How can a US company hire in India?
How to hire in India as a US company: US and India rules as of 30 October 2026.
A US company has four main routes to hire in India: set up an Indian subsidiary, use an employer of record (EOR), engage an independent contractor, or open a branch or liaison office. For one to five hires, an EOR or a correctly structured contractor is usually quickest; a subsidiary suits larger teams.
At a glance
- Employees in India are covered by Indian labour, provident fund and tax rules, not US ones.
- Contractor route is only valid for genuinely independent work.
- Indian salaries are quoted as CTC (cost to company: the total yearly employer cost, including basic pay, allowances, employer PF, gratuity and variable pay), not in-hand pay.
- Ask a qualified Indian adviser before choosing; the right route depends on your business.
Route comparison
| Route | Who employs | Set-up | Best for | Watch out |
|---|---|---|---|---|
| Indian subsidiary (private limited) | Your subsidiary | Incorporate with MCA, PAN/TAN, GST if needed, EPFO, ESIC, state registrations, bank account; foreign investment must follow FEMA/FDI rules | Teams of roughly 10 plus, long-term presence | Time and fixed compliance cost; annual filings; transfer pricing |
| Employer of record | The EOR | Sign with a vendor; contract and payroll set up for you | 1 to 10 hires, market test | Vendor fee; tax presence questions |
| Independent contractor | Self-employed | Services agreement, invoices, TDS where applicable | Real project work | Misclassification under Indian and US tests |
| Branch / liaison office | Your US company | RBI approval conditions apply | Narrow permitted activities | Strict limits on what the office may do; |
What do you owe on an Indian employee?
Typically: salary with TDS under the Income Tax Act, employer and employee provident fund contributions through EPFO, ESI contributions for eligible wages, gratuity, professional tax in states that levy it, and state shops-and-establishment registration. Maternity, leave and notice rules follow the Labour Codes and state law. The four Labour Codes (Code on Wages, Industrial Relations Code, Code on Social Security, Occupational Safety, Health and Working Conditions Code) were brought into force by the central government in November 2025.
Steps to hire your first person in India
- Decide the role is employee or contractor, and the route.
- Set pay as CTC in rupees with a breakup; see the India offer letter format.
- Get the legal employer in place (subsidiary registered, or EOR contract signed).
- Issue offer, then appointment letter, collect ID and bank details.
- Register for PF/ESI as applicable, run payroll monthly, file returns.
- Handle notice period and exit under the contract and law.
Worked cost view (Example only)
Example: CTC Rs 18,00,000 (18 lakh). Add EOR fee or subsidiary overhead and set-up costs on top. Convert at the rate on the day: Rs 18,00,000 is about USD 21,400 at an example Rs 84 per USD. Use a dated rate and your own quotes.
FAQ
Do I need an Indian entity to hire an employee? Not if you use an EOR, though a subsidiary is the direct-employment route.
Can I pay an Indian contractor in USD? Often yes, but tax, FEMA and invoicing rules apply. Check with an adviser.
Does hiring in India create a US tax issue? Possibly; see a US tax adviser.
Which model fits? Compare contract labour, EOR and own payroll in India. More India employer guides: POSH, DPDP, probation, termination, Shops and Establishments.
What is the notice period? Set by the contract, commonly 30 to 90 days; see how to hire in India.
Next step: read how to hire in India.
Related guides
Sources
See front matter. Accessed 30 October 2026.
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.