US Parent India Subsidiary Structure: How to Set it Up

A US parent India subsidiary structure puts a US corporation, usually a Delaware C corporation, above an Indian private limited company that builds, sells or services in India. US investors and enterprise customers ask for it because a US company is easier to fund, contract with and acquire. The structure also creates obligations in both countries: filings with the Reserve Bank of India (RBI), transfer pricing on every payment between the two companies, and US returns on the Indian shareholding. This guide maps the whole structure and links to our detailed pages on each step.

Can an Indian founder own a US company that owns an Indian subsidiary?

Yes. An Indian founder can own a US parent that holds an Indian private limited subsidiary, but the route depends on who holds the US shares. A resident individual invests under Schedule III of the Foreign Exchange Management (Overseas Investment) Rules, 2022 and files Form FC through a bank. The Indian subsidiary then reports the parent’s investment on Form FC-GPR through the RBI’s FIRMS portal.

How does a US parent India subsidiary structure work?

The founders own shares of a US corporation, the US corporation owns the shares of an Indian private limited company, and the Indian company employs the team and earns income from services, products or licences. Equity flows down from the parent, fees and dividends flow up, and each flow triggers its own filing in India, the United States or both.

Three layers matter. The parent is the fundraising, contracting and board entity. The subsidiary is where payroll, Indian tax and Companies Act 2013 compliance sit. The founders sit above both, and how they hold their shares decides which FEMA rules apply to them.

What each layer does

Layer	Entity	What it does	Rules that govern it
Founders	Individuals, or an Indian holding entity	Own common stock of the US parent, hold board seats	Overseas Investment Rules 2022, if resident in India
US parent	Delaware C corporation by default	Raises venture capital, signs US customers, owns or licenses IP	Delaware corporate law, US federal tax
India subsidiary	Private limited company	Employs the Indian team, builds product or serves customers, invoices the parent	Companies Act 2013, Non-debt Instruments Rules 2019, Income-tax Act 2025

Why do US investors and customers ask for a US parent?

• Investors usually subscribe to preferred stock of a US corporation on US-standard documents and prefer not to price Indian foreign exchange conditions into every round.
• Enterprise procurement teams onboard US vendors faster and pay from US accounts in dollars.
• US acquirers find a US parent simpler to buy than an Indian company whose share purchase carries FEMA pricing and reporting conditions.

Should the parent be a US company or an Indian company?

A US parent suits a company that raises US venture capital and sells to US enterprises. An Indian parent with a US subsidiary suits a company led by Indian revenue and Indian investors that needs a US sales presence. The two structures sit on opposite sides of FEMA, so the choice should be made before any shares are issued.

US parent or Indian parent

Factor	US parent, India subsidiary	Indian parent, US subsidiary
Typical fit	US venture rounds, US enterprise sales, US acquirer exit	Indian customers and investors, US office for sales
FEMA route	Holder route under Schedule III, or an Indian holding vehicle	Indian company makes ODI, within 400% of net worth
Where investors put money	US preferred stock	Indian company shares, reported on Form FC-GPR
Compliance weight	Both countries, plus transfer pricing on services	Indian filings (APR, FLA) plus US Forms 1120 and 5472 for the subsidiary
Exit	US acquirer buys the US parent	Acquirer buys the Indian company, FEMA pricing applies

Our guide on setting up an offshore subsidiary from India covers the Indian parent route, and the foreign subsidiary jurisdiction guide compares the US with Singapore, the UAE and the UK.

US company setup for Indian founders: the decisions to settle first

Five decisions fix the shape of the structure: the entity type and state of the US parent, who holds its shares, who owns the IP the Indian team creates, what the Indian company does for the parent, and how it is funded. Settle them in this order. The holder decision drives the FEMA route, and the funding decision drives the India-side filings.

The five decisions

Decision	Default for a venture-backed software founder	Why
Entity type and state	Delaware C corporation	Investors expect it. An LLC is tax transparent, and the Internal Revenue Service bars non-resident alien shareholders from S corporation status
Holder of the US shares	No default, see the next section	FEMA conditions differ by holder
Ownership of IP	Assigned to the US parent, with the Indian team’s employment contracts carrying IP assignment	Investors diligence IP title at the parent
Role of the India subsidiary	Captive services to the US parent on a cost-plus basis	Keeps Indian income and transfer pricing predictable
Funding of the India subsidiary	Equity or compulsorily convertible instruments	Equity is reported on Form FC-GPR, loans fall under the External Commercial Borrowings (ECB) framework

Our detailed guides cover each decision: Delaware entity setup for Indian businesses for the entity and state, IP transfer in a flip and work for hire in India for IP, intercompany service fees for the subsidiary’s role, and FC-GPR filing after foreign investment for funding.

