Open a Branch vs. Subsidiary in India

A branch and a subsidiary are ways a foreign company can enter the Indian market. Our team of lawyers assists foreign investors who wish to open a branch or a subsidiary in India in 2026.

What is a branch in India?

A branch is an extension of a foreign company, registered in India for the purpose of conducting the same business activities as the one abroad.

Specific rules apply to companies that expand their activities in this manner, and our lawyers in India can give you complete information about the laws and regulations in force.

What is a subsidiary in India?

A subsidiary is a locally registered company in which the foreign legal entity (called the parent company) owns more than 50% of shares, effectively controlling its Indian business.

Subsidiaries can be wholly owned or partially owned, depending on how many shares the foreign company owns in the Indian company.

Can any foreign company open a branch or a subsidiary in India?

Yes. Foreign companies are permitted to open branches or subsidiaries in India in 2026 as part of their expansion strategy; however, they must adhere to the local company registration requirements and the laws requiring special approvals, when needed. Our team can give you essential information, based on your specific investment strategy.

What are the differences between a branch and a subsidiary in India?

The table below summarizes the main differences between opening a branch or a subsidiary in India:

	Branch	Subsidiary
Legal status	Not a separate legal entity	Has legal personality
Liability	The foreign company is fully liable for the debt and obligations of its Indian branch	The foreign company has limited liability, to the extent of its shareholding in the Indian subsidiary
Activities	Performs the same activities as the parent company	Can engage in the same or in additional activities as the parent company
Taxation	The branch tax rate	The corporate income tax rate

What licenses do I need for a branch or a subsidiary in India?

Two issues are relevant for the licensing of an Indian branch or a subsidiary:

The branch must obtain special approvals for operating in India before it can commence its operations. The main one is issued by the Reserve Bank of India;
Any business form must apply for and obtain industry-specific licenses and permits, depending on its object of activity. These are applied for once the company is registered but before it commences its operations, to ensure its lawful functioning.

What are the relevant tax differences when opening a branch or a subsidiary in India?

This is an important difference between the two business forms which may influence the parent company’s decision to open one or the other.

Our tax lawyers in India list the main rates for corporate taxation for both business forms:

The subsidiary is subject to the corporate income tax rate applicable to domestic companies. This has values of 15%, 22%, 25% or 30% with a maximum of 34.944% including cess and surcharge (the 15% rate is limited to new manufacturing companies that began production by 31 March 2024);
The branch is subject to the foreign-company tax rate of 35% or a maximum of 38.22% when also including cess and surcharge.

All companies observe the compliance requirements, with locally registered companies following a tax year that spans from 1 April to 31 March the following calendar year. Branches are asked to provide additional documents as part of their annual submission requirements, while subsidiaries follow the standard statutory filing and audit conditions.

Do you want to open a company in another country, such as Bahrain? We can refer you to our partners.

Contact our law firm if you are interested in setting up a branch or a subsidiary in India in 2026.