For most Hong Kong companies the wholly owned private limited company is the practical choice: separate legal entity, limited liability, flexible funding and a clean exit. A liaison or branch office can suit a narrow purpose, but the RBI conditions are strict (a branch needs a USD 100,000 net worth and a five-year profit record; a liaison office USD 50,000 and three years), and the Press Note 3 approval route applies whichever structure you pick. A joint venture adds a partner and governance terms. Choose on liability, tax, approval, funding and exit, not on set-up speed.
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Key facts
| Private limited company | Separate entity, limited liability; default choice |
|---|---|
| LLP | Allowed in sectors with 100% automatic FDI and no performance-linked conditions; approval still applies for Hong Kong investors |
| Branch office | Net worth USD 100,000 and 5-year profit record; limited activities; RBI approval |
| Liaison office | Net worth USD 50,000 and 3-year profit record; no commercial activity; RBI approval |
| Project office | For a specific contract; conditions on funding and approval |
| Joint venture | Shareholders' agreement with an Indian partner; sector cap and pricing rules apply |
| Press Note 3 | Applies to any structure with Hong Kong or land-border ownership |
| Tax difference | Branch taxed as a foreign company at a higher rate than a domestic company (confirm the current rate); subsidiary at the domestic company rate |
Comparison
| Option | Liability | Activities | Tax outline | Main drawback |
|---|---|---|---|---|
| Private limited company | Limited to share capital | Any permitted business | Domestic company rate; dividends taxed on distribution | Compliance burden; two directors and shareholders |
| LLP | Limited to contribution | Services and permitted sectors | Taxed as a firm; no dividend distribution tax | Less familiar to investors; FDI conditions; limited exit via shares |
| Branch office | Parent liable | Narrow, permitted activities | Foreign company rate on profits | Strict RBI eligibility; Hong Kong parent exposed |
| Liaison office | Parent liable | Representation and communication only; no income | No Indian income; costs funded by parent | No revenue allowed; PE risk if it exceeds its remit |
| Project office | Parent liable | A specific contract | Taxed as a foreign company | Limited life; conditions on use |
| Joint venture company | Limited to share capital | Agreed scope | Domestic company rate | Partner disputes; exit and deadlock terms |
Wholly owned subsidiary
- Suited to sales, services, manufacturing, GCC and trading models.
- Funding by equity, preference shares or compliant external commercial borrowing. See funding and FEMA.
- Profits can be repatriated as dividends after tax, subject to the treaty. See repatriating profits.
- Exit by share sale or buy-back. See exit and restructuring.
Branch, liaison and project offices
- A branch can carry out specified activities such as export and import, professional services, research, and representing the parent, but not manufacturing.
- A liaison office cannot earn income. All costs are met from inward remittance.
- A branch office is a PE of the parent, and profits are taxed in India as a foreign company.
- The conditions and the Press Note 3 approval make these routes slower than they look.
Joint venture
- Agree reserved matters, deadlock, transfer restrictions, non-compete and exit terms before signing.
- Pricing rules apply to share transfers between a Hong Kong investor and an Indian resident. See funding and FEMA.
- Consider governing law and arbitration seat early. See contracts, courts and arbitration.
How to choose
- Start with the business model: contracts and revenue in India point to a subsidiary.
- Check the sector cap and the Press Note 3 route.
- Compare liability: a branch exposes the Hong Kong parent.
- Plan the exit and the repatriation route from day one.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Inland Revenue Department (Hong Kong), Companies Registry (Hong Kong) and the Ministry of External Affairs (India).
Frequently asked questions
What is the best structure for a Hong Kong company in India?
For most, a wholly owned private limited company, because it limits liability and is easy to fund and exit.
Can I use an LLP?
In sectors with 100% automatic FDI and no performance-linked conditions, subject to the Press Note 3 approval for Hong Kong investors.
What do I need for a branch office?
A net worth of USD 100,000 and a profit record for the preceding five years, with RBI approval.
What do I need for a liaison office?
A net worth of USD 50,000 and a profit record for three years, with RBI approval. It cannot earn income.
Can a liaison office sell products?
No. It can only represent the parent, promote exports and imports and communicate.
Is a joint venture easier?
It can open access to a partner and market, but it needs strong governance terms and pricing compliance.
How are branches taxed?
As foreign companies on Indian profits at the higher foreign company rate, with surcharge and cess; check the current rates.
Related guides
How to Incorporate a Private Limited Company in India as a Hong Kong Parent: Approval, SPICe+, Bank Account and Post-Incorporation Filings
Step-by-step route for a Hong Kong parent to set up an Indian private limited company: Press Note 3 approval, name, SPICe+, DIN and DSC, resident director, PAN and TAN, bank account, capital inflow, FC-GPR and first filings.
Read the guide →Funding Your Indian Subsidiary from Hong Kong: Equity, Preference Shares, External Borrowing and FEMA Reporting
How a Hong Kong parent can fund an Indian company: equity share and preference share pricing, 60-day allotment and FC-GPR rules, ECB, loans, FLA return, Press Note 3 and reporting through the authorised dealer bank.
Read the guide →Getting Money Out of India to a Hong Kong Parent: Dividends at 5%, Service Fees, Royalties, Interest and Loan Repayments
How a Hong Kong parent receives money from an Indian subsidiary: 5% treaty withholding on dividends, 10% on interest, royalties and fees, Section 393, Forms 41, 145 and 146, Hong Kong tax treatment and the documents banks ask for.
Read the guide →Exiting an Indian Subsidiary from Hong Kong: Share Sale, Buy-Back, Merger, Voluntary Liquidation and Tax on the Exit
How a Hong Kong parent exits or restructures an Indian business: sale of shares, FEMA pricing, FC-TRS, capital gains tax, buy-back, merger, voluntary liquidation, strike-off and the treaty position.
Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Hong Kong rules change often; confirm current requirements before acting.