2. Ecosystem & Industry Clusters

Look for regions with established clusters aligned to your industry:

• IT & Technology: Bangalore, Hyderabad, and Pune offer robust talent ecosystems and industry support .

• Manufacturing & Exports: Gujarat, Maharashtra, Tamil Nadu, and Karnataka host strong infrastructure, ports, and industrial zones.

• Retail & Consumer Brands: Metro cities like Delhi NCR, Mumbai, and Bengaluru host high-income consumers and retail infrastructure .

3. Talent Pool & Workforce Availability

India offers a vast pool of skilled professionals:

• The formal education system produces a steady stream of STEM graduates annually .

• Highly competitive cities (like Bengaluru, Pune, Hyderabad, Gurugram) offer ready access to tech and professional talent .

• Labour market dynamics and local regulations must be assessed depending on sector and region .

4. Infrastructure, Connectivity & Logistics

Efficient transport and infrastructure are key to smooth operations:

• Cities with robust multimodal connectivity reduce costs: look for access to ports, highways, airports, and rail.

• Industrial clusters (like Gujarat’s ports and Maharashtra’s MIDC) offer land, modern facilities, and plug‑and‑play options
  .

• Urban centres often face higher real estate costs and infrastructure stress. Tier‑2 cities may offer balanced options.

5. Cost of Setting Up and Operating

Costs vary significantly across regions:

• Incorporation fees, capital requirements, GST & TDS setups add nominal costs 

• Government incentives can significantly offset costs in certain regions (PLI, industrial incentives) .

6. Regulatory Environment & Incentives

Gather all local compliance and incentive information:

• India has liberalised FDI policy; over 94 DTAAs ease tax burdens

• PLI schemes provide sector-specific benefits—manufacturing, drugs, electronics .

• Checking state-level policies (e.g. labour reforms in Rajasthan, incentives in Gujarat/Telangana) is vital .

• Multiple compliance regimes apply: Companies Act, FEMA, Income Tax, GST, labour codes 

7. Legal Entity Structure & Capital Requirements

Choose the optimal legal structure:

• Private Limited Company: most common; separate legal entity; liability protection.

• Wholly Owned Subsidiary: full control, strategic autonomy, brand consistency; ideal for intellectual property protection 

• Liaison / Branch / Project Office: ideal for initial presence; limited activities allowed Minimum capital requirements vary; audits under Indian law will apply 

8. Cultural Fit & Management

Effective localization is key:

• India’s linguistic, regional, and business culture diversity calls for robust internal strategies .

• Adopt multilingual communications, local leadership, and cultural training programs 

9. Risk & Scalability

Assess adaptability and long-term viability:

• Choose regions with low political risk, stable policy frameworks, and ease of compliance—government is improving timelines .

• Infrastructure upgrades are ongoing, but some regions still lag—tier‑2 cities may pose logistical challenges .

• Factor in talent retention strategies in competitive markets .

10. Conduct a Structured Feasibility Assessment

A methodical review helps validate your decision:

1. Define Goals: Talents, markets, products.

2. Shortlist Locations: Based on ecosystem fit.

3. Market Study: Demand, competition, pricing.

4. Comply Review: State regulations, tax & labour codes.

5. Cost-Modelling: CapEx & OpEx estimations.

6. Site Visits: Inspect nodes, consult clusters, meet officials.

7. Incentive Audit: Explore state/federal rebates.

8. Risk Evaluation: Geo-political, logistical, compliance.

9. Scale Projection: Assess future capacity requirements.

10. Decision Matrix: Map locations against pre-defined weighted criteria.

11. Real-World Location Scenarios

• Bengaluru, Karnataka

  • IT powerhouse; high concentration of talent and global tech firms

  • Infrastructure challenges; high real estate costs

• Hyderabad, Telangana

  • Rapidly growing IT/Pharma hub; well_supported infrastructure & lower cost than Bengaluru

• Gujarat (Ahmedabad, Vadodara)

  • Strong manufacturing focus; port access & PLI benefits; low operational cost

• Maharashtra (Mumbai/Pune/Nashik)

  • Mumbai offers finance, manufacturing, retail; Pune is IT and auto hub; real estate expensive but highly connected

• Delhi NCR (Gurugram, Noida)

  • Diverse sector mix; metro advantages with ideal talent and proximity to bureaucracy

• Chennai, Tamil Nadu

  • Automobile and electronics hub; strong infrastructure; suitable for exports

• Tier‑2 Cities (Indore, Coimbatore, Vizag)

  • Emerging clusters; cost-effective but require deeper due diligence

12. Navigating Covid, Global Supply Shocks & “China+1” Strategy

• India forms a keystone in the “China+1” approach. Its internal logistics, port connectivity, and regional diversity support supply chain resilience.

• State-level incentives for exports and value-addition help avoid single-country dependency .

Conclusion

Selecting the ideal Indian location for your foreign subsidiary demands balancing multiple strategic elements: ecosystem compatibility, talent availability, cost-efficiency, logistics, legal compliance, and cultural integration. By running a detailed feasibility, visiting prospective sites, and utilising local support (EORs, clusters, state agencies), your foreign subsidiary can enjoy a powerful foundation—leveraging India’s advantages while mitigating risks.

🚀 Recommended Next Steps for Expansion Teams

• Shortlist 2–3 states aligned to your industry and objectives.

• Engage local advisors or EOR partners for due diligence.

• Arrange legitimacy site visits—including connections with logistics providers and cluster authorities.

• Analyse incentives and tailor financial modelling.

• Define entity structure and operational roadmap.