Great reasons to consider setting up a foreign subsidiary in India

Entrepreneurs in today’s interconnected world are constantly looking out for new opportunities in locations where there is innovation, demand, and economic growth. Any ambitious business owner understands that staying confined to one domestic market can limit potential, which is why those with insight and who become successful explore international options. Establishing a presence abroad can reduce exposure to economic fluctuations or political situations in a single region, which is why they look at setting up a foreign subsidiary, which is a company owned or controlled by a parent enterprise. With various funding sources available to foreign subsidiaries in India, that country is seen as a great place to invest for the following reasons.

• India’s domestic market is one of the largest in the world, while continually growing, with its huge population and rising disposable incomes. The country has an infrastructure being developed and improved, including expanding internet access. Consumer goods, e-commerce, automotive, healthcare, or technology all provide the opportunity to tap into over a billion potential customers. Establishing a subsidiary allows companies to localise products, services, and marketing strategies and build stronger connections with Indian customers.
• It’s possible to build a strong brand identity, especially if receiving assistance from a company offering professional advisory services and local knowledge. Labour costs are significantly lower in India than in Western economies, with a highly educated workforce available who are English-speaking and skilled in fields like engineering, IT, finance, and manufacturing, as universities and technical institutes produce millions of graduates each year.
• India’s geographical location gives businesses easy access to markets in South Asia, the Middle East, and East Africa, while its major ports and international airports lead to smooth trade logistics. The country’s growing network of free trade agreements enhances export opportunities for products that are manufactured or assembled locally, meaning that a subsidiary in India allows companies to use it as both a production and distribution base, while being able to tap into regional markets.
• India’s government actively encourages foreign direct investment, offering incentives for companies that establish subsidiaries in key industries or regions, as well as startup funding for those eligible. Various initiative schemes have made it easier for international firms to relocate, with most sectors now permitting 100% foreign ownership, as the incorporation process has become more transparent and efficient. Tax holidays, infrastructure support, and reduced import duties add to the financial benefits of setting up an Indian subsidiary.
• India’s legal system is based on English common law, providing transparency, predictability, and strong protection for intellectual property and contractual rights. Having a robust banking sector is another attraction, as is the country’s regulatory framework, which has improved significantly of late to simplify company registration procedures. Various regulatory bodies have made it easier to repatriate profits, manage currency exchange, and comply with reporting standards, offering greater security and confidence for foreign entrepreneurs.

Expanding into India through a foreign subsidiary offers access to one of the world’s largest markets and an opportunity to benefit from a young workforce, along with cost-effective operations.