Indian Subsidiary vs Branch Office vs Liaison Office: Which Should You Set Up?
Set up an Indian subsidiary if you will sell, hire or sign contracts in India and want a separate limited-liability company. A liaison office cannot earn revenue or sign contracts, a branch office is an extension of the foreign parent, and a project office fits one contract. See the Indian subsidiary registration page.
Which is better: an Indian subsidiary, a branch office or a liaison office?
An Indian subsidiary is the better fit when you will sell, hire staff or sign contracts in India, while a liaison office suits only market research and representation. A branch office sits in between, and a project office covers one contract.
Take Lukas, who runs an auto-parts maker in Stuttgart. He wants two people in Pune to meet dealers and gather feedback for a year, with no invoicing from India. That is what a liaison office is for. Once he wants Indian customers to pay an Indian entity, or wants to hire a sales team on Indian payroll, the subsidiary becomes the sensible route. This is an illustration only.
Honest trade-off: a subsidiary is the heaviest of the four to run, because it has company law, FEMA and tax filings. The other three are lighter on paper but limit what you can do, and the parent carries more direct exposure. The table below compares them side by side.
How do a subsidiary, branch office, liaison office and project office compare?
The four options differ mainly on legal status, whether they can earn revenue, and the route by which each is approved. The table reflects sources reviewed for September 2026, and the RBI-based rows rest on older Master Direction text, so confirm them before you rely on them.
| Feature | Indian subsidiary (WOS) | Branch office | Liaison office | Project office |
|---|---|---|---|---|
| Legal status | Separate Indian company under the Companies Act, 2013 | Extension of the foreign company | Extension of the foreign company | Extension of the foreign company |
| Can it earn revenue? | Yes, in its permitted business | Yes, within RBI's permitted activities | No; representation and research only | For the specific project |
| How it is set up | SPICe+ on the MCA portal, then FC-GPR with the RBI | Form FNC to an AD Category-I bank, which forwards it to the RBI | Form FNC to an AD Category-I bank | Form FNC route, or general permission if conditions are met |
| Track record asked (RBI text, older; confirm) | No home-country test in the sources reviewed | Profit-making 5 years, net worth USD 100,000 | Profit-making 3 years, net worth USD 50,000 | Contract from an Indian company, with clearances and funding conditions |
| Foreign parent's liability | Generally limited to its shares | Direct, as an extension of the parent | Direct, as an extension of the parent | Direct, as an extension of the parent |
| Income tax angle | Domestic company; can opt for the 22% regime | Taxed as a foreign company at a materially higher rate | Not intended to earn income | Taxed as a foreign company |
| Ongoing load | MCA filings, FEMA reporting, possible transfer pricing | Its own reporting to the bank and RBI, plus tax filings | Its own reporting to the bank and RBI | Tied to the project |
The details of each column come from practitioner summaries of the RBI directions. Ask your CA to check the latest RBI text before you choose an office over a company.
When does a liaison office make sense?
A liaison office makes sense if you only want to represent the parent in India, promote its products, and collect market information. It cannot earn revenue or sign contracts, according to two practitioner sources.
Approval runs through an authorised dealer bank on Form FNC. The RBI Master Direction as mirrored in older text says a liaison office generally has a validity of 3 years, and 2 years for NBFC and construction sectors. It asks the parent for 3 profit-making years and a net worth of USD 50,000, so confirm the current text.
- Fits: exploring the Indian market, supplier visits, dealer relations, no invoicing.
- Does not fit: any sale, service billing, or Indian employees on your India payroll doing revenue work.
If you already know sales will start within a year, skipping the liaison office and comparing a subsidiary directly can avoid paying for two set-ups.
When does a branch office make sense?
A branch office makes sense when the foreign parent wants to carry on its own permitted business in India directly, without creating a separate Indian company. The parent is then directly liable for what the branch does.
Older RBI text asks a foreign company for 5 profit-making years and a net worth of USD 100,000 (an equivalent of about ₹85 lakh per one practitioner source), and RBI restricts branch activities to a defined list. Confirm both before applying.
The tax angle is important. The 22% concessional company tax option is not available to foreign companies, so a branch's income is taxed at the higher foreign-company rate. We could not verify the current foreign-company rate, so do not assume a number. Ask your CA to model both before you decide.
For most businesses that plan to hire people and sign local contracts, a subsidiary tends to be the simpler route. A branch fits a parent that specifically wants its profits and liabilities to stay in one legal entity. Read our guide on what the subsidiary route costs when you compare.
Request a free callback and a CA will check your plan against the subsidiary route.
Start Indian subsidiary registration →When does a project office make sense?
A project office makes sense when a foreign company has won a specific contract from an Indian company and needs a temporary presence to execute it. It ends with the project.
