There is one conversation I have with founders entering India that is harder than any technical discussion about structure, tax or compliance. It is the conversation about control.
Specifically: you are about to create an entity in a jurisdiction you do not understand, staffed by people you have not met, governed by rules you will not read, signed off by a director who is not you. And the things that go wrong will not be the things you are currently worried about.
Why it is uncomfortable
Founders entering a new market arrive with a plan, a budget and a timeline. What they want from an adviser is confirmation and execution. What I have to introduce is the idea that their ability to see what is happening in the India entity will be considerably worse than in their home operation, at least for the first two years.
This is not a comment on India. It is true of any distant subsidiary. But it is more pronounced here because the regulatory surface is larger, the filing obligations are more numerous, and the consequences of drift attach to individuals rather than only the company.
The specific things I raise
You will not know if the filings are being made. Not really. You will receive assurances. The failure mode is not fraud, it is an overstretched local team, an accountant who has stopped responding, a deadline nobody owned. The parent finds out when something is blocked. I tell founders to ask for filing acknowledgements, not status updates, and to have someone outside the India team check them.
Your resident director carries personal liability. If that person is a nominee arranged by a service provider, you have a director with personal exposure, limited commercial interest in the company, and no reason to escalate a problem to you. That is a structural weakness, and it is worth spending money to fix it properly.
The bank account is harder to control than you expect. Signing authority, the mechanics of payments, who can actually move money and who can see the statements — these require decisions the parent usually delegates by default. Getting visibility over the India bank account from the parent’s side is the single highest-value control to insist on.
Your first hire will define the entity. In a small subsidiary, the first substantive hire sets the culture, the standards and often the commercial direction, with very little supervision. Founders spend weeks on the structure and days on this decision. The proportion should be reversed.
The part founders resist most
The hardest thing to say is that the India entity will need real management attention from the parent, not just oversight — and probably for longer than they have planned.
Most founders intend to set it up, hire a country manager, and check in quarterly. That works once the entity is established and the processes are proven. It does not work in year one, when the processes do not exist yet and every decision is a precedent.
The subsidiaries that succeed have someone senior from the parent genuinely engaged in the first year, often visiting, making decisions, and building the relationships. The ones that struggle were delegated early to someone whose incentives nobody examined closely.
Why I have the conversation anyway
It is not a pleasant conversation and it occasionally costs me the engagement. I have it because the alternative is worse for both of us.
The cleanups I am called into — the unreported inflows, the transfer pricing position that cannot be defended, the director who has disappeared, the filing backlog discovered during diligence — almost never come from a bad structure. They come from a reasonable structure with nobody paying attention to it.
Structure is a one-time cost. Attention is a running one, and it is the one that actually determines whether the India entity works.
What I ask founders to commit to
Three things, before anything is incorporated:
- A named person at the parent who owns the India entity — not a function, a person with a name
- A monthly review of filings, bank position and headcount, with the underlying documents attached rather than summarised
- A genuine plan for the first year of management attention, including how often someone senior will be physically present
Founders who commit to these rarely need me for anything other than the work they engaged me for. Those who do not are usually back within two years with a problem that costs several times what the attention would have.
If you are planning an India entry and would rather have this conversation before incorporation than after, AeTx handles the structuring and the ongoing compliance — and will tell you plainly where the risk actually sits.