India Topco or US Topco? How Indian Founders Should Structure Their Holding Company

For Indian founders building a global company, few decisions carry as much long-term weight as where to place the holding entity. There is no straightforward answer since it is a question that sits at the intersection of taxation laws, fundraising plans, compliance, and operations and yet it is often approached without the rigour it deserves. Getting it right from the outset can save significant time, cost, and legal problems down the line.

The two holding structures: Understanding the basics

When setting up a cross-border structure between India and the United States, there are two broad configurations a founder will encounter. The first places an Indian company at the top of the structure, with the US entity operating as a step-down subsidiary. The second inverts an arrangement where the US company becomes the holding entity, with India sitting beneath it as a subsidiary. Each configuration carries a distinct set of advantages and trade-offs, and understanding them is essential before making a decision.

The India topco structure

In an India topco arrangement, the Indian company is the parent entity and the US company operates as its subsidiary. This structure tends to be more relevant for founders whose primary market, investor base, and operational centre remains in India. Its key advantages include:

• Better access to Indian angels, Indian VCs (AIFs), Indian corporates, and Indian government grants such as DPIT Startup India

• Better India IPO exit potential 
• No LLPs required, making it faster and cheaper to set up
• Preferred by the Indian government for domestically focused businesses
• Avoids transfer pricing tax leakage

The US topco structure

The US Topco structure is the more commonly adopted configuration among founders targeting global growth, international fundraising, or eventual relocation abroad. Here, the US company sits at the top, typically incorporated as a Delaware C-Corporation and the Indian entity operates as a wholly owned subsidiary beneath it. Its key advantages include:

• Better global and US investor access
• Better suited if the founder is personally planning to live abroad
• Better early-stage valuation
• Better foreign IPO potential (e.g. NASDAQ)
• Better foreign M&A chances
• Better IP protection and arbitration clauses

Choosing the Right Structure for Your Situation

The correct structure is not determined by preference alone. It is largely dictated by the founder's current circumstances. The scenarios below cover the most common situations founders encounter.

When There Is No Existing Entity

For founders starting from scratch with no prior Indian or US entity in place, the simplest and most commonly recommended path is a US holding company with an Indian subsidiary established underneath it when operationally required. The US entity is typically incorporated first which is most often as a Delaware C-Corporation and the Indian subsidiary is set up subsequently, once the founder requires a local entity for hiring, contracting, or compliance purposes. This sequence minimises complexities and positions the company well for international fundraising from day one.

When an Indian Entity Exists but Has No External Shareholders

Founders who have already incorporated an Indian entity but have not yet brought in external shareholders have more flexibility than they might expect. One option is to dissolve the Indian entity entirely and start fresh with a US incorporation, which avoids the need for any restructuring. Alternatively, the founder can retain the Indian company and transfer its ownership to a newly incorporated US parent, making the Indian entity a wholly owned subsidiary of the US holding company. A third path is to keep the Indian entity operational but assign all intellectual property to the US entity, effectively converting the Indian company into a development and services shop while the US entity holds the core business assets and serves as the contracting and fundraising vehicle.

When an Indian Entity Exists with Multiple Shareholders

Once an Indian entity has multiple shareholders on its cap table, restructuring into a US Topco arrangement becomes a materially more complex exercise. It is no longer a straightforward process  it requires coordinated involvement from US-qualified legal counsel and an Indian CA or CS to navigate the regulatory requirements, share transfer mechanics, and FEMA compliance considerations. Founders in this situation should seek professional guidance early, as delays or missteps in the restructuring process can create complications that are difficult and costly to unwind.

When There Is No Intention to Have an Indian Entity

Some founders intend to operate entirely out of the United States and have no requirement for an Indian entity at the time of incorporation. In this case, a direct US incorporation is entirely viable. Indian employees or contractors can be compensated through service provider arrangements structured by Indian CAs, and ESOPs can be issued directly from the US holding company without the need for an Indian entity to be in place. This is a straightforward structure to establish and maintain, though founders should be aware that it may require additional administrative coordination as Indian team members are brought on.

The India Topco with a US Subsidiary

This structure, where an Indian holding company owns a US subsidiary is technically feasible but is the least commonly adopted among founders with global fundraising ambitions. The primary reason is that it creates significant friction for international investors, who are generally more comfortable investing into a US entity at the holding level. Cross-border fund movement under this structure also tends to be more complex, with additional regulatory considerations on both sides. Founders should evaluate this path carefully and typically only consider it if their business is primarily India-facing with limited requirements for international capital.

Closing remarks

The structure you choose today will quietly shape every significant decision your company makes for years : who can invest, how capital moves, where your IP lives, and how cleanly you can exit when the time comes. Most founders only discover this in hindsight.

The question worth sitting with is not just which structure is simplest to set up, but which one gives your company the most room to grow into. If you would like to think through what that looks like for your specific situation, the Inkle incorporations team is happy to help you work through it. Book your call today at Inkle Incorporate.