The three forms
Company. An Indian company incorporated under the Companies Act, 2013 with its registered office in the IFSC. It is the form accepted across the widest range of frameworks, and the usual choice where the entity will hold its own capital, employ people and contract in its own name. It has its own board and its own tax identity.
LLP. A limited liability partnership under the Limited Liability Partnership Act, 2008. Governance is lighter than for a company, and the form is accepted for some activities, for example certain fund managers and ancillary service providers. It is not available under every framework.
Branch of a foreign entity. A foreign company registers its place of business in India under Chapter XXII of the Companies Act, 2013 (section 379 onwards). The branch is not a separate legal person: it carries the parent's balance sheet, which can help meet capital tests, but it exposes the parent directly and, for regulated businesses, usually needs home-regulator comfort.
What each framework allows
| Framework | Forms | Points to note |
|---|---|---|
| Fund Management Entity (FM Regulations 2025) | Company, LLP or branch | A Registered FME (Retail) may not be an LLP or a branch, so retail schemes need a company. |
| Finance company or finance unit | Company (subsidiary, joint venture or new company); a finance unit is set up by an entity incorporated in its home jurisdiction | No-objection from the home regulator if the parent carries on a regulated financial activity. |
| Banking | IFSC Banking Unit (branch) or IFSC Banking Company (subsidiary) | A branch relies on the parent's capital with branch-level requirements; a subsidiary has its own. |
| Insurance (IIO) | Usually a branch of the insurer or reinsurer | Home-regulator standing is central. |
| Global In-House Centre | Company, LLP, or a branch of an entity incorporated outside the IFSC | Branches must come from jurisdictions not on the FATF call for action. |
| TechFin and ancillary services | Company, LLP or branch of a foreign company or LLP | A partnership firm whose partners are all members of a statutory professional body may also apply. |
This table summarises; the regulation for your activity governs.
Branch or subsidiary: the trade-offs
- Capital. Where the framework allows, a branch's capital or net worth can be maintained at parent level. A branch FME, for example, may maintain its net worth at the parent, earmarked for IFSC operations. A subsidiary must be capitalised in India.
- Governance. A branch follows the parent's governance, supplemented by IFSCA's principal officer and KMP requirements. A subsidiary needs its own board and, in some frameworks, independent directors.
- Group support. For a branch, research, models or systems supplied by the parent move within one legal person. For a subsidiary, the same support is an arrangement between two entities, so the framework's outsourcing provisions and transfer pricing need to be considered.
- Change of control. Some frameworks treat a change at parent level differently for a branch and a subsidiary. Under the FM Regulations, a branch FME notifies IFSCA where the home regulator has approved the change, while a subsidiary needs IFSCA's prior approval.
- Liability and tax. A branch exposes the parent's whole balance sheet to the IFSC business. For tax, the branch is part of the foreign company, and its profits are attributed to it as a permanent establishment. A subsidiary is a separate Indian taxpayer.
- Exit. Closing a branch is generally simpler than dissolving a company.
When the forms are not comparable
Capital rules, KMP rules and tax positions differ by framework, so a comparison only works within one framework. A bank branch and a fund-manager LLP are not alternatives to each other. Start from the activity, identify the forms its framework permits, and compare those.
Groups sometimes use two forms side by side, for example a branch in the IFSC for one activity and a separate Indian company for another, or a branch FME for non-retail business with a company added later for retail schemes. Each entity then needs its own registration, people and records.
Whichever form you choose, the constitutional documents must fit the framework: object clauses, signing authority and the powers of the principal officer should match what the IFSCA application will say.