Australia Subsidiary Formation in India
Entity structuring, incorporation, and RBI/FEMA reporting for Australian parent companies setting up an Indian subsidiary.
Why Australian Companies Set Up in India
Setting up a wholly-owned or majority-owned subsidiary in India is the most common route for Australian companies expanding into the Indian market. The process runs under the Companies Act, 2013, with foreign direct investment (FDI) from Australia permitted under the automatic route in most sectors - meaning no prior RBI or government approval is needed before incorporation.
India offers a large domestic market, a skilled and cost-effective workforce, and - for a subsidiary structured as a domestic Indian company - an effective corporate tax rate of approximately 25.17% under Section 200 of the Income-tax Act, 2025 (the erstwhile Section 115BAA). The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA), in force since 29 December 2022, has strengthened trade and services ties between the two countries, and Hyderabad's IT, life sciences, and business services ecosystem has made it an increasingly common choice for Australian founders and companies evaluating a wholly-owned Indian subsidiary.
Entity Options for an Australian Parent
The right structure depends on the parent's objectives, funding plans, and how much local operational control is needed.
Wholly Owned Subsidiary (Private Limited Company)
The most common route - a Private Limited Company under the Companies Act, 2013, with the Australian parent (typically a Pty Ltd) holding up to 100% of the shares. Offers full operational control, limited liability, and the ability to raise further funding or bring in an Indian JV partner later if needed.
Limited Liability Partnership (LLP)
100% FDI is permitted in LLPs under the automatic route, but only in sectors and activities where 100% FDI is already allowed with no FDI-linked performance conditions attached. LLPs suit Australian parents wanting pass-through tax treatment on the Indian side, though most groups still prefer the Private Limited route for fundraising flexibility.
Branch or Liaison Office
For parents wanting a presence without incorporating a separate Indian company - filed via Form FNC with RBI. A Liaison Office can only undertake representational activities; a Branch Office has wider permitted activities but needs specific RBI approval and is taxed as a foreign company at a higher rate.
Incorporation Process
The core steps stay the same regardless of the parent's country - what changes is the DTAA position and the paperwork on the Australia side (board resolutions, apostille/notarisation of documents, and so on).
Name Reservation
DSC for proposed directors, followed by RUN/SPICe+ Part A name approval with the RoC.
SPICe+ Filing
Drafting of MOA & AOA and SPICe+ Part B filing - PAN and TAN applied for within the same form.
Certificate of Incorporation
RoC issues the Certificate of Incorporation along with PAN and TAN.
Bank Account & Subscription
Indian bank account opened and subscription money remitted from the Australian parent.
FC-GPR Filing
Shares allotted to the parent are reported to RBI via Form FC-GPR on the FIRMS portal.
Post-Incorporation
GST, Startup India/DPIIT, EPF & ESI, Shops & Establishment, and the compliance calendar set up.
Key Considerations for Australian Parent Companies
- DTAA PositionUnder the India-Australia DTAA, dividends remitted to the Australian parent are taxed at 15%, and royalties fall under Article 12; fees for technical services aren't separately defined in the treaty, so payments not covered by the royalty definition are taxed under the domestic Income-tax Act rate unless a permanent establishment applies.
- Group ReportingAustralian parents typically need the Indian subsidiary's statutory financials, prepared under Indian GAAP/Ind AS, reconciled to AASB (Australian Accounting Standards) for year-end group consolidation - a comparatively lighter lift than for non-IFRS-aligned jurisdictions, since both Ind AS and AASB are IFRS-converged.
- FC-GPR / FC-TRS FilingFresh share allotments and any subsequent share transfers to the Australian parent need to be reported to RBI via Form FC-GPR and Form FC-TRS respectively.
- Funding RoutesFollow-on funding can come in as equity, ECB (External Commercial Borrowing), or intercompany loans, each with a different RBI reporting route and pricing/tenure restriction.
- Australia-Side CFC RulesAustralia's controlled foreign company attribution rules under Part X of the Income Tax Assessment Act 1936 can attribute the Indian subsidiary's passive or "tainted" income back to the Australian parent's taxable income unless the active income test exemption applies - this needs coordination with the parent company's Australian tax advisor; we handle the Indian entity's compliance end.
Protecting Your Brand Name
A trademark registered in your home country doesn't automatically extend to India - protecting your brand name and logo here needs a separate India trademark application, ideally filed alongside incorporation.
Frequently Asked Questions
Does an Australian parent company need RBI approval to invest in an Indian subsidiary?
In most sectors, no prior RBI approval is required - FDI from Australia falls under the automatic route, and the investment is reported to RBI via Form FC-GPR after the shares are allotted.
Can an Australian Pty Ltd company hold 100% of its Indian subsidiary?
Yes. An Australian parent can hold up to 100% of an Indian Private Limited subsidiary in most sectors under the automatic route, subject to at least one resident director being appointed under Section 149(3).
Do Australian group financial statements need to be restated for Indian consolidation?
Usually a reconciliation rather than a full restatement. Both Ind AS (used for Indian statutory financials) and AASB (used in Australia) are converged with IFRS, so the adjustments needed for group consolidation are typically narrower than for jurisdictions on a different accounting framework.
How is a share transfer between an Australian parent and its Indian subsidiary reported?
Any transfer or fresh allotment of shares to the Australian parent needs to be reported to RBI via Form FC-TRS (for transfers) or Form FC-GPR (for fresh allotment), in addition to updating the Indian subsidiary's statutory registers under the Companies Act, 2013.
Does the Australia-India trade agreement (AI-ECTA) change our compliance obligations in India?
No. AI-ECTA, in force since December 2022, primarily affects tariffs and the Australian-side tax treatment of certain payments for technical services provided remotely from India - it doesn't change the Indian subsidiary's Companies Act, FEMA, or RBI reporting obligations, which apply the same way regardless of the trade agreement.