Setting up an Indian subsidiary from the United States

What is different when your parent company is in the United States?

The USA is the third-largest recorded source of foreign direct investment into India. DPIIT’s fact sheet for April 2000 to March 2026 shows 10.39% of cumulative equity inflows, about US$81.8 billion. This is the country of the immediate investor, so read it as investment recorded as coming from the USA.

The company-law route is the same as for any foreign parent. In most sectors a US company can hold 100% of an Indian private limited company under the automatic route, subject to prohibited sectors and sector-specific caps. The wholly owned subsidiary page describes the entity.

Trade news is a separate matter. A joint statement of 6 February 2026 announced a framework for an interim trade agreement, and there is a framework for a full agreement as well. These frameworks concern tariffs and market access, not the incorporation or FEMA steps on this page.

How do you authenticate US documents for India?

The United States has been a party to the Hague Apostille Convention since 15 October 1981, and India since 14 July 2005. The Ministry of External Affairs states that a document apostilled in a Hague member country needs no further attestation or legalisation for use in India. So the route is for a notary public to notarise the parent’s and directors’ documents in the US, and for the Secretary of State of the relevant state (or another competent authority) to apostille them.

Typically you need the following, notarised and apostilled:

• For an individual director or subscriber: the passport, as identity and address proof.
• For a corporate subscriber: the certificate of incorporation, a board resolution authorising the subscription and authorised signatory details.

Every first director also needs a Director Identification Number (DIN), applied for through SPICe+, and a Class 3 digital signature certificate from an MCA-accepted certifying authority. See the documents guide for the full pack.

Trademark and name approval. If your proposed company name is based on your trademark, bring the trademark certificate. An internationally valid trademark, as recorded with WIPO, makes name approval easier in India. Also bring a no objection letter from the trademark owner, so that the name approval goes smoothly.

What does the India-US tax treaty mean for payments to your parent?

A double taxation avoidance agreement (DTAA) between India and the USA is in force. Reported ceilings, before surcharge and cess, are:

Sources: * PwC Worldwide Tax Summaries, India withholding taxes (reviewed 11 May 2026). # Indian Embassy USA, tax rates under the Act and the Indo-US DTAA.

The royalty and services rates depend on the category of payment, so do not read them as one blanket figure.

Treaty relief needs proof of residence and beneficial ownership. Under the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026, the non-resident’s supplementary declaration for treaty relief is Form 41, in place of Form 10F. Capital gains on a sale of shares in the Indian subsidiary depend on the treaty, the facts and when the shares were acquired. Consult a Chartered Accountant or tax adviser before you plan an exit.

Payments between the subsidiary and its US parent, such as service charges or royalties, are international transactions, so a transfer-pricing report on Form 48 applies. See the transfer pricing guide.

How does money move from the US to India?

Your US bank handles the outward transfer. The Indian side follows the FEMA sequence:

1. The parent remits the share subscription money through an authorised dealer bank in India.
2. For this first capital injection, the subscriber shares are already committed in the Memorandum of Association, so the subsidiary issues share certificates at the first board meeting rather than through the 60-day allotment rule for a later, fresh issue.
3. The subsidiary files Form FC-GPR within 30 days of allotment, typically with the board resolution, FIRC, KYC of the remitter and a Company Secretary certificate.
4. The subsidiary files the annual FLA return by 15 July.

Later share issues to non-residents must be priced at or above fair value, certified by a Chartered Accountant, SEBI-registered merchant banker or cost accountant, and the valuation certificate must not be more than 90 days old at the date of investment. A valuation certificate is not required for the subscriber shares issued at incorporation. This is our understanding of the current position. Confirm it with your Chartered Accountant before you rely on it. After incorporation the FEMA reporting is the subsidiary’s responsibility; the parent remits the funds and supplies documents and KYC. The guide to opening a bank account and remitting capital explains why bank account opening is usually the slowest step for a foreign-owned company.

Where ProLead fits

ProLead Business Consulting has a virtual office in the USA and a presence across Bangalore, Hyderabad, Mumbai, Delhi, Cochin and Amritsar in India. Its leadership includes professionals qualified as CPAs (USA) and Chartered Accountants in India. ProLead coordinates the notarised and apostilled document pack, the incorporation with its practising professionals, support for the subsidiary’s FEMA reporting, and ongoing bookkeeping, month-end close and statutory reporting for the Indian entity. ProLead has extensive experience in US GAAP reporting, so it can also prepare US GAAP reports from the Indian subsidiary if your parent company needs them.

To discuss your structure, book a free consultation.

Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.

General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.