Setting Up an Indian Subsidiary for a US Logistics Company

Prepared by AU Corporate's CA-led advisory team · Published 12 October 2026 · General guidance; verify activity-specific rules and local permissions before operating.

A US logistics company entering India should define the service it plans to provide before choosing an entity. Freight forwarding, third-party logistics (3PL), transport coordination, warehousing, cold-chain services and logistics software have different operational needs. A clear model helps the business plan its contracts, facilities, people, tax and any permissions that apply to the activity.

1. Define the logistics business model

“Logistics” covers a range of businesses. The first planning document should state what the Indian operation will do, which services it will buy from others, who will contract with customers, and who will be responsible when a shipment or service is delayed or damaged.

• Freight forwarding and coordination of international shipments.
• Third-party logistics, order fulfilment and supply-chain management.
• Warehousing, distribution centres, inventory handling and cross-docking.
• Road transport coordination or operation, including subcontracted carriers.
• Cold-chain, specialist storage or handling of regulated or sensitive goods.
• Logistics software, visibility platforms and data or customer support services.

These activities can sit within one group, but they do not necessarily share the same permits, premises, insurance, staffing or contract requirements. Avoid using a broad activity description as a substitute for an operating plan.

2. Compare a partner-led model with an Indian subsidiary

Working through an established Indian logistics partner may be useful when the US business wants to test demand, reach customers quickly or avoid managing local facilities from the outset. The trade-off is that the partner may control parts of the customer relationship, service delivery, operating data and pricing.

An Indian subsidiary may suit a business that wants to hire its own team, sign customer contracts, operate systems, control service standards or develop a lasting network. It also brings its own company-law, accounting, tax, payroll and governance responsibilities.

Compare both models on customer ownership, service-level commitments, liability, insurance, working capital, local hiring, access to facilities, data ownership and exit options. The cheapest setup at launch may not be the best model once shipment volumes and service expectations increase.

3. Check foreign-investment eligibility and the proposed activities

Foreign-investment conditions depend on the specific business activity and current policy. Do not assume that every service described as logistics, every infrastructure investment or every form of retail and trading is subject to identical conditions. Review the applicable FDI policy and any sector-specific requirements before finalising the ownership structure or funding.

The Department for Promotion of Industry and Internal Trade's FDI resources are a useful starting point. For a business with several activities, map each revenue stream and operating responsibility and have the route checked against the current policy rather than relying on a general industry label.

4. Map activity-specific registrations and permissions

Build a permissions checklist around what the company will actually do. Depending on the model, the review may need to consider tax and GST registrations, local trade or establishment requirements, facility approvals, transport-related obligations, customs-related authorisations, insurance, labour requirements and special rules for particular goods.

A company that coordinates shipments through licensed partners has a different risk profile from one that directly operates a warehouse, transports goods, handles customs clearance or stores temperature-sensitive products. Confirm who is responsible for each regulated step and keep evidence of the relevant partner's authorisations where applicable.

5. Choose facilities and locations carefully

For warehousing or distribution operations, assess the location against customer demand, port and airport access, road connectivity, labour availability, service partners, power reliability and delivery times. Also review the proposed property's permitted use, lease conditions, building and fire requirements, security, vehicle access, insurance and any product-specific storage conditions.

Do not sign a long lease based only on headline rent. Model fit-out costs, racking and handling equipment, technology, utilities, maintenance, safety systems, staffing, shrinkage, insurance and the cost of exiting or relocating the facility.

India's logistics policy work includes integrated development and coordination across modes and infrastructure. The DPIIT Logistics Division page provides policy context, but it should not be treated as a substitute for local site, land-use or operating approvals.

6. Put customer and supplier contracts in place

Logistics agreements should explain the service scope, service levels, shipment visibility, handover points, liability limits, insurance, claims, subcontracting, data access, payment terms, disruption handling and termination support. Where multiple parties handle a shipment, define who communicates with the customer and who is responsible for records and claims.

Review contracts with carriers, warehouse operators, customs brokers, freight agents and technology vendors before launch. Ensure the Indian entity's contractual promises match the services it can actually control and the permissions held by the parties performing each step.

7. Plan working capital and the financial model

Estimate the cash required for payroll, facility deposits, freight and carrier payments, insurance, technology, fuel or handling costs, taxes and customer credit periods. A logistics business can face a gap between paying suppliers and collecting from customers, so forecast cash flow by service line and customer terms.

Set up accounting to track shipments or contracts, customer billing, carrier and warehouse costs, claims, deposits and accruals. If the Indian company transacts with the US parent or other group entities, document the services, cost allocations and pricing method and review transfer-pricing and cross-border tax treatment where relevant.

8. Set up hiring, systems and operating controls

Identify the roles needed locally, such as operations, customer service, sales, finance, warehouse supervision, technology support and compliance. Plan employment contracts, payroll, applicable registrations, training, workplace safety, access controls and a clear escalation process for shipment incidents or customer complaints.

Agree how the India team will use the US group's software, customer data, shipment records, pricing tools and security procedures. Document system access, data retention, incident reporting, business continuity and handover procedures. The parent and subsidiary should also agree on reporting cadence and who can approve material expenditure or customer commitments.

9. Build the recurring compliance calendar

After incorporation, the company may need recurring company-law filings, accounting, statutory audit, income-tax and GST compliance, payroll obligations, and foreign-investment reporting where applicable. The exact calendar depends on the entity, activity, registrations and transactions.

Assign an owner and backup for each filing, retain supporting records, reconcile statutory returns to the books, and schedule periodic reviews of customer and supplier contracts. See the post-incorporation compliance checklist and annual compliance calendar for related company-level planning.

10. Prepare a decision checklist before launch

Before committing to a structure or facility, prepare a short file with the service model, target customers, ownership route, contracts, required permissions, location and facility plan, staffing, insurance, cash-flow forecast, tax assumptions and exit options. Confirm the current requirements for each activity with qualified advisers and the relevant authorities where necessary.

AU Corporate can assist with the India entity assessment, incorporation, accounting, tax and ongoing corporate compliance. Operational permits, customs matters, transport requirements and facility-specific approvals should be confirmed with specialists who cover the relevant activity and location.

Official references

• DPIIT: Foreign Direct Investment resources
• DPIIT: Development of the Logistics Sector
• Ministry of Corporate Affairs for company incorporation and filings.
• GST Portal for GST registration and filing services.

Frequently asked questions