Per the RBI Master Direction as mirrored, general permission is available if the contract is from an Indian company and the project has the required regulatory clearances and funding conditions. Otherwise the standard approval route applies.
If the contract might turn into a continuing India business, plan for what happens after the project ends. That might be an application to convert into a subsidiary, or simply setting up the subsidiary from the start.
When does RBI itself approve the office, and how does that compare with the subsidiary route?
For most applicants the authorised dealer bank handles approval, but RBI's own prior approval is needed for specific applicants and sectors. Per the older Master Direction text, that includes applicants from Pakistan, certain applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong and Macau for specified regions, and defence, telecom, private security and information and broadcasting sectors.
A subsidiary works differently. Under the FDI policy, most sectors allow up to 100% foreign ownership under the automatic route with reporting after the investment. Government approval applies in some sectors, and where the investor or beneficial owner has a land-border link. Our FDI and FEMA guide covers the details.
Confirm your sector against the DPIIT Consolidated FDI Policy before choosing either route. A short prohibited list applies to foreign investment in India, including lottery, gambling, chit funds, Nidhi companies and tobacco manufacturing.
Should you start with a liaison office and convert to a subsidiary later?
Start with the structure that matches the first thing you will actually do in India. If you will sell within the year, go straight to a subsidiary; if you truly only need a presence to explore, a liaison office is enough.
A liaison office is not a company, so it does not become a subsidiary by itself. The subsidiary would be incorporated separately, and the office would be closed or continued according to RBI's directions. Ask your CA about the transition before you open an office you expect to replace.
- List what the India team will do in the first 12 months: sell, bill, hire, or only meet people.
- If any of the first three is on the list, price the subsidiary route.
- If only meeting people is on the list, price a liaison office and set a review date.
You can also compare against other Indian entities: a foreign investor can also use an LLP in restricted circumstances, but an LLP with foreign investment is limited to certain sectors, as covered in our Private Limited vs LLP vs OPC guide.
How does Shunya fit in if you choose the subsidiary route?
Shunya's Indian subsidiary registration covers the subsidiary route: a CA verifies your documents, prepares the SPICe+ filing with FEMA-compliant MOA and AOA, and prepares the SPICe+ filing; FC-GPR reporting after share allotment is a separate service. The page does not describe branch, liaison or project office approvals, so ask on the callback if you need one of those.
Shunya's professional fee for the subsidiary is ₹1,999. The DSC issuer's charge, government fees, stamp duty and other third-party costs are billed separately, and your CA walks you through them on your callback.
You can request a free callback or pay the fee online from the page, or WhatsApp +91 80809 18797. A practising Chartered Accountant reviews every filing. The subsidiary is legally a Private Limited company, so its comparison with LLP and OPC applies too.
Can a liaison office earn revenue in India?
No. Practitioner sources agree that a liaison office is limited to representation and research and cannot earn revenue or sign commercial contracts. It is an extension of the foreign company rather than a separate entity. If you expect to invoice Indian customers, a subsidiary or a branch office is the route to compare.
Is a branch office better than a subsidiary for a foreign company?
Usually not, if you plan to hire and sell locally. A branch is an extension of the parent, so the parent carries the liability directly, and its income is taxed as a foreign company. A subsidiary is a separate company, and as a domestic company it can opt for the 22% tax regime.
How is a liaison or branch office approved?
Through an application on Form FNC to an authorised dealer Category-I bank, which forwards it to the RBI for a unique identification number. Some applicants and sectors need RBI's own prior approval. The rules sit in an older RBI Master Direction, so confirm the current text before applying.
What track record does a foreign company need for a branch or liaison office?
Per the RBI Master Direction as mirrored in older text, a branch office asked for five profit-making years and a net worth of USD 100,000, and a liaison office asked for three years and USD 50,000. That text dates from 2016, so confirm the current criteria before relying on it.
Does a subsidiary need a track record like a branch office does?
The sources we reviewed list no home-country track-record test for a subsidiary in the automatic-route sectors. It is incorporated on SPICe+ like any Private Limited company, and the foreign investment is reported to the RBI. Sector conditions or government approval can still apply, so confirm for your sector.
Can I start with a liaison office and set up a subsidiary later?
You can, but they are separate things. A liaison office is not a company, so it does not turn into a subsidiary. You would incorporate the subsidiary separately and deal with the office's closure or continuation. If sales are planned within the year, most advisers compare starting with the subsidiary directly.
This article is for general information only. For your specific situation, consult a practicing CA.
Ready to register your Indian Subsidiary?
Request a free callback or pay the ₹1,999 professional fee online and a CA starts your filing. Government fees and other statutory costs are billed separately at actual cost.
Professional fee ₹1,999. Government fees, statutory costs and any third-party charges are billed separately; your CA walks you through them on your callback.