The US-side set-up has four working steps, and none needs a US visit.

• A registered agent in the state of incorporation, which every US state requires.
• An Employer Identification Number (EIN). The online application needs a US taxpayer number, so founders without a Social Security Number or ITIN apply on Form SS-4 by phone, fax or mail.
• A US business bank account. Whether it can be opened remotely depends on the bank, so confirm each provider’s non-resident requirements before choosing one.
• Beneficial ownership reporting. FinCEN’s interim final rule of 26/03/2025 exempts US-formed entities, but check fincen.gov before skipping a report.

Who should hold the shares of the US parent: resident individual, Indian entity or non-resident founder?

Shares of the US parent can be held by resident Indian founders directly, through an Indian company or LLP, or by founders who are non-resident under FEMA. The route decides the rules. Resident individuals face the tightest conditions under Schedule III of the Overseas Investment Rules, 2022, including a Liberalised Remittance Scheme (LRS) limit of US$250,000 per financial year per individual.

Holder routes compared

Holder route	FEMA basis	Key conditions	Watch point
Resident individual founders directly	Schedule III, Overseas Investment Rules 2022, Form FC through an Authorised Dealer (AD) Category I bank	Investment only in an operating foreign entity outside financial services, within the LRS limit of US$250,000 per year	Schedule III bars a resident individual with control from holding a foreign entity that has a subsidiary or step-down subsidiary. Whether an Indian subsidiary counts is read differently in practice
Indian holding company or LLP owned by the founders	Overseas Investment Rules 2022, financial commitment capped at 400% of net worth	Two-layer limit under Rule 19(3), audited net worth not older than 18 months	Practitioner view varies on whether this route avoids the individual-control restriction. Confirm with the AD bank
Founders who are non-resident under FEMA	Overseas Investment Rules do not apply to their own holding. The India subsidiary’s inbound investment follows the Non-debt Instruments Rules 2019	Residence is tested under section 2(v), FEMA 1999, not under the Income-tax Act	FEMA residence and tax residence differ, and a founder moving abroad changes the analysis for co-founders who stay

Is a resident individual allowed to control a US parent that has an Indian subsidiary?

This position is unsettled, and we do not state it as settled. Rule 19(3) of the Overseas Investment Rules, 2022 permits a resident investor to invest in a foreign entity that invests back into India, provided the structure has no more than two layers of subsidiaries. Our guide on round tripping under FEMA covers that rule. Schedule III separately restricts a resident individual with control from holding a foreign entity that has a subsidiary or step-down subsidiary. Practitioners read the two together differently, and some commentary treats the restriction as ruling out direct resident-individual control of a US parent with an Indian subsidiary.

The document that closes the gap is the AD bank’s written acceptance of Form FC for your specific structure, or an RBI reply obtained through the AD bank. Get it before the US company is incorporated, not after. A founder who is an NRI or moving abroad should also read our guide on India tax residency for NRI startup founders.

Related reading: the FEMA ODI rules for Indian startups investing abroad cover the 400% net worth cap, Form FC and the Annual Performance Report in full.

Two ways to build it: US first or India first

Founders without an Indian company can incorporate the US parent first and then incorporate the Indian subsidiary under it. Founders with an operating Indian company reach the same structure through a flip, which moves the shareholding above the Indian company, and the tax and FEMA cost sits in that step. The end state is identical. The work and the risk are not.

Build sequence by path

Step	Path A: US first	Path B: India first (flip)
1. US parent	Incorporate the Delaware company and issue founder shares	Same
2. Holder filing	Form FC through the AD bank before any remittance, or on a zero-cash incorporation where an Indian resident has control	Same, plus share swap valuation
3. India company	Incorporate a new private limited company through SPICe+ on the Ministry of Corporate Affairs (MCA) portal	Existing company stays, shareholders swap their shares into the US parent
4. Ownership transfer	Not applicable	Share swap, with the Section 47 exemption analysis and GAAR review in our flip structure guide
5. First funding	Parent subscribes to Indian shares, FC-GPR follows	Parent already holds the shares, later infusions follow FC-GPR

How long does it take?

