As India continues to attract foreign direct investment (FDI), many multinational corporations are establishing foreign subsidiaries within the country. One of the most crucial components in setting up operations is real estate acquisition or leasing—a decision that directly impacts operational efficiency, compliance, and long-term financial viability.

This article outlines key real estate considerations foreign subsidiaries must evaluate when entering the Indian market, while also highlighting how TAXAJ can provide comprehensive assistance.

🌍 Understanding the Indian Regulatory Landscape

Before diving into the property market, foreign subsidiaries must be aware of India’s complex regulatory environment:

• Foreign Exchange Management Act (FEMA): Governs transactions involving foreign exchange, including property acquisition.

• FDI Policy: Under the automatic route, 100% FDI is allowed in most sectors, including manufacturing and services. However, real estate trading is prohibited.

• RERA Compliance: All real estate dealings must be compliant with the Real Estate (Regulation and Development) Act, 2016.

🔗 Explore FDI Compliance & Advisory

🏗️ Buy or Lease? Strategic Considerations

Foreign subsidiaries must decide between buying and leasing property. Each comes with its own set of advantages and implications:

✅ Leasing

• Lower upfront capital requirement

• Greater flexibility for short-term operations

• Easier exit strategies

• Common for IT companies, service providers, and new entrants

✅ Buying

• Long-term cost savings

• Useful for manufacturing units, where stability and permanence are key

• Investment asset that may appreciate in value

📌 Need help deciding? Consult Real Estate Due Diligence Experts

🧾 Key Legal Documentation

Whether leasing or buying, you must verify:

1. Title Deed

2. Encumbrance Certificate

3. Building Plan Approval

4. Occupancy Certificate

5. RERA Registration Details

6. Stamp Duty & Registration

Failure to verify any of the above can lead to future litigation or loss of business continuity.

📄 Check out Legal Documentation & Drafting Services

📌 Location Strategy

Choosing the right location goes beyond just rental cost. It affects:

• Logistics and transportation

• Workforce availability

• Proximity to clients or ports

• State-level tax benefits or subsidies

• Zoning and environmental regulations

🔎 Example: A foreign manufacturing unit may benefit from locations in Gujarat, Maharashtra, or Tamil Nadu due to state incentives and infrastructure readiness.

🌐 Read more about India Entry Strategy

💼 Special Economic Zones (SEZs) & Industrial Corridors

Foreign subsidiaries focused on export or large-scale manufacturing can benefit by setting up in SEZs or government-approved industrial parks. Advantages include:

• Tax exemptions (under SEZ Act, 2005)

• Simplified customs processes

• Duty-free procurement of raw materials

TAXAJ assists in identifying the right SEZ and filing all approvals.

📍 Learn about SEZ Registration & Support

🏦 Financing Real Estate

Foreign subsidiaries may fund real estate through:

• Foreign remittances

• Parent company loans

• External Commercial Borrowings (ECB)

• Joint ventures with Indian companies

Each financing route involves compliance with FEMA and RBI regulations, which TAXAJ helps streamline.

💡 Explore FEMA & RBI Advisory

👥 Hiring a Local Partner or Consultant

Due to India's vast diversity in regulations across states and municipalities, foreign subsidiaries are advised to work with:

• Local legal advisors

• Tax and compliance consultants

• Real estate brokers with due diligence expertise

TAXAJ provides end-to-end support from selecting the property to documentation, registration, and legal compliance.

📞 Talk to Business Setup Experts

🔒 Risk Mitigation & Exit Planning

Foreign entities should plan for:

• Force Majeure clauses

• Termination & lock-in periods in leases

• Eviction laws & litigation delays

• Repatriation of funds from real estate sales

TAXAJ structures agreements to minimize legal and financial exposure.

🛡️ Check our Risk Assessment Services

📝 Final Thoughts

Real estate decisions can make or break the success of a foreign subsidiary in India. It’s essential to conduct due diligence, understand regulatory frameworks, evaluate financial implications, and work with trusted advisors like TAXAJ.

Whether it's setting up your first office, leasing a manufacturing unit, or acquiring land for long-term operations—TAXAJ Corporate Services LLP ensures your venture is legally compliant, financially sound, and strategically positioned.

📞 Get in Touch

Ready to take the next step?
👉 Visit https://taxaj.com or
📧 Email us at connect@taxaj.com
📱 Call us at +91-8802-912-345

Operations Head at TAXAJ

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ

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TAXAJ Corporate Services LLP

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