Setting Up India Subsidiary for Australian Companies

Australia–India business collaboration is accelerating as Australian companies seek access to India’s rapidly expanding economy, skilled workforce, and cost-efficient operating environment. However, setting up a subsidiary in India involves navigating complex legal, tax, foreign exchange, and regulatory frameworks.

With over 13+ years of experience, Anbac Advisors supports Australian companies looking to establish and expand their presence in India. We regularly work with businesses from major Australian cities including Melbourne, Sydney, Perth, Adelaide, and Brisbane.

Our advisory covers the entire India market entry process — from entry strategy, entity structuring, and Indian subsidiary incorporation to regulatory approvals, tax structuring, FEMA compliance, and ongoing corporate advisory. We help Australian investors navigate India’s regulatory framework efficiently while ensuring tax-efficient structures and full compliance with local laws.

Why should Australian Companies Consider India for setting up subsidiary?

  • Large and expanding consumer market
  • Competitive operating costs
  • Skilled workforce and strong technology ecosystem
  • Growing manufacturing and infrastructure sectors
  • Strengthened trade relations under the Australia–India Economic Cooperation and Trade Agreement (ECTA)

The Key Advantages of Setting Up a Subsidiary are as follows:

  • Limited liability protection
  • Enhanced credibility with Indian customers and partners
  • Ability to raise local funding
  • Full operational flexibility
  • Long-term market presence

India offers substantial long-term growth potential across sectors including technology, education, mining services, renewable energy, healthcare, agribusiness, and professional services.

Legal and Tax Structuring Options Available to Australian Companies

A. Tax Structuring Options

Establishing an Indian subsidiary is the most preferred route for Australian companies planning long-term operations in India. A subsidiary provides operational flexibility, legal separation from the parent entity, and improved credibility with customers, regulators, and business partners.

Australian companies can enter India through multiple structures depending on their commercial objectives:

  • Wholly Owned Subsidiary (Private Limited Company)
  • Limited Liability Partnership (LLP)
  • Branch Office
  • Liaison Office

Comparison of India Entry Options for Australian Companies

Particulars Wholly Owned Subsidiary (Private Limited) Limited Liability Partnership (LLP) Branch Office Liaison Office
Legal Status Separate legal entity incorporated in India Separate legal entity Extension of Australian parent company Extension of Australian parent company
Foreign Ownership Up to 100% permitted in most sectors Up to 100% permitted in eligible sectors 100% (parent-owned) 100% (parent-owned)
Regulatory Approval Automatic route for most sectors Automatic route (sector dependent) RBI approval required RBI approval required
Permitted Activities Full commercial operations Commercial operations (limited by sector) Restricted activities only Non-commercial, representative activities only
Revenue Generation Allowed Allowed Allowed (restricted scope) Not allowed
Liability Exposure Limited to capital invested Limited to contribution Parent company fully liable Parent company fully liable
Compliance Requirements Moderate to high Moderate Moderate Low
Taxation Indian corporate tax applicable LLP tax applicable Taxed as foreign entity No income tax (no income allowed)
Profit Repatriation Dividends, royalties, management fees Profit share Freely repatriable (post-tax) Not applicable
Suitable For Long-term presence, manufacturing, IT, services Consulting, professional services Limited India operations Market research, liaison & relationship building

 

Among these, a wholly owned subsidiary is the most common choice, as it allows up to 100% foreign ownership in most sectors under the automatic FDI route. The various tax structuring options are as detailed below:

(i) Wholly Owned Subsidiary (Private Limited Company)

The most common structure for foreign investors.

Key features:

  • Separate legal entity incorporated under Indian law
  • 100% foreign ownership permitted in most sectors under the automatic route
  • Limited liability protection
  • Full operational control

Suitable for: Long-term operations, manufacturing, service delivery, sales offices, technology operations.

(ii) Limited Liability Partnership (LLP)

A flexible alternative structure.

Key features:

  • Limited liability protection
  • Fewer compliance requirements compared to companies
  • Permitted in sectors allowing 100% FDI under automatic route

Suitable for: Professional services, consulting, joint ventures.

(iii) Branch Office

Allows a foreign company to operate directly in India.

Key features:

  • Extension of the Australian parent company
  • Requires Reserve Bank of India (RBI) approval
  • Restricted scope of activities
  • Profits remittable to Australia (subject to taxes)

Suitable for: Companies wishing to maintain close control and limited operational activities.

(iv) Liaison Office

Used only for representative purposes.

Key features:

  • Cannot undertake commercial or revenue-generating activities
  • Acts as a communication channel
  • Requires RBI approval

Suitable for: Market research and relationship-building.

B. Tax Considerations

  • Corporate Tax
  • Standard corporate tax rate generally 25% or even dropping upto 22% (plus surcharge and cess) for domestic companies opting for concessional regime
  • Other regimes may apply depending on eligibility
    • Goods & Services Tax (GST)
  • Indirect tax applicable to supply of goods and services
  • Registration mandatory once threshold limits are exceeded
    • Withholding Taxes
  • Applicable on payments such as royalties, fees for technical services, and dividends
    • India–Australia Double Taxation Agreement (DTAA)
  • Helps prevent double taxation and may provide reduced withholding tax rates.