We would plan six to eight weeks end to end once the FEMA steps are added. Four things set the pace: notarisation and apostille of the US parent’s documents, MCA name approval and any resubmission, the bank’s video KYC and account activation, and the AD bank’s review of Form FC. The US document apostille is usually the longest step.

There is no minimum paid-up capital for an Indian private limited company under the Companies Act.

Wholly owned subsidiary in India: incorporation, FDI route and the first 180 days

The Indian subsidiary is a private limited company incorporated through SPICe+ and held by the US parent under the automatic FDI route for software and IT services. After incorporation it has statutory deadlines of its own: a first board meeting and a first auditor within 30 days, and Form INC-20A within 180 days.

The company needs at least two directors, one of whom has stayed in India for 182 days or more in the previous year (section 149(3), Companies Act 2013), and at least two members (section 3(1)(b)). The US parent holds all but one share and a nominee holds the last. Our page on resident director options for a foreign-owned Indian subsidiary covers who can fill that seat. The US parent’s board resolution, charter documents and good standing certificate usually need notarisation or apostille before the MCA and the bank accept them.

Does a US venture investor with Chinese or Hong Kong partners change the FDI route?

It can. Software and IT services sit under the automatic route, but investors whose beneficial owners are in a country sharing a land border with India are subject to Press Note 3 (2020). Press Note 2 (2026), in force from 01/05/2026, links the beneficial owner test to anti-money-laundering thresholds and, for holdings below them, moves the requirement from approval to reporting. Check the investor chain of the US parent at each round. Our guides on downstream investment under FEMA and the Press Note 3 amendment cover the mechanics.

What must the India subsidiary do in the first 180 days?

• Hold the first board meeting within 30 days of incorporation (section 173(1), Companies Act 2013).
• Appoint the first statutory auditor within 30 days (section 139(6)).
• Issue share certificates within two months and pay stamp duty.
• File Form INC-20A within 180 days, before starting business or borrowing.
• Open the bank account, register for GST once service turnover crosses ₹20 lakh, and complete provident fund, employees’ state insurance, shops and establishment and professional tax registrations as the team grows.
• From year one: four board meetings a year with no gap above 120 days, statutory audit, annual filings with the Registrar of Companies, income-tax return and TDS returns.

Our guides cover post-incorporation formalities, opening a bank account for a foreign-owned Indian subsidiary and, for captive delivery centres, STPI registration.

FEMA filings in a US parent India subsidiary structure, in the order they fall due

Six filings recur: Form FC before the Indian investor remits funds abroad, a FIRMS report when the India subsidiary receives the parent’s money, allotment within 60 days, Form FC-GPR within 30 days of allotment, the Annual Performance Report by 31 December, and the Foreign Liabilities and Assets (FLA) return by 15 July. Most avoidable penalties come from losing the sequence between the first four.

FEMA filing calendar

Filing	Who files	Trigger	Deadline	Basis
Form FC	Indian resident investor, through the AD bank	Remittance abroad, or a zero-cash incorporation where an Indian resident has control	Before funds leave India	Overseas Investment Rules and Regulations 2022
Advance remittance report on FIRMS	India subsidiary	Receipt of the parent’s funds	Within 30 days of receipt	Non-debt Instruments Rules 2019
Allotment of shares	India subsidiary	Receipt of application money	Within 60 days of receipt, failing which the money is refunded	Companies Act 2013, Non-debt Instruments Rules 2019
Form FC-GPR	India subsidiary, through the AD bank	Allotment of shares or convertible instruments	Within 30 days of allotment	Regulation 4, Mode of Payment and Reporting Regulations 2019
Annual Performance Report	Indian investor	Each overseas entity, every year	31 December	Overseas Investment Regulations 2022
FLA return	Indian entities with outstanding foreign investment or overseas investment	Position as on 31 March	15 July. The RBI extended the FY 2025-26 return to 31/07/2026, and extensions are year specific	RBI FLAIR portal

The issue price of Indian shares sold to the US parent cannot be below fair value under Rule 21 of the Non-debt Instruments Rules, 2019, so a valuation report is needed at every subscription. Contraventions attract a penalty of up to three times the sum involved under section 13 of FEMA 1999, and late reporting attracts a late submission fee on top. If the India subsidiary later invests in another Indian company, Form DI and the downstream rules apply. Our page on FC-GPR filing walks through the portal steps.

Does the US parent need to file anything in India?

