Can a US aerospace company establish an Indian subsidiary?

A subsidiary may support engineering, manufacturing, sourcing or other local operations, but the appropriate structure depends on the activity, ownership, customer requirements and applicable rules. Verify the position before incorporating or funding the project.

Does a company registration allow aerospace manufacturing or maintenance?

No. Company incorporation is separate from any aviation, factory, quality, environmental, defence-related or other approvals that may apply to the actual product and activity.

Can technical drawings and controlled data be shared with an Indian team?

Do not assume that incorporation or an intercompany agreement permits every transfer. Review US export-control requirements, Indian rules, customer restrictions and contractual approvals with qualified counsel before sharing controlled technical data.

Does civilian aerospace have the same rules as defence work?

Not necessarily. Requirements can differ by product, end use, customer, technology and whether defence-related activities are involved. Classify the proposed activity and obtain specialist advice where needed.

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US to India · Aerospace engineering and components

Setting Up an Indian Subsidiary for a US Aerospace Company

Start by defining whether the India operation will provide civilian aerospace engineering, manufacture components, source parts, sell equipment or support maintenance. Aerospace work can involve customer qualification, aviation rules, export controls, technical-data restrictions and defence-related licensing depending on the activity. Check those requirements before selecting the entity, transferring technical data or committing to a facility.

Prepared by AU Corporate's CA-led advisory team · Published 13 October 2026 · General guidance; confirm current rules and project-specific requirements before acting.

Quick answer

What should a US company check before setting up this type of operation in India?

1. Define the aerospace activity and end use

Aerospace operations can include design engineering, simulation, precision components, tooling, supplier development, maintenance support, distribution or manufacturing. Defence-related work and controlled technical data can add separate licensing and customer requirements. Do not treat every aerospace activity as having one regulatory route.

Document the products, end users, technical data, manufacturing steps, customer contracts and whether any defence or controlled technology is involved.
Keep a written record of the decision, responsible owner and supporting documents.

2. Check ownership and activity-specific approvals

Review current FDI policy and the relevant aviation or industry rules against the precise activity. Manufacturing, engineering services, maintenance and defence-related work may require different checks. Incorporation alone does not authorise a regulated activity or establish that a customer will qualify the supplier.

Use official FDI and sector sources as a starting point, then confirm licensing and approval requirements with specialist counsel before making commitments.
Keep a written record of the decision, responsible owner and supporting documents.

3. Review technical-data and export-control requirements

US-origin software, drawings, technical specifications, tooling data and engineering support may be subject to export-control rules or customer restrictions. An internal transfer to an affiliated Indian company should not be assumed to be exempt. Access by employees, contractors and suppliers should follow an approved classification and authorisation process.

Before sharing data, identify the controlling rules, permitted recipients, end use, access controls and recordkeeping requirements.
Keep a written record of the decision, responsible owner and supporting documents.

4. Build supplier quality and traceability into the model

Aerospace customers may require qualification, quality management, component traceability, configuration control, inspection records and change approval. Requirements vary by customer, product and contract. The Indian entity should know whether it is a designer, manufacturer, distributor, subcontractor or maintenance provider.

Agree quality responsibilities, inspection and acceptance criteria, non-conformance handling, record retention and change-control procedures with customers.
Keep a written record of the decision, responsible owner and supporting documents.

5. Structure contracts, IP and liability

Define ownership of background IP, new designs, tooling, software and customer-specific work. Contracts should address product specifications, warranties, recall or corrective action, indemnities, insurance, delivery, export restrictions and responsibility for supplier failures. The contracting entity should be able to perform those obligations.

Align customer, supplier, employee and parent-subsidiary agreements with the actual flow of work and risk.
Keep a written record of the decision, responsible owner and supporting documents.

6. Plan funding, tax and recurring compliance

The Indian company may need local banking, capital funding, accounting, audit, tax, payroll, GST and company-law compliance. Cross-border services, royalties and related-party purchases should be reviewed for withholding and transfer pricing. Foreign investment and share issues may require FEMA/RBI reporting.

Create a compliance calendar and maintain technical, supplier, project, funding and intercompany records from the start.
Keep a written record of the decision, responsible owner and supporting documents.

Official sources to check

Use official material as the starting point and confirm that it remains current for the proposed activity. Requirements can depend on ownership, products, end use, contracts, location and changes to applicable rules.

Related guides

For the broader incorporation route, start with our India entry guide for US companies. AU Corporate can help map the India-side entity, tax and compliance workstreams to the proposed operating model.

This article is general information, not legal, tax, regulatory or investment advice. Requirements can change; no approval, licence or incentive is guaranteed.