An Indian subsidiary of a US company is subject to two anti-bribery systems and to US export control and sanctions rules that travel with the parent's technology and money. The Foreign Corrupt Practices Act reaches US companies and their agents, and its books-and-records and internal control provisions reach the subsidiary's accounts when consolidated into a US issuer. India's Prevention of Corruption Act, as amended in 2018, makes giving a bribe an offence and makes a commercial organisation liable for bribery by a person associated with it, with a defence of adequate procedures. US export controls on technology also matter, because releasing controlled technology to a foreign national, including an Indian employee in India, is an export. The practical response is a short written programme, due diligence on agents and resellers, training for the Indian team, screening and clear records. US enforcement priorities have shifted in 2025, but the law remains in force and Indian law is independent of it.
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Key facts
| FCPA | Anti-bribery provisions for US companies and agents; accounting provisions for issuers; applies to payments to foreign officials |
|---|---|
| Indian law | Prevention of Corruption Act, 1988 as amended in 2018: offences by givers, and liability of commercial organisations for associated persons, with an adequate-procedures defence |
| Third parties | Agents, distributors, customs brokers and consultants are the highest-risk channel |
| Facilitation payments | Not a safe harbour in India and a narrow exception under the FCPA; avoid |
| Export controls | EAR controls on technology and software; deemed exports to foreign nationals; check the classification of what the Indian team receives |
| Sanctions | US sanctions can reach foreign subsidiaries of US companies in some programmes; screen customers and vendors |
| Records | Accurate books and records and internal controls; gift and hospitality register |
| Enforcement | US priorities changed in 2025; the statutes remain and local enforcement is independent |
How the FCPA reaches India
The anti-bribery provisions prohibit paying or offering anything of value to a foreign official to obtain or retain business. They apply directly to US companies and to US citizens, and indirectly to an Indian subsidiary when a US person authorises, directs or participates in a payment, or when the payment is made through an agent of the US company. The accounting provisions require issuers to keep accurate books and records and a system of internal controls, and the Indian subsidiary's books are part of the issuer's consolidated books, so a bribe booked as a consulting fee in India is a problem in the US as well as in India.
In India the officials most often met by a subsidiary are customs officers, tax officers, municipal and state inspectors, utility and licensing officers and employees of public-sector customers. The risk areas are licences and approvals, customs clearance, tax audits, labour inspections and public tenders. Public-sector bank and enterprise employees are public servants under Indian law, so a government customer need not be a ministry to raise the issue.
Indian anti-corruption law
The Prevention of Corruption Act, 1988, as amended in 2018, makes it an offence to give or promise an undue advantage to a public servant, and extends liability to commercial organisations whose associated persons give such advantages to obtain or retain business, with a defence if the organisation had adequate procedures. Senior officers of a company can be personally liable if the offence is committed with their consent or connivance. The Indian Penal Code replacement, the Bharatiya Nyaya Sanhita, and the laws on money laundering add related offences. The Indian regime does not depend on whether the US enforces the FCPA, and Indian authorities do investigate foreign-owned companies.
A programme that fits a small subsidiary
- A short written policy in plain language covering gifts, hospitality, travel, political and charitable payments, facilitation payments and the reporting of concerns.
- A register of gifts and hospitality given to or received from public officials and customers, reviewed monthly by finance.
- Due diligence on agents, distributors, resellers and customs brokers before onboarding, with a risk rating and an anti-bribery clause in the contract.
- A payment control: no cash, no payment to an account in the name of a person other than the contractor, and an invoice that describes the real service.
- Training for the Indian team at hiring and once a year, with examples from the work they do.
- A hotline or named contact, and a rule against retaliation.
- An annual review by the US compliance lead, with a short report to the board of the Indian company.
