Benefiting from opening a subsidiary company in the USA gives Indian corporations a tactical benefit as it opens up one of the largest markets in the world. There are many benefits of forming a U.S. subsidiary company, including easier market entry, increased credibility, support in recruiting skilled and advanced workforce, better tax system, Legal protection, and many more which will surely help in accelerating the Globalization drive of the company.
In such a blog, we shall discuss the reasons why Indian companies should utilize these beneficial reasons to grow themselves and thrive in the competitive environment that is the USA.
1. Market Share and Growth
Maiden foreign acquisition set up a clear path for Indian multinational corporations to enter the U.S. market. Local presence enables companies to develop their products as well as their services and strategies as per country-specific requirements. Familiarity with the market allows for physical market entry techniques such as market surveys, local regulations and culture, and current trends among consumers which maximizes market coverage and growth.
2. Coping with Risks
As a legal entity, a subsidiary is separate from its parent company and this brings about import risk minimization advantages. This stricture protects the parent company‘s resources and activities from any legal and financial risks that the company may have in the U.S. In other projects, cross-border risk management must be handled efficiently to protect the parent company from all the downsides of the subsidiary.
3. Tax Optimization
Residing in the USA and establishing a subsidiary can bring some situs advantages in doing business. The Indian companies are getting benefits of tax in the form of reducing the corporate taxes in certain states in the USA like Arizona, Arkansas, and Colorado among others which are 5% excluding. Moreover, the other applicable treaties and offers can help reduce taxes on foreign investors.
4. Operational Independence and Progressive Attitude
In terms of operation, if there is a subsidiary in the USA, the subsidiary will have some level of independence hence management decisions concerning local conditions can be made quickly. This flexibility is important to enable quick adaptation to changes that may occur in the markets and alter the business models that may be practiced in that locality. The US subsidiary can access the parent company’s capabilities yet execute actions that concern the US market to improve productive efficiency.
5. Customizing Hiring Support and Recruiting Staff
By establishing a subsidiary in the USA, Indian companies will be able to use the know-how of the local professionals, understand the culture, and build up suppliers, partners, and end clients. The local talent and resources that are available can also introduce new ideas to the company and may help it explore the US market better and have a superior competitive advantage.
6. Distinct Brand and Bolstered Reputation Globally
Establishing a new subsidiary or wholly owned subsidiary in the US market tends to raise the profile of the Indian company and its standing on the global scale. This approach also portrays the business as one with an international presence and scope; thereby creating opportunities for investors, partners, and clients looking for growth through expansion. This improved exposure can create further growth avenues and bolster the company’s image internationally.
7. Outsourcing of Auxiliary Administration Services
A subsidiary in the USA may be responsible for performing specialized activities and may decently expect financial resources from such relations as share subscriptions, or service payments for supporting the parent’s technical service or training, or other consultation activities.
This will facilitate continuous inflow of investment which is useful in breaking even through losses which are made through profits and aid in partnership establishment with other firms. The parent and subsidiary companies can interactively deploy their resources to help enhance the efficiency of processes and cut down on the costs of capital.
8. Compliance and Regulatory Framework
Even though it requires compliance with U.S. domestic regulations to establish a subsidiary, the procedure is quite systematic. In the formation of a company, the company is required to register itself with the appropriate state and federal authorities and secure the requisite endorsements, as well as submit the taxation returns that are due and a stack of other documents. Therefore, with careful consultation, Indian companies can comply with these and create a successful and long-lasting business.
9. Perpetual Existence and Mutual Transfer of Shares
Incorporating a subsidiary in the USA will provide for perpetual existence as well as ease of transfer of ownership. This is advantageous for case barriers during long-term business planning and succession since the outlook of the subsidiary does not change even when its ownership is transferred from the parent company.
Conclusion
Indian companies looking for organic growth through their overseas setup can establish a subsidiary company in the USA. It is a very effective method for minimizing geographical, and political accumulated risk along with advancing efficiency within the already existing business processes. There is a wide range of benefits from market entry and taxation to operational efficiency and resource procurements. There is tremendous transformational potential for International businesses led by Indian companies in terms of growth and U.S. market-aided innovation provided the regulatory landscape is understood and adhered to.
In case you are exploring the option of extending your Indian business operations in the U.S. you can rely on the lawyers at EasyFiling for you will receive the appropriate assistance to stress- incorporate in the correct manner terms of jurisdiction. With our expertise, you can leverage the strategic benefits attained from having a subsidiary in the United States of America and enhance your company.
Nabin Adhikari
