Indian Subsidiary Company Registration

When a foreign company plans to set up a subsidiary in India, it must choose the appropriate business structure. The most common structures are:

Note: Under the proviso to Section 2(71) of the Companies Act, 2013, a private company that is a subsidiary of a company that is not private is deemed to be a public company. This means an Indian private limited subsidiary of a foreign parent that qualifies as a public company may be subject to public-company compliance requirements, including higher governance and disclosure requirements.

India is one of the world’s largest economies, with a relatively open FDI regime permitting 100% foreign investment under the automatic route in many sectors. For foreign companies, an Indian subsidiary provides a separate local legal entity, greater operational control, and a foundation for long-term expansion, among other benefits like:

• Market access and diversification: Enter one of the world’s largest consumer and business markets while expanding revenue sources and reducing reliance on a single market.
• Tax and cost advantages: Benefit from India’s DTAAs, skilled workforce, and competitive corporate tax rates, including the optional 22% concessional regime, formerly covered under Section 115BAA and now under the Income-tax Act, 2025. The regime is subject to conditions, including forgoing specified exemptions and deductions, and requires companies to opt in by filing Form 10-IC.
• Limited liability: The subsidiary is a separate legal entity, generally limiting the parent's financial exposure to its investment, subject to applicable law.
• Local decision-making: An Indian subsidiary can make market-specific decisions on pricing, deals, and customer service without relying on the foreign parent for every decision, enabling faster responses to local demand.
• Regulatory presence: Operating through an Indian company makes it easier to enter contracts, hire employees, maintain local accounts, and meet Indian regulatory requirements.
• Strategic partnerships: A local entity can make it easier to work with Indian businesses, distributors, suppliers, and other partners.
• Brand credibility: An established local presence can strengthen trust among Indian customers, suppliers, investors, and business partners.
• Focused local operations: Dedicated teams can manage India-specific products, customers, sales, and compliance without relying entirely on the foreign parent.

To register a subsidiary in India, you need at least two shareholders, two directors including one resident Indian director, and a registered office in India. Other requirements are:

• Shareholders: At least two shareholders, who may be individuals, foreign companies, or a combination of both.
• Directors: At least two directors, with at least one resident in India for 182 days or more during the financial year.
• Registered office: A valid address in India that can receive official correspondence from the MCA and other authorities. For a rented property, you generally need the lease or rent agreement, a recent utility bill, and the owner's No Objection Certificate (NOC).
• No minimum capital: There is no prescribed minimum paid-up capital. The company can choose capital based on its business requirements.
• Parent's shareholding: A foreign parent generally qualifies as the subsidiary's controlling company if it controls the composition of the board or holds more than 50% of the total voting power. A wholly owned subsidiary has 100% ownership by the parent, subject to applicable sectoral and regulatory requirements.

The incorporation process for an Indian subsidiary requires documents for that Indian company, its foreign parent, along with directors, shareholders, and registered office.

1. Company and Parent-Company Documents

• Memorandum and Articles of Association: Set out the company's objectives, share capital, shareholding, and internal governance rules.
• Registered office proof: Lease or rent agreement for a rented property, or ownership documents for an owned property, along with a recent utility bill.
• NOC: Required from the property owner where applicable.
• Parent company's Certificate of Incorporation: Establishes the foreign parent's legal existence and corporate identity.
• Board resolution: Approves the Indian subsidiary and authorises the parent company's representatives to complete the incorporation and related formalities.
• Shareholding and capital details: Details of the proposed shareholders, shareholding pattern, authorised capital, and paid-up capital.

2. Director and Shareholder Documents

• DSC and DIN: Proposed directors need Digital Signature Certificates, while Director Identification Number can be allotted through the SPICe+ incorporation form for up to three directors who don't already have one.
• Identity and address proof: Indian individuals generally provide PAN and applicable identity/address proof. Foreign individuals generally provide a passport and prescribed address proof.
• Foreign company documents: Documents issued outside India may need to be notarized, apostilled, or consularized, depending on the country of issue and applicable requirements.
• Photographs: Recent photographs may be required for individual directors or shareholders.
• Declarations and consents: Required declarations, consents, and other incorporation documents must be signed by the relevant directors and shareholders.

Setting up a foreign subsidiary in India involves incorporating the company, bringing in foreign capital, and completing the required regulatory filings. The process generally follows these steps:

1. Choose the Company Type

Most foreign businesses establish their Indian subsidiary as a Private Limited Company. This gives the subsidiary a separate legal identity and limited liability while allowing the foreign parent to hold controlling ownership, subject to applicable FDI rules.

2. Obtain DSC

Each proposed director who will sign the incorporation forms needs a Digital Signature Certificate (DSC). It allows directors and authorized representatives to digitally authenticate documents submitted through the MCA portal.

3. Reserve the Company Name

Apply for name approval through SPICe+ Part A on the MCA portal. The proposed name must comply with the Companies Act, 2013, and should not conflict with existing company names or trademarks.

