Set Up a Company in India from the USA: Complete 2026 Guide

Why US Companies Are Entering India in 2026

Engineering talent: India produces 1.5 million engineering graduates per year. Senior engineers cost 40-60% less than equivalent US talent.

GCC expansion: Global Capability Centres have grown from 800 to 1,700+ in a decade. The majority are US-headquartered.

Consumer market: The Indian middle class is projected at 550 million by 2030. US consumer brands, SaaS products, and B2B services are finding scale here.

Tariff realignment: Post-2025 tariff changes have made India-manufactured goods more competitive for US import versus China-origin alternatives.

Step 1 — Choose the Right Entity Type

Private Limited Company — Recommended for most US companies

The Pvt Ltd is India's most common foreign-owned entity. Under the Companies Act 2013, it offers limited liability, full profit repatriation rights, 100% foreign ownership in most sectors, and the ability to issue ESOPs and raise VC funding.

Requirements: 2 directors (at least 1 must be an Indian resident), 2 shareholders, registered office address in India.

Tax rate: Effective ~25.17% corporate tax (22% base + surcharge + cess).

Setup timeline: 15-25 business days for incorporation. Add 3-5 weeks for bank account opening.

Branch Office

A Branch Office is a direct extension of the foreign parent — not a separate legal entity. It requires prior RBI approval and is taxed at the higher foreign company rate of ~43.68%. Best for regulated sectors or companies needing to avoid creating a separate Indian entity.

Liaison Office

A Liaison Office can only represent the parent and gather market information. It cannot earn income, sign commercial contracts, or conduct operations. Best for early-stage market exploration only.

US Parent: Delaware C-Corp vs LLC — Does It Matter for Your Indian Subsidiary?

Yes — significantly. The legal form of your US parent affects how your Indian subsidiary is taxed, how dividends flow back, and whether you can claim India-USA DTAA benefits at all.

Delaware C-Corporation (recommended in most cases). A C-Corp is a separate taxable entity recognised as a "resident of the United States" under Article 4 of the India-USA DTAA. This is what makes treaty benefits available — withholding tax on dividends from your Indian subsidiary can drop from the domestic 20% to 15% (or lower for qualifying shareholdings). C-Corps also satisfy the apostille and Tax Residency Certificate requirements cleanly.

Delaware LLC / Wyoming LLC (proceed with caution). A single-member LLC is treated as a disregarded entity for US tax purposes — meaning the IRS sees the LLC's income as flowing directly to its owner. Indian tax authorities and the CBDT have repeatedly held that a US LLC is not a "resident" under the DTAA because it is not "liable to tax" in the US in its own right. The practical consequence: your Indian subsidiary may have to withhold the full domestic 20% on dividends with no treaty relief.

Practical takeaway. If your US parent is an LLC and you want clean DTAA access, restructure to a C-Corp before incorporating the Indian subsidiary — or interpose a C-Corp holding entity. Fixing this after the fact is expensive

Step 2 — Understand the FDI Route

FDI into India is governed by FEMA and the FDI Policy issued by DPIIT. Almost all sectors permit 100% FDI under the automatic route — no prior government approval needed.

Automatic route (most sectors): Technology, manufacturing, consulting, e-commerce (B2B), healthcare. Invest first, file Form FC-GPR with RBI within 30 days of share allotment.

Government approval route: Defence above 74%, broadcasting, print media, multi-brand retail.

Prohibited sectors: Lottery, gambling, tobacco manufacturing, atomic energy.

Step 3 — Incorporation Process (Step by Step)

Step 3.1 - Name reservation via MCA21 portal (RUN application). Turnaround: 1-2 days.

Step 3.2 - Obtain Digital Signature Certificates for all directors. Apply for Director Identification Numbers simultaneously. Timeline: 3-5 days.

Step 3.3 - File SPICe+ on MCA portal with MoA, AoA, director declarations, and address proof. MCA processes in 7-12 business days.

Step 3.4 - Receive Certificate of Incorporation with Company Identification Number. Company is legally formed.

Step 3.5 - PAN and TAN are applied automatically via SPICe+. Arrive within 2-3 days.

Step 3.6 - Apply for GST registration if turnover will exceed Rs. 20 lakh. Mandatory within 30 days of commencing business.

Step 3.7 - Open a current bank account. Required documents: Certificate of Incorporation, MoA, AoA, board resolution, KYC for all directors and shareholders.

Step 3.8- File Form FC-GPR with RBI via the FIRMS portal within 30 days of receiving foreign investment.

Step 4 — Costs and Timeline

Cost Item

Amount (USD)

Notes

MCA government fees

$20–$200

Depends on authorised capital

Professional fees (CA + CS)

$200–$500

Standard Pvt Ltd

Apostille of US documents

$50–$150

US Secretary of State

DSC for foreign directors

$30–$60

Per director

Total all-in setup

$300–$910

Excludes office address

End-to-end timeline: 3-5 weeks from initiating documents to an operational bank account.

Step 5 — Ongoing Annual Compliance

MCA filings: MGT-7 (Annual Return) and AOC-4 (Financial Statements) due within 60 days of AGM.

Statutory audit: Mandatory for all companies regardless of size. Appoint a CA firm within 30 days of incorporation.

GST returns: Monthly GSTR-3B and GSTR-1; annual GSTR-9.

Transfer pricing: Form 3CEB and TP study mandatory if intercompany transactions with the US parent exceed Rs. 1 crore in aggregate.

FEMA annual return: FLA (Foreign Liabilities and Assets) return due to RBI by 15 July each year.

Ready to set up your company in India? Our India entry team has helped many US and global companies navigate the full process.

Book a free 30-minute discovery call at www.indiacompanysetup.com or WhatsApp +91 99157-31447

Frequently Asked Questions
Can a US company own 100% of an Indian subsidiary?+
Yes, in most sectors. Under the automatic FDI route, 100% foreign ownership is permitted in technology, manufacturing, consulting, and most services. You need at least one resident Indian director but not a local equity partner.
Do I need a local Indian partner to set up a company in India?+
No. The local partner requirement was removed for most sectors years ago. Under the automatic route, a US company can be the 100% shareholder of an Indian Private Limited company.
How long does bank account opening take for a foreign-owned Indian company?+
Typically 3–6 weeks after incorporation. Foreign-owned entities require additional documentation including the Certificate of Incorporation of the US parent, apostilled or notarised for Indian submission.
What taxes does an Indian subsidiary of a US company pay?+
The effective corporate tax rate is approximately 25.17%. Dividends paid to the US parent attract 20% withholding tax, reducible to 15% under the India-USA DTAA if a valid Tax Residency Certificate is in place.
Is transfer pricing compliance mandatory for an Indian subsidiary of a US company?+
Yes, if there are any international transactions between your Indian subsidiary and the US parent — management fees, software licences, shared services, or loans. A Transfer Pricing Study is required when the aggregate value of such transactions exceeds ₹1 crore.
Does it matter if my US parent is a Delaware LLC or a C-Corp for my Indian subsidiary?+
Yes. A C-Corp qualifies as a US tax resident under the India-USA DTAA and can claim treaty benefits — typically reducing withholding tax on dividends from 20% to 15%. A single-member LLC is a disregarded entity for US tax purposes and is generally not treated as a "resident" under the DTAA by Indian tax authorities, meaning no treaty relief on dividends. If treaty access matters, structure your parent as a C-Corp.
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