No. The US parent files nothing with the RBI directly. The Indian shareholder carries Form FC and the Annual Performance Report, and the Indian subsidiary carries the FIRMS report, Form FC-GPR and its share of the FLA return. A US parent that remits money without the Indian side knowing creates the gap that surfaces in due diligence.

How money moves between a US parent and an Indian subsidiary

Five flows run between the two companies: equity from the parent, service fees paid to the subsidiary, royalties on IP licensed to the subsidiary, dividends from the subsidiary, and loans. Each is a transaction between associated enterprises, so each needs an arm’s length price, a written agreement and a tax and GST treatment decided before the first invoice.

Money flows and their treatment

Flow	Direction	India treatment	Treaty rate or form
Equity subscription	US parent to India subsidiary	Not income. Reported on FIRMS and Form FC-GPR	Valuation floor under Rule 21, Non-debt Instruments Rules 2019
Service fees (captive development)	India subsidiary invoices US parent	Income of the subsidiary. Export of services under section 2(6) of the IGST Act 2017, zero-rated under section 16 with a Letter of Undertaking	Transfer pricing: Form 48 under the Income-tax Act 2025
Royalty on IP licensed to India	India subsidiary pays US parent	Withholding on payment to a non-resident. Import of services under reverse charge, section 5(3), IGST Act 2017	India US DTAA Article 12: 10% or 15% depending on the royalty type. Tax residency certificate and Form 41 needed
Dividends	India subsidiary pays US parent	Withholding on payment to a non-resident	India US DTAA Article 10: 15% if the parent holds at least 10% of voting stock, 25% otherwise. Form 41 needed
Loan from parent	US parent to India subsidiary	Falls under the RBI’s ECB framework, with maturity and pricing conditions	Interest under Article 11: 10% for banks, 15% for others

Treaty relief now needs two documents. From 01/04/2026, Form 41 under section 159(8) of the Income-tax Act 2025 and Rule 75 of the Income-tax Rules 2026 replaced Form 10F, and it is filed electronically alongside the US tax residency certificate (IRS Form 6166). Without both, the Indian payer withholds at the domestic rate.

What does transfer pricing require from year one?

Every payment above is an international transaction between associated enterprises. Under the Income-tax Act 2025, in force from 01/04/2026, section 161 sets the arm’s length principle, section 162 defines associated enterprises (26% voting power is one test), section 165 lists the pricing methods and section 167 carries safe harbour. The accountant’s report moved from Form 3CEB to Form 48 under section 172. From year one, the Indian subsidiary needs:

• A written intercompany agreement signed before services start, see our guide to the parent subsidiary intercompany agreement in India.
• A benchmarking study with a functions, assets and risks analysis for each flow, unless safe harbour is elected.
• Form 48 filed with the return. Secondary sources show the due date as either 31 October or 30 November for tax year 2026-27.
• A decision on safe harbour. For tax year 2026-27 onward, Rule 89(2) of the Income-tax Rules 2026 read with section 167 sets 15.5% of operating expenses for IT services, with an eligibility ceiling of ₹2,000 crore, a five-year lock-in and no access to the mutual agreement procedure for covered transactions. The older 17% to 24% margins and the ₹300 crore ceiling no longer apply. Our guide on safe harbour for IT, ITeS and captives covers eligibility and the low-risk test.

Failure to file Form 48 carries a penalty of ₹1,00,000 and failure to keep or report records carries 2% of the transaction value, shown in secondary sources as sections 447 and 442 of the 2025 Act.

US tax, place of effective management and permanent establishment

The US parent is a C corporation taxed at 21% federal rate under section 11(b) of the Internal Revenue Code and files IRS Form 1120 each year. Because Indian persons own 25% or more, it files Form 5472 for related-party transactions. As the shareholder of a controlled foreign corporation, it also reports the India subsidiary on Form 5471 and computes net CFC tested income.

US-side items created by the India subsidiary

Item	What it is	Why it matters
Form 5472	Information return on transactions with foreign related parties, sections 6038A and 6038C, Internal Revenue Code	Penalty of US$25,000 per form per year for failure. Each Indian founder is a separate related party
Form 5471	Return on a controlled foreign corporation, section 6038	The India subsidiary is a controlled foreign corporation of the US parent from day one
Net CFC tested income	New name for global intangible low-taxed income, from the One Big Beautiful Bill Act signed 04/07/2025	The deduction falls to 40% for tax years beginning after 31/12/2025, which commentators put at 12.6% before credits. India’s corporate rate of about 25.17% under section 200 of the 2025 Act (formerly section 115BAA) is usually above the US high-tax threshold, which a US CPA tests each year
Foreign research amortisation	Section 174, Internal Revenue Code	Domestic research costs can be expensed from 2025, but foreign research costs stay on a 15-year amortisation. Paying an Indian subsidiary for software development is foreign research
Dividend participation exemption	Section 245A, Internal Revenue Code	May exempt dividends from the India subsidiary in the US, and it also disallows credit for Indian withholding. Confirm with a US CPA

A US accountant who has never seen an Indian subsidiary will file Form 1120 and miss Forms 5471 and 5472. Brief them on the full structure at the start of the first year.

