Foreign Subsidiary Company Registration in India

With a projected real GDP growth of 5.9% in 2025, India remains one of the fastest-growing economies in the world. For a foreign company, establishing a local unit here opens up a world of opportunities. The best way to do so is often through foreign subsidiary company registration.

While starting a business in a new country presents unique challenges, the foreign company subsidiary registration process in India is a well-defined path. This guide provides the clarity needed to navigate your entry into the Indian market successfully.

What is a Foreign Subsidiary in India?

A foreign subsidiary is an Indian company established and controlled by a parent company based in another country. The parent company usually holds more than 50% of the shares, giving it control over major business decisions of the subsidiary.

Under Indian law, a foreign subsidiary is treated as a regular Indian company and must comply with all applicable local regulations. These include, but are not limited to, the Companies Act, 2013, the Foreign Exchange Management Act (FEMA), the Income Tax Act, and other relevant labor and commercial laws. This compliance framework allows foreign businesses to operate seamlessly in India as if they were local entities.

Wholly-Owned Subsidiary vs. Joint Venture

When considering market entry in India, foreign companies must choose between maintaining full control through a wholly-owned subsidiary or sharing ownership and expertise in a joint venture.

Choosing between a WOS and a JV is a big decision. It depends on your business goals, your need for control, and how much you value local partnership.

India's rapidly growing economy and liberalized FDI policy make it a prime destination for global businesses. Establishing a foreign subsidiary is an increasingly straightforward way to access this vast market.

Here are the top reasons to establish a foreign subsidiary in India:

• Full Control and 100% Ownership

A wholly-owned subsidiary provides the parent company with complete operational and strategic control. The foreign parent company holds all the shares. This means you have complete authority. You can make decisions quickly without needing approval from a local partner. You can protect your company’s secret strategies, technology, and business plans. This total control is a huge advantage for companies that want to maintain their unique global brand and operational style.

• Limited Liability Protection

A subsidiary is a separate legal entity. If the Indian subsidiary faces any financial loss or legal issues, the parent company's assets remain safe. The liability is limited to the investment made in the Indian subsidiary, reducing risk for the parent company.

• Access to a Booming Market and Talent Pool

India is the fifth-largest economy in the world and has a population of over 1.4 billion people. This means a huge customer base for your products and services.

• • Massive Consumer Market: The Indian middle class is growing rapidly, with more money to spend.
  • Skilled Workforce: India has a vast pool of young, educated, and skilled professionals who speak English. You can hire top talent in technology, management, and manufacturing at a competitive cost.
  • Government Support: The Indian government actively encourages foreign investment with policies like 'Make in India' and 'Digital India'.

• Enhanced Credibility and Local Trust

Operating as a registered Indian company shows you are serious about the Indian market. It builds trust with local customers, suppliers, and employees. Customers are more likely to do business with a proper Indian company than with a foreign entity they don't know. Having an official presence helps you build a strong local brand and a loyal customer base.

• Tax and Financial Advantages

India has agreements called Double Tax Avoidance Agreements (DTAAs) with over 90 countries. These agreements make sure that foreign companies do not have to pay tax twice on the same income earned in India and sent back to their home country. This means that when a foreign subsidiary in India sends profits back to its parent company, the money is taxed only once, and the taxes paid in one country can be adjusted against the tax in the other.

In addition to tax treaties, foreign subsidiaries can access other financial advantages, like special tax breaks, and can also take loans or raise money from Indian banks and investors. They can send profits back to their parent company following the rules set by Indian law. All these factors make India financially attractive for foreign investors to set up subsidiaries and do business here.

Before you begin the foreign company subsidiary registration process in India, you need to meet some basic requirements. These rules are set by the Indian government to ensure that all companies operate properly. Let's look at the key requirements in simple terms.

1. Director Requirements

A private limited subsidiary must have a minimum of two directors.