Key Regulatory Considerations for setting up Indian Subsidiary

Setting up and operating an Indian subsidiary for Australian companies based in Melbourne, Sydney and other parts of Australia requires ongoing compliance under multiple laws and regulatory frameworks.

Key compliance areas include:

  • Company incorporation and filings with the Ministry of Corporate Affairs (MCA)
  • Foreign Direct Investment (FDI) compliance under FEMA
  • RBI reporting for capital infusion and share allotment
  • Corporate tax and GST registrations
  • Transfer pricing documentation for inter-company transactions
  • Payroll, labour law, and social security compliance
  • Annual statutory audits and regulatory filings

As trusted India subsidiary setup consultants for Australian companies, Anbac Advisors manages the complete compliance lifecycle — allowing management teams to focus on business growth rather than regulatory complexity.

How does Anbac Advisors Support Australian Companies?

We provide end-to-end assistance including:

  • Structuring advice tailored to your commercial objectives
  • Incorporation and regulatory approvals
  • FDI and FEMA compliance
  • Tax structuring and DTAA analysis
  • GST and corporate tax registrations
  • Ongoing compliance and advisory support

We provide holistic structuring to cover all aspects from Tax, FEMA, Sector specific, Companies Act (ROC) and Shareholders arrangement for long term stability of the structure.

Our approach ensures your Indian operations are structured efficiently, compliant from day one, and aligned with your global business strategy.

Common Challenges for Australian Companies

Australian businesses entering India often face challenges such as:

  • Understanding sector-specific FDI restrictions
  • Delays due to incorrect documentation or regulatory approvals
  • Structuring inter-company transactions to meet transfer pricing rules
  • Managing FEMA compliance for funding and profit repatriation
  • Navigating India’s evolving tax and regulatory environment

Without the right local advisory support, these issues can lead to delays, penalties, or inefficient structures. A well-planned entry strategy significantly reduces these risks.

Why should you prefer Anbac Advisors for India Subsidiary Setup?

Anbac Advisors is a trusted partner for Australian companies looking to establish and scale operations in India.

Our Strengths

  • Deep expertise in India entry strategy for Australian businesses
  • End-to-end support covering legal, tax, FEMA, and regulatory compliance
  • Practical structuring aligned with long-term commercial objectives
  • Strong experience across technology, professional services, manufacturing, and trading businesses
  • Ongoing advisory support beyond incorporation

We provide holistic structuring, covering tax optimisation, FEMA compliance, sector-specific regulations, Companies Act requirements, and shareholder arrangements — ensuring stability, scalability, and compliance from day one.

Frequently Asked Questions (FAQs)

(i) Why should Australian companies appoint India subsidiary setup consultants?

India’s regulatory environment involves multiple laws covering foreign exchange, taxation, company law, and sector-specific regulations. Appointing experienced India subsidiary setup consultants for Australian companies helps ensure correct structuring, faster incorporation, full compliance with FEMA and FDI norms, and long-term tax efficiency. Consultants also reduce risks related to penalties, delays, and operational disruptions.

(ii) What is the best structure for Australian companies setting up a business in India?

For most Australian companies, a wholly owned subsidiary (Private Limited Company) is the preferred structure. It allows up to 100% foreign ownership in most sectors, offers limited liability, enables full commercial operations, and supports long-term growth. Other options such as LLPs, branch offices, or liaison offices may be suitable depending on the nature and scale of activities.

(iii) How long does it take to set up an Indian subsidiary from Australia?

The typical timeline to incorporate an Indian subsidiary is 3 to 6 weeks, depending on the structure selected, availability of documents, and whether regulatory approvals are required. Engaging experienced consultants can significantly streamline the process and avoid delays.

(iv) Is 100% foreign ownership allowed for Australian companies in India?

Yes, most sectors in India permit 100% foreign direct investment (FDI) under the automatic route. However, certain regulated or strategic sectors require government approval or have sector-specific conditions. Proper assessment of FDI eligibility is essential before incorporation.

(v) What are the key compliance requirements after setting up an Indian subsidiary?

Post-incorporation compliance includes:

  • Annual filings with the Ministry of Corporate Affairs (MCA)
  • Corporate tax and GST compliance
  • FEMA and RBI reporting for foreign investment
  • Transfer pricing compliance for inter-company transactions
  • Payroll, labour law, and statutory audit requirements

Ongoing compliance management is critical for smooth operations in India.

(vi) What taxes apply to an Indian subsidiary of an Australian company?

An Indian subsidiary is subject to:

  • Corporate income tax (rates can be as low as 22% plus surcharge and cess under concessional regimes)
  • GST on supply of goods and services
  • Withholding tax on royalties, technical service fees, interest, and dividends

The India–Australia DTAA helps prevent double taxation and may reduce withholding tax rates.

(vii) Can profits be repatriated from India to Australia?

Yes, profits can be repatriated through dividends, royalties, management fees, and inter-company charges, subject to applicable taxes, transfer pricing rules, and FEMA regulations. Proper structuring at the outset ensures efficient and compliant profit repatriation.

Looking to Set Up a Subsidiary in India?

If you are an Australian company planning to enter the Indian market, engaging experienced India subsidiary setup consultants for Australian companies can make the difference between a smooth launch and costly delays.

Anbac Advisors helps you establish a compliant, tax-efficient, and future-ready presence in India with confidence.

Contact us today to discuss your India expansion strategy.