Two India-side tax risks sit above the structure. If the founders run the US parent from India, the parent can be treated as an Indian tax resident under the place of effective management (POEM) test in section 6(3) of the 1961 Act, carried into the 2025 Act, applied through CBDT Circular No. 6 of 2017. If the parent directs the Indian team, or its US staff work from India for long periods, it can create a permanent establishment (PE) under Article 5 of the India US DTAA. Both turn on substance, not on paper. Our guides on place of effective management and permanent establishment risk, including the effect of an Indian subsidiary on the foreign parent cover the tests and the controls.

Can Indian founders live and work in the US for the parent?

Forming and owning a US company needs no US visa, but working inside the United States for it does. Most Indian founders run the US parent from India at first. The E-2 treaty investor visa is not available to Indian nationals, so the realistic routes for relocating are L-1A, O-1A and EB-5, and immigration counsel should confirm eligibility.

Visa routes for an Indian founder

Route	Who it suits	Key conditions	Watch point
No visa, remote operation	Founders running the US parent from India	No visa to form or own the company	Place of effective management risk if all decisions are taken in India
E-2 treaty investor	Not available	India has no qualifying treaty with the United States	Citizenship of a treaty country is the only route
L-1A intracompany transferee	Founder moving from the Indian company to the US parent	A qualifying parent, subsidiary or affiliate link between the two companies, and one continuous year of employment abroad in the preceding three years. New-office petitions start at one year	The structure must be in place and operating before the transfer. L-1A can lead to an EB-1C green card
O-1A extraordinary ability	Founders with documented acclaim	Evidence of national or international recognition. No investment requirement	High evidentiary bar
EB-5 immigrant investor	Founders with capital to commit	A qualifying investment above a statutory minimum, which is lower in a targeted employment area, and 10 full-time US jobs	India’s unreserved EB-5 numbers were reported exhausted for FY 2026, resetting on 01/10/2026

A founder who moves to the US also changes their FEMA and tax residence, which changes the holder analysis above for the founders who stay in India.

Common mistakes that cost founders time and money

Mistake 1: Holding US shares as a resident individual without testing Schedule III. US-side incorporation takes days, so founders move first and ask later. The correct approach is the AD bank’s written position on Form FC before incorporation. The cost of getting it wrong is a FEMA contravention with a penalty of up to three times the sum involved under section 13, plus compounding.

Mistake 2: Wiring share capital without planning the allotment clock. Money reaches the Indian account before the board has approved the issue. Allot within 60 days of receipt and file Form FC-GPR within 30 days of allotment, or refund the money.

Mistake 3: Starting services before an intercompany agreement and benchmark exist. The team starts work in week two and the agreement is signed months later. Sign the agreement first. The penalty for missing records is 2% of the transaction value.

Mistake 4: Leaving the US accountant unbriefed on the Indian subsidiary. The result is Form 1120 filed without Forms 5471 and 5472, with a US$25,000 penalty per missed Form 5472. Give the CPA the full structure chart in the first month.

Mistake 5: Treating the US parent as a mailbox while the founders run it from India. This invites POEM scrutiny. Hold real board decisions with documented substance, and keep records of where decisions are taken.

Treelife practitioner note

In the US parent and India subsidiary engagements we have run at Treelife, the structure rarely fails on the law. It fails on sequence. The US company gets incorporated in a week, the first customer invoice goes out in the second, and the holder route, the intercompany agreement and the FEMA calendar are discussed afterwards.

Two patterns repeat. First, the AD bank sets the timeline. Banks differ in how they process Form FC for a zero-cash incorporation where an Indian resident has control, and in how they read the Schedule III restriction when the foreign entity has an Indian subsidiary. A written position from the bank’s forex desk before incorporation has saved founders from re-papering the holder route after investors have signed. Second, the first intercompany invoice is the moment the structure becomes real. If the services agreement, benchmark and GST treatment are not in place by then, the first year’s Form 48 becomes a reconstruction exercise rather than a filing.