• Minimum Directors: You need at least two directors to form a private limited subsidiary.
• Resident Director: At least one of the directors must be an Indian resident. A resident is a person who has lived in India for at least 182 days in the previous calendar year. This person does not have to be an Indian citizen. A foreign national living in India can also be the resident director.

2. Shareholder Requirements

Shareholders are the owners of the company. They invest money in the company by buying shares.

• Minimum Shareholders: You need a minimum of two shareholders.
• Second Shareholder: To fulfill this minimum requirement, the second shareholder can be either an individual or a corporate nominee appointed by the foreign parent company. This means the foreign parent can nominate a person or another company related to it to hold shares on its behalf.
• Parent Company as Shareholder: For a subsidiary, the foreign parent company will be the main shareholder. Another person or entity (from the parent company or a nominee) can be the second shareholder to meet the minimum requirement.
• 100% Foreign Ownership: For a wholly-owned subsidiary, the parent company and its nominee will hold all the shares.

3. Capital Requirements

This is about the money invested in the company to start its business.

• No Minimum Capital: There is no minimum capital requirement by law to start a private limited subsidiary in India. You can start with any amount you feel is sufficient for your business.
• Authorized Capital: You must state an "authorized capital" in your company documents. This is the maximum amount of capital the company is allowed to raise. You can increase it later by paying a fee. There is no fixed limit, but it is common to start with an authorized capital of ₹1,00,000 (around $1,200).

4. Registered Office Requirement

Every company in India must have an official address. This is called the registered office.

• A Physical Address: The registered office must be a physical address in India. It cannot be a P.O. box. This is where all official letters and notices from the government will be sent.
• Can Be Rented or Owned: You can use a rented property or a property you own as the registered office.
• Timing: You don't need to have this address on day one of the process. However, you must have it before you apply for registration, and the company must have it within 30 days of being officially formed.

Meeting these foundational requirements is the first step in the registration process for a foreign subsidiary in India.

The Indian government has significantly simplified the process of incorporating a subsidiary through modern online platforms, making it faster, more transparent, and user-friendly. Here’s a step-by-step guide to help you register a subsidiary of a foreign company in India with ease:

Step 1: Obtain DSC and DIN

Before you can file any online forms, the proposed directors need two things:

• A Digital Signature Certificate (DSC) is the digital equivalent of a physical signature. It is used to sign electronic documents. All proposed directors need a DSC.
• Director Identification Numbers (DINs) are unique identification numbers assigned to each director. A person can have only one DIN for their lifetime.

This is the foundational step for any foreign subsidiary company registration.

Step 2: Reserve Your Company Name (RUN Service)

You need a unique name for your subsidiary. The name should not be the same or too similar to any existing company or trademark in India.

• RUN Service: You can apply for a name using the government's online service called "Reserve Unique Name" (RUN).
• Name Guidelines: The name should ideally include the parent company's name to show the connection (e.g., "ABC India Private Limited" if the parent is "ABC Inc."). It must end with the words "Private Limited."
• Approval: The Ministry of Corporate Affairs (MCA) will check the name. If it's unique and follows the rules, they will reserve it for you for 20 days.

Step 3: Draft MoA and AoA

These two documents are the constitution of your company.

• Memorandum of Association (MoA) defines the company's objectives. It states what business the company will do. The company cannot do any business that is not mentioned in the MoA.
• The Articles of Association (AoA) document contains the internal rules for running the company. It covers things like the powers of directors, how meetings are held, and how shares are transferred.

These documents must be drafted carefully. For a foreign subsidiary company, they also need to be signed by the representatives of the foreign parent.

Step 4: File the Integrated SPICe+ Form

The SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a single, integrated web form used for company incorporation in India, streamlining multiple processes into one application to make the registration faster and more efficient.

You use this one form to apply for:

• Company incorporation
• DIN for directors
• PAN (Permanent Account Number) for the company
• TAN (Tax Deduction and Collection Account Number) for the company
• GSTIN (Goods and Services Tax Identification Number)
• EPFO (Employees' Provident Fund Organisation) registration
• ESIC (Employees' State Insurance Corporation) registration

You need to attach the MoA, AoA, and all other required documents to this form and file it online.

