of Finance, Government of India · checked 12 Nov 2026

Prepared by Intelligence desk · AI-assisted research, sources checked 12 Nov 2026. Points marked "General information" are widely published practice and should be confirmed with qualified advisers. Not legal, tax, investment or financial advice. How research is reviewed · Report a correction