# India Subsidiary for YC Startups: Batch to Bangalore Without Slowing Down

> Source: https://krystal7.com/insights/y-combinator-founders-india-subsidiary
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: Nihal Srivastava
> Published: 01 Aug 2026; updated 24 Sep 2026
> Summary: How YC startups set up an India subsidiary without losing batch speed: Delaware parent, four to five week timeline plus apostille time, hiring before the entity exists, FC-GPR and FLA on autopilot, fixed fees.

## AI Overview Summary

- A YC founder keeps the Delaware C corporation as parent and forms a wholly owned Indian Private Limited company, with one nominee share for the two member minimum. SAFEs stay at the parent.
- The parent invests in an Indian software or product subsidiary under the automatic route. Shares must be allotted within 60 days of the capital landing, and Form FC-GPR filed within 30 days of allotment.
- Before the entity exists, hire through an employer of record or pay contractors from the parent. Sign IP assignment and confidentiality terms in favour of the entity chain from day one.
- Grant Indian employees options over parent shares under the existing plan. The employee's tax event lands at exercise, so design exercise windows with that in mind.
- After launch, run monthly payroll with TDS, GST, quarterly TDS returns, the audit, MCA filings and the FLA return by 15 July. Zero rate export invoices to the parent under a Letter of Undertaking.

You raised, you have eighteen months of runway, and the hiring plan says India. The constraint is not ambition, it is founder attention: every week you spend learning Indian company law is a week not spent on the product. This guide is the speed run for YC and YC-adjacent founders, built around the stack you already have, the Delaware C corp, the SAFEs, the standard docs, and tuned for one outcome: engineers on payroll in Bengaluru or Pune while you stay focused on the batch cadence of building and shipping.

## Your YC Stack, and What India Adds

Nothing about your existing stack changes. The Delaware C corp stays the parent, your SAFEs and priced rounds live at the parent, and your India entity is a wholly owned subsidiary underneath: an Indian private limited company the parent owns completely, with one nominee share for the two-shareholder minimum. SAFEs do not complicate the India side, because India only sees one thing: the parent company subscribing to the subsidiary's shares. Investment into an Indian software or product subsidiary comes in under the automatic route, no prior approval, reporting after the money moves. The Delaware-specific detail, franchise tax, the parallel calendars, the Wyoming LLC question if you have not converted yet, lives in the [Delaware C corp playbook](/insights/setting-up-a-us-company-india-subsidiary-the-comprehensive-2026-guide).

## The Fast Path, With Real Dates

| Step | Owner | Typical time |
|---|---|---|
| US document notarisation and apostille | You + our checklist | Depends on you and the issuing US state |
| Name approval, incorporation filing, certificate | Krystal7 Consultants | About 8 to 10 working days |
| PAN, TAN, GST, first registrations | Krystal7 Consultants | PAN and TAN with the certificate; GST 2 to 3 weeks after it |
| Bank account, capital remittance, share allotment | You + bank + Krystal7 Consultants | 2 to 3 weeks after incorporation |
| FC-GPR filing with the RBI | Krystal7 Consultants | Within 30 days of allotment |

End to end, about four to five weeks is the honest range, plus apostille time. Bank KYC is the other variance. The two dates that are law rather than logistics: shares must be allotted within sixty days of the capital landing, and Form FC-GPR must reach the RBI within 30 days of allotment. Both go into the calendar the day the wire is planned.

## Hiring Before the Entity Exists

You do not have to wait for the certificate to make offers. The standard bridge is an employer of record: your first hires start on an EOR's payroll this month, then flip onto your subsidiary's payroll the month it goes live, with continuity of tenure written into their letters. Contractors during the batch are simpler still, paid from the parent against invoices, with GST on their side handled by their registration status. The rule that keeps this clean: sign the IP assignment and confidentiality terms with each person from day one, in favour of the entity chain, so nothing needs re-papering at the flip.

## ESOPs Your Indian Team Will Actually Value

Two workable patterns. Grant parent-level options to Indian employees under your existing plan, which keeps one cap table and is what most YC companies do early; the tax event for the employee lands at exercise, so design exercise windows with that in mind. Or, at scale, mirror a scheme at the Indian company. Start with parent options, document the India grants properly, and revisit when the India team passes the size where local practice matters for retention.

If you would rather issue shares than options to Indian employees, our guide to [sweat equity shares in India](/insights/sweat-equity-shares-india-companies-act) covers the special resolution, valuer report and lock in.

## Investor Reporting Without the Scramble

Your investors will ask two India questions at the next board meeting: is the subsidiary compliant, and what did it cost. The artifacts that answer them are the certificate of incorporation, the FC-GPR acknowledgment, the FIRC trail for capital, and a one-page compliance calendar showing payroll, GST, TDS, the audit and the annual FLA return each have an owner and a date. We hand you that pack as a deliverable, because a ten-minute board answer is part of what you are buying.

## Compliance on Autopilot

After go-live the rhythm is fixed: monthly payroll with TDS, monthly or quarterly GST, quarterly TDS returns, the statutory audit cycle, MCA annual filings, the FLA return by 15 July every year, and transfer pricing documentation for the parent-subsidiary service flow, priced cost plus and certified annually. If the subsidiary bills the parent for development, zero-rate the export invoices under a Letter of Undertaking. None of this needs founder attention beyond a monthly summary email, which is the point.