Step 5: Get Your Certificate of Incorporation (COI)

Once the MCA officials check and approve your SPICe+ form and all the documents, they will issue the Certificate of Incorporation.

The COI is the official birth certificate of your company. It proves that your company is legally registered in India. The company's PAN and TAN are also allotted at this stage and mentioned on the COI.

Step 6: Post-Incorporation Formalities

Once the company is registered, several crucial post-incorporation steps must be completed to ensure full compliance.

• Open a Bank Account: You must open a corporate bank account in the name of the new subsidiary.
• Deposit Share Capital: The shareholders must deposit their share subscription money into this bank account.
• File Form INC-20A: Within 180 days of incorporation, you must file a form called INC-20A. This is a declaration that the company has received its share capital from the shareholders. You will also need to attach proof from the bank.
• RBI Reporting: You also need to report the foreign investment to the Reserve Bank of India.

Following the Foreign Company Subsidiary Registration process in India carefully will ensure a hassle-free start for your business.

To complete the registration, you will need to gather several documents. It is best to prepare these in advance to avoid delays. The documents must be clear, valid, and properly certified.

Here is a simple checklist of what you'll need.

1. From the Foreign Parent Company

These documents prove the existence and authority of the parent company.

• Certificate of Incorporation: A copy of the parent company's registration certificate from its home country. This must be "apostilled" or "notarized" by the Indian embassy in that country. An apostille is a special type of certification recognized internationally.
• Charter Documents: A copy of the parent company's constitution, like its MoA and AoA or equivalent documents. These also need to be apostilled.
• Board Resolution: A formal decision passed by the parent company's Board of Directors. This board resolution for investment in a foreign subsidiary company should state its intention to set up a subsidiary in India, name the authorized representative who will sign documents, and confirm the investment amount. This must also be apostilled.

2. For Foreign National Directors and Shareholders

If the directors or shareholders are foreign nationals, they need to provide the following:

• Proof of Identity: A copy of their passport. This must be notarized and apostilled.
• Proof of Address: A copy of a recent document, like a bank statement, electricity bill, or driver's license, showing their address. This also needs to be notarized and apostilled.
• Photograph: A recent passport-sized photograph.
• Business Visa: If the foreign director intends to work in India, they might need a valid Business Visa.

3. For the Indian Resident Director

The director, who is a resident of India, needs to provide:

• PAN Card: A copy of their Permanent Account Number (PAN) card.
• Aadhaar Card: A copy of their Aadhaar card.
• Proof of Identity and Address: A copy of their passport, voter ID, or driver's license, along with a recent bank statement or utility bill.

4. For the Registered Office Address in India

You must provide proof that you have a legal right to use the registered office address.

• Proof of Premises: If the property is rented, a copy of the rent agreement. If it is owned, a copy of the sale deed or property deed.
• No Objection Certificate (NOC): A letter from the property owner stating that they have no objection to the company using their premises as a registered office.
• Utility Bill: A recent utility bill (like electricity or water bill) for the address, not more than two months old.

Understanding the costs involved is crucial for planning your budget. The total cost can be divided into three parts: one-time setup costs, professional fees, and recurring annual costs.

1. One-Time Setup Costs

These are the government fees you pay during the registration process.

• Registration Fee: For filing the SPICe+ form in companies with an authorized capital of up to ₹15 lakhs (approx. $18,000). This fee is often waived to encourage new businesses.
• Name Reservation (RUN): A small fee of ₹1,000 for reserving the company name.
• Stamp Duty: This is a state tax paid on the MoA and AoA. The amount varies from state to state. It depends on the authorized capital of the company.
• PAN and TAN Application: The fee for applying for PAN and TAN is ₹143.
• Director Identification Number (DIN) and Digital Signature Certificate (DSC):
  • DIN application is now part of the SPICe+ form.
  • The cost of a DSC can range from ₹1,000 to ₹2,500 per director and is valid for two to three years.

