US company subsidiary in India

How US Companies Set Up a
Wholly Owned Subsidiary in India

India is the United States\' Fastest-Growing Major Trade Partner

100% Automatic-Route FDI in Most Sectors, India-USA DTAA, Familiar Common-Law Framework

The United States is consistently among the top three sources of foreign direct investment into India, contributing over USD 6 billion annually across IT services, manufacturing, R&D centres, e-commerce, and venture-backed expansion of US tech companies. India\'s Companies Act framework is Westminster-style common law — familiar to US legal teams — and the Wholly Owned Subsidiary structure mirrors a Delaware C-Corp in liability isolation and tax treatment as a separate Indian legal entity.

This page covers the specifics US companies need to know: the DTAA mechanics for dividend / royalty / FTS remittance, FCPA and SOX considerations that flow down to the Indian subsidiary, sector-specific FDI conditions for the verticals US companies most often enter, and the timeline from US-side apostille to Indian operational readiness. Read our pillar guide on Foreign Company Registration in India for the cross-country setup playbook.

India-USA DTAA — The Numbers That Matter
  • Dividends: 15% (Article 10) when paid to a US tax resident holding shares in the Indian subsidiary. Foreign Tax Credit claimable on the US federal return.
  • Royalty & Fees for Included Services (FIS): 15% (Article 12) on payments from the Indian subsidiary to the US parent for IP licensing or technical services.
  • Interest: 15% (Article 11) on intercompany loans, subject to thin-capitalisation rules under Indian transfer pricing.
  • Business profits: Taxable in India only if attributable to an Indian Permanent Establishment (Article 7). A WOS is its own taxable entity; the US parent does not have a PE merely by owning the WOS.
  • Capital gains on share sale: Generally taxable in India under domestic law; DTAA does not provide relief for transfer of Indian-company shares.
  • Form 10F + TRC filed annually for the US parent to claim DTAA benefits at source.
Common Sectors US Companies Enter India In
  • IT services & product engineering: 100% automatic route. Most common — offshore development centres, R&D arms.
  • SaaS & cloud: 100% automatic. India serves as both engineering and growing customer base.
  • E-commerce marketplace: 100% automatic; inventory-based e-commerce restricted (FDI Press Note 2 of 2018).
  • Pharmaceuticals: 100% automatic for greenfield; 74% automatic for brownfield acquisitions (74–100% needs Government approval).
  • Manufacturing: 100% automatic. Section 115BAB concessional 15% tax for new manufacturing entities incorporated by Oct 2024 (then 22% standard).
  • Banking / NBFC / insurance: sector caps apply (74% insurance, 49–74% banking); RBI prior approval required.
FCPA & SOX Considerations for US Public Companies
  • FCPA: the US parent is liable for anti-bribery violations by the Indian subsidiary. We implement vendor due-diligence procedures, gifts & hospitality policies, and books-and-records controls compatible with FCPA at the Indian entity level.
  • SOX: for US-listed parents, the Indian subsidiary\'s financial close must support the consolidated 10-K. We design close calendars, ICFR (internal controls over financial reporting) testable controls, and entity-level controls that satisfy PCAOB AS 2201 expectations.
  • Form 5471: the US parent files an annual Form 5471 on the Indian subsidiary; we provide the underlying schedules (E&P, GILTI, Subpart F categorisation) from the Indian books.
  • Transfer pricing alignment: India\'s TP regime and the US Section 482 framework are similar but not identical. We document an arm\'s length policy that survives both Indian Form 3CEB scrutiny and US contemporaneous documentation requirements.
Typical Setup Timeline for a US Parent
  1. Week 1: Engagement, structuring (WOS vs branch), proposed name search, sector FDI confirmation.
  2. Week 1–2: Document collection, US Secretary of State apostille of parent COI / MoA / board resolution, DSC for US directors (issued by Indian CA after video-KYC).
  3. Week 3–4: SPICe+ filing, ROC processing, Certificate of Incorporation, PAN/TAN issued automatically with COI.
  4. Week 4–6: Bank account opening with an AD Category-I Bank (HDFC, ICICI, Citi India, JPMorgan Chase India common for US-parented subsidiaries), GST registration, IEC if importing.
  5. Week 6–8: Capital infusion from US parent into the new account, FC-GPR filing within 30 days of share allotment, first board meeting, compliance calendar set.
Why Jain Anurag & Associates for US Parents
  • Working hours overlap with US East and West coast via scheduled calls; document handoff is asynchronous through cloud workspaces.
  • Direct experience setting up Indian subsidiaries for US-headquartered SaaS, fintech, healthcare-IT and product-engineering companies.
  • Coordinated handoff with your US CPA / Big-4 firm for Form 5471, GILTI, Subpart F and consolidated reporting; we own the Indian side and stay in their format.
  • Quarterly compliance summary in English with US-style dashboards (variance vs budget, working capital, tax provision walk).

Planning to enter India from the US? Schedule a structuring call — we will walk through the entity choice, the FDI route map for your sector, and the realistic 6–8 week timeline to operational readiness.