The entity structure you choose is the first real decision of your India entry, and it quietly shapes everything that follows: how much you can do, how much tax you pay, how exposed your parent company is, and how much compliance you carry. Get it right and the rest of the setup falls into place.
Start with the question that matters most
Before comparing forms, answer one thing honestly: do you intend to earn revenue in India in the near term, or are you here first to understand the market and build relationships? That single answer removes half the options.
Liaison office: a presence without operations
A liaison office lets a foreign company hold a presence in India without carrying out commercial or revenue-generating activity. It cannot sign revenue contracts, raise invoices, or trade. Because it earns nothing in India, it is funded entirely by inward remittance from the parent and generally pays no Indian income tax.
Best for: market research, brand representation, and relationship-building before you commit to operations. See market research services.
Watch out for: activity restrictions are strict. Stepping over them is a FEMA contravention, not a grey area.
Branch office: limited operations under the parent's name
A branch office lets an established foreign company carry out a defined set of commercial activities while remaining an extension of the parent. Permitted activities include export/import, professional services, research, and technical support. It can earn income and is taxed at the foreign-company rate - reduced from 40% to 35% (plus surcharge and cess) from the 2024 financial year.
Best for: established firms wanting a real operational footprint without incorporating a separate company.
Watch out for: the parent carries the liability, and the tax rate sits above what a domestic company pays.
Wholly owned subsidiary: full control as a separate company
A wholly owned subsidiary is a separate Indian company, usually a private limited company, owned entirely by the foreign parent. It can do everything a domestic company can do. It is taxed as a domestic company - a subsidiary opting into the concessional regime pays a base rate of roughly 22% (plus surcharge and cess). Liability is ring-fenced to the capital invested.
Best for: companies serious about long-term, revenue-generating operations. See our market entry guide.
Joint venture: a subsidiary with a local partner
A joint venture is an Indian company incorporated with a local partner who holds a share of the equity. Companies pick it when sector caps require an Indian partner, or when a partner brings distribution, licences, or market knowledge that would take years to build alone.
Comparison at a glance
| Factor | Liaison Office | Branch Office | Wholly Owned Subsidiary | Joint Venture |
|---|---|---|---|---|
| Revenue activity | Not permitted | Permitted (defined scope) | Full | Full |
| Legal status | Extension of parent | Extension of parent | Separate Indian company | Separate Indian company |
| Liability on parent | Yes | Yes | Limited to shareholding | Shared, per shareholding |
| Income tax | None (no income earned) | Foreign-company rate (35% + surcharge) | Domestic rate (from 22% + surcharge) | Domestic rate |
| Approval route | RBI via AD bank (FEMA) | RBI via AD bank (FEMA) | MCA incorporation | MCA incorporation |
| Best suited to | Market study, representation | Limited operations | Full operations, long term | Shared or regulated entry |
A regulatory change worth knowing about
Under the current FEMA framework, a liaison office generally requires the parent to show a profit-making track record over the preceding three years and net worth of at least USD 50,000, while a branch office requires a five-year track record and net worth of at least USD 100,000. In October 2025 the RBI published draft regulations proposing to remove these thresholds - as of now those changes remain in draft. Confirm the current position when you file.
The most expensive mistake is choosing for speed. A structure that is quick to register but wrong for your goals costs far more to unwind later than it ever saved at setup. If you are still weighing India against other markets, see our 2026 market entry comparison.
How UVAN helps
UVAN helps foreign companies choose and set up the right India entity structure through market entry consulting, weighing control, tax, liability, and compliance against your growth plans. From RBI approvals and incorporation through document translation and notarisation via language services, we run the structure and the paperwork as one process.
Not sure which structure fits? Try our market entry audit or get in touch.