2. Professional Fees

Since the process involves legal and technical steps, most companies hire a professional firm (like Chartered Accountants, Company Secretaries, or lawyers) to handle the registration.

• Expert Services: Professional fees cover services like drafting documents (MoA, AoA, resolutions), filing forms correctly, providing advice, and coordinating with government departments.
• Cost Range: These fees can vary widely depending on the complexity of the registration and the firm's experience. It can range from ₹25,000 to over ₹1,00,000. It is wise to get a clear quote that includes all services.

3. Recurring Annual Costs

After your foreign subsidiary company is registered, there are annual costs to keep it legally active.

• Annual Compliance: This includes filing annual returns with the Registrar of Companies (ROC) and income tax returns.
• Auditor Fees: Every company must appoint an auditor to audit its financial statements each year.
• Registered Office Costs: Rent for the office space, if applicable.
• Other Professional Fees: You may need ongoing professional help for accounting, tax advice, and other legal matters.

Budgeting for these costs ensures your subsidiary of a foreign company remains in good standing with the law.

Registering your company is just the beginning. To operate legally in India, you must follow certain rules and deadlines called compliance. Not following these rules can lead to heavy fines and penalties. Here is a simple checklist of compliances for a subsidiary of a foreign company in India.

Immediate Actions (Within the First 180 Days)

1. First Board Meeting: Hold the first meeting of the Board of Directors within 30 days of incorporation.
2. Appoint First Auditor: The Board of Directors must appoint the company's first statutory auditor within 30 days. The company must then file Form ADT-1 with the Registrar of Companies (ROC) to notify them of the appointment.
3. Open Bank Account: Open a corporate bank account immediately after receiving the Certificate of Incorporation.
4. Deposit Share Capital: Ensure all shareholders deposit their promised share money into the company’s bank account.
5. File Declaration of Commencement of Business (Form INC-20A): This is a must. File the INC-20A form with the ROC within 180 days of incorporation to declare that the share capital has been received. You cannot start your business activities until this is filed.

RBI & FEMA Compliances

Since there is foreign investment involved, you must report it to the Reserve Bank of India under the Foreign Exchange Management Act (FEMA).

• Form FC-GPR (Foreign Collaboration - General Permission Route): This form must be filed within 30 days of receiving the share investment from the foreign parent company. This form reports the details of the foreign direct investment to the Reserve Bank of India through its online Foreign Investment Reporting and Management System (FIRMS) portal.

The company must obtain a valuation report from a certified valuer (such as a Chartered Accountant or SEBI-registered Merchant Banker) to certify the fair value of the shares issued. This ensures compliance with RBI regulations and transparency in share allotment and investment details.

• FLA Return (Foreign Liabilities and Assets): This is an annual return that must be filed by July 15th every year. It details all the foreign investments (both received and made) by the Indian company.

Annual ROC and Tax Filings

Every year, you need to file certain documents with the Registrar of Companies (ROC) and the Income Tax Department.

• Annual General Meeting (AGM): Hold an AGM with your shareholders every year.
• Form AOC-4: File your company's financial statements (Balance Sheet, Profit & Loss Account) with the ROC.
• Form MGT-7: File your company's Annual Return with the ROC. This contains details about directors, shareholders, etc.
• Income Tax Return: File the company's income tax return with the tax department by the due date.
• Tax Audit: If your company's turnover exceeds ₹1 crore in a financial year, you need to get your accounts audited by a Chartered Accountant under Section 44AB of the Income Tax Act (the limit increases to ₹10 crore if at least 95% of your business transactions are digital). Additionally, companies with FDI must comply with transfer pricing norms and file Form 3CEB if applicable.

Staying on top of this compliance for foreign subsidiaries under the Companies Act 2013 and other laws is key to long-term success.

A foreign subsidiary is a popular choice, but it's not the only way to enter India. Here's a quick comparison with other options to help you decide.

For most businesses planning serious operations, the foreign subsidiary company model offers the best combination of control, protection, and flexibility.