If there is a need, conversion from PEO model to subsidiary model is possible & is quite easy, simple and convenient. But conversion from subsidiary to PEO model is more difficult, cumbersome, time consuming & expensive, as the subsidiary, which is a legal formed entity would need to be wound up.
Therefore, you need to clearly evaluate your choices based on your business objective in India, your long-term intent, your employee headcount plans, your budget, etc and make an informed decision.