Tip: Before filing, check name availability using a company name search tool to avoid paying for a name that is already taken.

4. Prepare the MoA and AoA

Draft the Memorandum of Association (MoA) and Articles of Association (AoA) to define the subsidiary's business objectives, ownership, share capital, and internal governance. The documents should reflect:

• Business activities: The objectives the Indian subsidiary will undertake.
• Share capital: The proposed authorised and paid-up capital.
• Shareholding: The foreign parent's proposed ownership.
• Governance: Rules for managing the company's internal affairs.

5. File the Incorporation Application

Submit SPICe+ and the linked incorporation forms to the Registrar of Companies with the required supporting documents. These generally include:

• MoA and AoA
• Registered office proof
• Director and shareholder KYC
• Foreign parent's incorporation documents
• Board resolution approving the Indian subsidiary

Note: Up to three proposed directors who don't already have a Director Identification Number are allotted one through the SPICe+ form itself.

6. Receive the Certificate of Incorporation

Once the ROC approves the application, it issues the Certificate of Incorporation (COI). This formally establishes the subsidiary as an Indian company. The incorporation process also provides:

• PAN for the company
• TAN for tax-deduction and collection requirements

7. Open a Bank Account and Receive Foreign Capital

Open a bank account in the subsidiary's name and arrange for the foreign parent to remit its share capital through permitted banking channels. The investment must comply with the applicable:

• FDI sectoral limits and entry route
• Pricing and valuation requirements
• FEMA requirements
• Banking and reporting procedures

8. Allot Shares to the Foreign Parent

After receiving the investment, the subsidiary allots shares to the foreign parent according to the approved capital structure. The company must:

• Obtain the required corporate approvals.
• Complete the share allotment within the prescribed timeline.
• Issue the shares in compliance with the Companies Act and FDI requirements.

9. Report the FDI With FC-GPR

After issuing shares to the foreign parent, report the investment through Form FC-GPR on the RBI's FIRMS portal within 30 days of the share issue. This filing reports the foreign investment and shares issued against it.

10. File the Commencement Declaration

Where applicable, file Form INC-20A within 180 days of incorporation to declare the commencement of the subsidiary. The company should also obtain registrations required for its particular business. These may include:

• GST registration, where applicable
• Import Export Code (IEC) for businesses involved in imports or exports
• Sector-specific licences, where required

11. Start Business Operations

Once incorporation, share allotment, FDI reporting, and applicable registrations are complete, the subsidiary can begin operations in India. It must then meet its ongoing:

• MCA and Companies Act compliance
• Income-tax and accounting requirements
• GST obligations, where applicable
• RBI/FEMA reporting requirements for foreign investment

Registering a subsidiary in India costs around ₹25,000–₹70,000, depending on authorized share capital, professional fees, number of directors and shareholders, and state-specific charges. The table below brings all the typical costs together:

Overall, a foreign company can expect to spend roughly ₹25,000–₹70,000 to incorporate and report an Indian subsidiary, depending on capital, state, and the scope of professional support.

Once the subsidiary is incorporated, an Indian subsidiary must complete several post-incorporation, tax, company law, and foreign investment compliances before and after starting operations. These include:

1. Receive the parent company's capital: The foreign parent must remit the subscribed share capital through permitted banking channels. The investment must comply with applicable FDI and FEMA requirements.
2. File Form FC-GPR with the RBI: Report shares issued to the foreign parent through Form FC-GPR on the RBI's FIRMS portal within 30 days of the share issue.
3. Complete state-level registrations: Depending on the state and business activity, the subsidiary may need registrations such as:
   • Professional Tax, where applicable
   • Shops and Establishments registration, where applicable
   • Local trade or municipal licences
   • Sector-specific licences or approvals
4. Maintain books of accounts: Maintain proper books and financial records in accordance with the Companies Act, 2013 and applicable accounting standards. Records may be maintained electronically or physically as permitted by law.
5. Appoint the first statutory auditor: The Board must appoint the first statutory auditor within 30 days of incorporation. The company must also complete the applicable filing with the ROC.
6. Hold the first Board meeting: Hold the first Board meeting within 30 days of incorporation to address matters such as the registered office, bank account, share certificates, auditor, and other initial business requirements.
7. Complete annual compliances: The subsidiary must meet its recurring company law, tax, and foreign investment reporting requirements. These generally include:
   • AOC-4: Filing of annual financial statements with the ROC.
   • MGT-7: Filing of the company's annual return.
   • AGM: Holding the Annual General Meeting within the prescribed timeline.
   • Income-tax return: Filing the company's applicable income-tax return.
   • DIR-3 KYC: DIN holders must file DIR-3 KYC once every three financial years, by 30 June following the end of the third financial year. This replaced the earlier annual 30 September requirement from 31 March 2026.
   • FLA return: An Indian company with outstanding foreign liabilities or assets must file the Foreign Liabilities and Assets (FLA) return with the RBI by 15 July each year.
   • GST and TDS returns: File applicable GST, TDS, and other tax returns based on the company's transactions and registrations.