One of the first decisions a foreign business makes when entering India is also one of the most consequential: which legal structure to set up under. Liability protection, tax treatment, funding options and how much day-to-day compliance you'll carry all trace back to this one choice.
There's no universally "best" structure — only the one that fits your specific plans. Here's how the three most common options compare.
Wholly-Owned Subsidiary (Private Limited Company)
A subsidiary is a separate Indian legal entity, typically 100% owned by your overseas parent company in most sectors. It offers the strongest liability protection — your parent company's exposure is limited to its investment in the subsidiary — and it's the structure most Indian and foreign investors, banks and enterprise clients are comfortable transacting with.
Best for: Long-term operations, building a local team, signing contracts directly with Indian clients, and businesses planning to raise funding in India.
Branch Office or Liaison Office
Rather than incorporating a new entity, an existing foreign company can register a Branch or Liaison Office to operate in India under RBI approval. A Liaison Office can only represent the parent (no local revenue); a Branch Office can conduct limited commercial activities on the parent's behalf.
Best for: Market research, representing your brand before committing further, or executing a specific, time-bound contract.
Limited Liability Partnership (LLP)
An LLP combines limited liability with a simpler compliance regime than a Private Limited Company — no mandatory statutory audit below a turnover threshold, and no dividend distribution tax. The trade-off is that LLPs are generally less attractive to venture investors, who almost always prefer investing into a Private Limited Company.
Best for: Professional services firms, consultancies, and founders who don't plan to raise institutional funding.
| Factor | Subsidiary (Pvt Ltd) | Branch / Liaison Office | LLP |
|---|---|---|---|
| Liability protection | Full | None — parent is liable | Full |
| Foreign ownership | Up to 100% (most sectors) | N/A — extension of parent | Up to 100% (with conditions) |
| Investor readiness | High | Not applicable | Low |
| Compliance burden | Higher | Moderate | Lower |
How to Decide
The right structure depends on your timeline, funding plans, and how much commercial activity you need to conduct in India from day one. We typically start with a short conversation about your business goals before recommending a structure — getting this right at the start avoids a costly restructuring later.