If you want an outside provider for this ongoing work, our guide to the [top CA firms for foreign subsidiaries](/insights/top-ca-firms-for-foreign-subsidiaries-in-india) compares five types and their fees.

## Why YC Founders Pick Krystal7 Consultants First

Fixed fees agreed before we start, quoted for your case, with government charges at cost, because surprise invoices are a batch-speed killer. A corridor playbook that has run the US-parent flip repeatedly, so your apostille chain, bank KYC and FC-GPR clock are checklist items, not discoveries. One team across incorporation, FEMA, transfer pricing, payroll and virtual CFO, which means one thread to follow and no vendor gaps. Async-first communication built for US hours. And documents drafted at engineer speed: checklists, dates and owners, not fifty-page memos.

## The Batch to Bangalore Checklist

Convert to a Delaware C corp if you are still an LLC. Approve the India plan at parent board level. Run the apostille chain from our country checklist. Reserve the company name. Appoint the resident director solution. Incorporate and collect PAN, TAN, GST. Open the bank account and wire the first capital. Allot shares inside sixty days, file FC-GPR inside 30. Flip EOR hires onto the subsidiary. Put the compliance calendar on autopilot and get back to shipping.

If the hiring plan says India this quarter, [talk to the US desk](/contact). Fixed fee, dated calendar, and your first India payroll run lands while the batch is still fresh.

## Key terms

- **Wholly Owned Subsidiary (WOS)**: An Indian company whose entire share capital is held by a foreign parent, directly or through a nominee. Section 2(87) of the Companies Act, 2013 defines a subsidiary by control of the board or of more than half the voting power. A Private Limited company still needs two members, so one share sits with a nominee. (https://krystal7.com/glossary#wholly-owned-subsidiary)
- **Employer of Record (EOR)**: An employer of record is an Indian company that becomes the legal employer of people who work for a foreign company. It signs the contracts, pays salary, deducts tax under section 392 of the Income Tax Act, 2025 and runs PF and ESI. No Indian statute defines or licenses the term, and the client still directs the work. (https://krystal7.com/glossary#employer-of-record)
- **Employee Stock Option Plan (ESOP)**: A plan that gives employees the right to buy shares at a fixed price. For Indian employees holding options over foreign parent shares, the discount at exercise is taxed as a perquisite under the Income Tax Act, 2025, and a later sale is taxed as capital gains. (https://krystal7.com/glossary#employee-stock-option-plan)
- **Form FC-GPR**: The report an Indian company files with the Reserve Bank of India on the FIRMS portal after issuing equity instruments to a person resident outside India. Regulation 4(1) of FEMA 395/2019-RB requires it within 30 days of the issue. The shares must be issued within 60 days of receiving the money, or the money is refunded within 15 days after. (https://krystal7.com/glossary#form-fc-gpr)
- **Foreign Liabilities and Assets (FLA) return**: The FLA return is an annual RBI return under FEMA that an Indian company files on the FLAIR portal if it holds foreign direct investment or overseas investment at the end of March. The RBI FAQ gives 15 July as the due date for the year ended 31 March. Companies with no such investment in either year are excused. (https://krystal7.com/glossary#foreign-liabilities-and-assets-return)
- **Letter of Undertaking (LUT)**: The undertaking in Form RFD-11 under rule 96A of the CGST Rules, 2017 that lets an exporter supply goods or services without paying IGST. It is filed for each financial year. If payment for an exported service does not arrive within the allowed time, the exporter pays the IGST with interest under section 50(1). (https://krystal7.com/glossary#letter-of-undertaking)
- **Transfer pricing**: Transfer pricing rules in sections 161 to 173 of the Income Tax Act, 2025 require international transactions between associated enterprises, such as service fees, royalties and interest between an Indian company and its foreign parent, to be priced at arm's length. The Indian company keeps documentation and files an accountant's report in Form 48, formerly Form 3CEB. (https://krystal7.com/glossary#transfer-pricing)
- **Apostille**: An apostille is a certificate issued under the Hague Apostille Convention, 1961 that authenticates the signature, seal or stamp on a public document from one member country for use in another. India joined in 2005, so a valid apostille replaces attestation by an Indian embassy, except where India or the other country has objected to the Convention applying between them. (https://krystal7.com/glossary#apostille)

## Frequently Asked Questions

### Can we sign an India office lease before incorporation?

Practically, use the interim tools: coworking under a founder or EOR arrangement, then move the lease onto the subsidiary once the certificate exists. Long leases signed personally by founders are a re-papering headache later.

### Do SAFEs complicate FDI reporting in India?

No. SAFEs are instruments of the Delaware parent. India's reporting concerns the parent's equity investment into the subsidiary, FC-GPR and the annual FLA return, regardless of how the parent financed itself.

### How do we pay Indian contractors during the batch, before the entity exists?

From the parent, against invoices, with clear IP assignment in each contract. Once the subsidiary is live, move ongoing contractors and employees onto it so costs sit where the work happens, which also keeps your transfer pricing story clean.

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Krystal7 Consultants, business@krystal7.com, +91 94657 30130. HTML version: https://krystal7.com/insights/y-combinator-founders-india-subsidiary