The regulatory anchor to keep in view is Rule 19(3) of the Overseas Investment Rules, 2022. It permits the loop, and it applies at the time of investment and at any time after, so a later step-down entity under the US parent can break a structure that was clean on day one. Review it before every new entity is added.

Frequently asked questions on the US parent India subsidiary structure

Q: What tax does India charge on dividends from the subsidiary to the US parent?

A: Withholding is capped at 15% if the parent holds at least 10% of the voting stock and 25% otherwise, under Article 10 of the India US DTAA. A tax residency certificate (US Form 6166) and Form 41 support the claim. The US parent may be able to claim a participation exemption under section 245A and cannot credit the Indian withholding against it, so confirm with a US CPA.

Q: How are founders taxed when they sell shares of the US parent?

A: A resident Indian founder is taxed in India on the gain. Unlisted shares become long-term after 24 months, and long-term gains are taxed at 12.5% under section 112 of the 1961 Act as amended by the Finance (No. 2) Act 2024, plus surcharge and cess. US tax on a non-resident’s gain from stock of a US operating company is generally nil, subject to US counsel’s confirmation.

Q: Can the US parent pay dividends to Indian founders efficiently?

A: No. The India US DTAA caps US withholding on dividends to an individual at 25%, against 30% under US domestic law, and India taxes the dividend again with credit for the US tax. The structure suits fundraising and exit, not distributions.

Q: How long does the setup take end to end?

A: We would plan six to eight weeks, covering US incorporation, Indian incorporation, the bank’s Form FC review and account activation.

Q: What documents does the Indian subsidiary need from the US parent?

A: Certificate of incorporation, charter documents, a board resolution approving the investment and naming a signatory, a good standing certificate and beneficial ownership details. Notarisation or apostille is usually required, and the exact list varies by AD bank.

Q: Can the US parent lend to the Indian subsidiary?

A: Yes, but the loan is an External Commercial Borrowing under the RBI’s ECB framework, with conditions on maturity, pricing and reporting. Most early-stage structures use equity or compulsorily convertible instruments instead. Our note on ECB for start-ups covers eligible lenders.

Q: What are the penalties for missing FEMA filings?

A: Section 13 of FEMA 1999 allows a penalty of up to three times the sum involved where it can be quantified. Late reporting also attracts a late submission fee, and entities with historic lapses are asked to regularise before new overseas investment.

Q: Can family members hold shares in the US parent?

A: Each resident family member is a separate individual investor with a separate LRS limit of US$250,000 per financial year. Resident individuals cannot gift overseas investments to non-residents. Co-founders and family holders should agree on one holder route before incorporation.

Q: Does DPIIT recognition survive the structure?

A: The Indian subsidiary remains an Indian private limited company and can apply for recognition in its own name. Which benefits attach, including any tax holiday, depends on the current Department for Promotion of Industry and Internal Trade (DPIIT) notification.

Q: How do US investors fund a US parent with an Indian subsidiary?

A: They subscribe to preferred stock of the US parent, so no Indian filing arises on their investment. Form FC-GPR arises only when the parent then infuses money into the Indian subsidiary. Investors’ diligence usually asks for proof of the FEMA filings and the transfer pricing file.

Q: How are Indian employees’ stock options handled?

A: The US parent grants options or restricted stock units to Indian employees, who are taxed in India as a perquisite on exercise or vesting. The grants also carry FEMA reporting obligations.

Q: What if one founder is an NRI?

A: A founder who is non-resident under section 2(v) of FEMA is outside the Overseas Investment Rules for their own holding, but the resident co-founders still need their own holder analysis. The Indian subsidiary’s inbound investment follows the Non-debt Instruments Rules 2019.

Q: Does an Indian founder need a US visa or Social Security Number to set up the US parent?

A: No visa is needed to form or own the company, and an EIN can be obtained without a Social Security Number through Form SS-4. A visa is needed only to work inside the United States, and the E-2 route is closed to Indian nationals.

What a clean US parent India subsidiary structure looks like

The default we would name for a founder-led software company raising US venture capital is this: a Delaware C corporation parent, a wholly owned Indian private limited subsidiary on a cost-plus services agreement, funded by equity, with the holder route confirmed in writing by the AD bank before the US company is incorporated. Everything else in a US parent India subsidiary structure is a variation on that base, and each variation adds a filing in one country or the other.