Third parties: where problems start
| Third party | Typical risk | Control |
|---|---|---|
| Customs broker or clearing agent | Payments to officers to speed clearance or reduce duty | Written scope, fee schedule, receipts, audit right |
| Distributor or reseller | Discounts or commissions used to fund payments to customers' officials | Due diligence, commercial justification, volume-based pricing |
| Consultant for licences and approvals | Success fees with no clear work product | Fixed fees, reports and deliverables, no success fee tied to officials |
| Landlord or facilities provider | Payments to inspectors | Contracts that make the provider responsible for permits |
| Recruiter or agent for government tenders | Inside information and payments | Tender rules, no agent in public tenders without senior approval |
Export controls: the Indian team and US technology
The Export Administration Regulations control the export of items, software and technology, and an export includes releasing technology or source code to a foreign national, whether in the US or abroad. When a US company sends controlled technology to its Indian centre, or lets Indian staff access controlled source code on a shared system, it makes an export to India that may need a licence depending on the classification of the item and the destination. India has been placed in a more favourable country group than before, which makes licence exceptions available for some items, but the analysis is classification-specific. Most commercial software and general engineering information carries no licence requirement to India, while encryption, aerospace, defence, advanced semiconductor and certain dual-use technologies need case-by-case review.
- Classify the technology and software the Indian team will receive, using the Commerce Control List.
- Restrict access on shared repositories by role and location where a licence would be needed.
- Screen Indian staff, contractors and visitors who will handle controlled items.
- Keep records of what was released, to whom and under what authority.
- Do not re-export to a third country without checking the controls.
Sanctions and restricted parties
US sanctions are administered by the Treasury Department and bind US persons, and in some programmes they reach entities owned or controlled by US persons abroad. An Indian subsidiary of a US company should screen customers, vendors, banks and beneficial owners against the sanctions and restricted-party lists before onboarding and at renewal, and should not do business with sanctioned parties or in sanctioned territories without legal advice. India has its own rules, so check both systems. The same screening is useful for the bank account onboarding and for the anti-money-laundering checks that Indian banks run.
Books, records and the audit
Accurate records are the backbone of both regimes. Each payment should have a contract, an invoice, evidence of delivery and an approval, and should be coded to the right account. Expenses for entertainment, gifts and travel for officials or customers need an approval and a purpose. The statutory auditor and the US group auditor both test controls over financial reporting, and the Indian company's internal financial controls are reported on by the auditor. See audit and ICOFR.
Mistakes to avoid
- Treating small facilitation payments as harmless.
- Hiring an agent on a success fee for a licence or tax matter.
- Letting finance book payments to a third party under a vague description.
- Giving Indian staff access to controlled technology without classification.
- Assuming that changes in US enforcement mean that Indian law is relaxed.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Internal Revenue Service (US), Bureau of Industry and Security (US) and the Ministry of External Affairs (India).
Frequently asked questions
Does the FCPA apply to an Indian subsidiary?
Directly to US persons and agents, and indirectly to the subsidiary when a US person is involved or when its books are consolidated into a US issuer. Treat it as applicable.
Does India have its own anti-bribery law?
Yes. The Prevention of Corruption Act, 1988 as amended in 2018 punishes giving a bribe and makes a commercial organisation liable for bribery by an associated person, with an adequate-procedures defence.
Are facilitation payments allowed?
They are not a safe harbour in India and the FCPA exception is narrow. Avoid them.
What do we need to do for agents and distributors?
Run due diligence, write the scope and fees into a contract with an anti-bribery clause, and monitor payments.
Is sharing source code with the Indian team an export?
Yes, releasing controlled technology or source code to a foreign national, including in India, is an export under the EAR. Most commercial software needs no licence, but classify first.
Which technologies need special care?
Encryption, aerospace, defence, advanced semiconductors and some dual-use items. Check the Commerce Control List.
Can US sanctions affect an Indian subsidiary?
In some programmes yes. Screen customers and vendors and take advice before doing business with sanctioned parties or territories.
Does the 2025 change in US enforcement relax the rules?
No. The statutes remain in force, enforcement priorities can change again, and Indian law is independent.
Who should own the programme?
A named person in the US compliance function with a local owner in India, plus an annual report to the board.
Related guides
Audit and ICOFR
Statutory audit and internal financial controls.
Read the guide →Common mistakes
Errors US companies make in India.
Read the guide →US parent obligations
Form 5471 and the other US filings that follow an Indian subsidiary.
Read the guide →Compliance calendar
Annual and monthly filings for an Indian subsidiary.
Read the guide →Sources
Last updated 2 November 2026. General information only, not legal or tax advice. Indian and US rules change often; confirm current requirements before acting.