Expanding a business into India is one of the smartest moves for global entrepreneurs today. With a fast-growing economy, tech-savvy talent pool, and supportive government policies, India offers immense opportunities. But before entering the market, foreign companies must understand the process of Indian Subsidiary Registration—a key step to establish a legitimate business presence.
In this guide, we’ll explain what an Indian subsidiary is, the registration process, key requirements, and the benefits it brings to foreign investors.
What is an Indian Subsidiary Company?
An Indian subsidiary company is a business entity formed in India where a foreign company owns more than 50% of the share capital. The parent company controls management decisions while the subsidiary operates under Indian laws.
This setup allows foreign companies to expand operations while enjoying limited liability, separate legal status, and local credibility. It also enables easier access to India’s massive consumer base and skilled workforce.
Types of Subsidiaries in India
Foreign companies can register their presence in India through different business structures. The most common types are:
1. Wholly Owned Subsidiary (WOS)
In this model, the foreign parent company owns 100% of the shares in the Indian entity. This structure is ideal when full control and ownership are required.
2. Joint Venture (JV)
A joint venture is a partnership between a foreign company and an Indian firm. It combines local market understanding with foreign capital and technology, creating a strong collaborative model.
Both models are governed by the Companies Act, 2013 and require compliance with FEMA (Foreign Exchange Management Act) guidelines.
Key Features of an Indian Subsidiary
Separate Legal Entity: The subsidiary is distinct from its parent company, ensuring limited liability.
100% Foreign Ownership: In most sectors, foreign companies can own up to 100% under the automatic route.
Indian Compliance: It must follow all Indian corporate, tax, and regulatory laws.
Local Directors: At least one director must be a resident of India.
These features make it easier for global businesses to operate seamlessly within India’s legal framework.
Step-by-Step Process of Indian Subsidiary Registration
Setting up a subsidiary in India involves a few structured steps. Here’s how it works:
Step 1: Obtain Digital Signature Certificates (DSC)
The first step is obtaining DSCs for all proposed directors. Digital signatures are necessary for filing company documents online with the Ministry of Corporate Affairs (MCA).
Step 2: Apply for Director Identification Number (DIN)
Each director must have a DIN, which is used to identify directors in company records and filings.
Step 3: Reserve the Company Name
Submit a name application to the MCA. The name must reflect the business’s nature and include “Private Limited.” For example, “XYZ Technologies Private Limited.”
Step 4: Draft the Memorandum and Articles of Association (MOA & AOA)
These legal documents define the company’s objectives, operations, and internal management rules.
Step 5: File Incorporation Documents
Submit the incorporation form (SPICe+) along with MOA, AOA, address proof, and details of directors and shareholders to the MCA.
Step 6: PAN and TAN Application
After incorporation approval, apply for a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) from the Income Tax Department.
Step 7: Open a Bank Account and Capital Remittance
The parent company must remit the capital amount to the Indian subsidiary’s bank account within the prescribed time.
Once the process is completed, the subsidiary receives a Certificate of Incorporation, which acts as legal proof of its existence in India.
Documents Required for Indian Subsidiary Registration
Passport copies of foreign directors and shareholders
Address proof (utility bills or bank statements)
Proof of registered office address in India
Board resolution of the parent company authorizing investment
MOA and AOA of the parent company
All foreign documents should be notarized and apostilled as per international standards.
Benefits of Registering an Indian Subsidiary
1. Market Expansion
India’s large consumer base offers significant business growth potential across industries such as IT, manufacturing, and e-commerce.
2. Full Control and Ownership
Foreign companies can retain full ownership and decision-making power through a wholly owned subsidiary.
3. Tax Advantages
Indian subsidiaries can benefit from various tax incentives, especially for startups and specific sectors.
4. Legal Protection
As a separate legal entity, the liability of shareholders is limited to the amount of share capital invested.
5. Brand Credibility
Operating as a registered Indian company builds customer trust and improves brand perception in the local market.
Post-Registration Compliance
Once registered, the Indian subsidiary must adhere to ongoing compliance requirements such as:
Annual filing of financial statements and returns with the MCA
Maintenance of statutory books and records
Conducting board and annual general meetings
Filing of income tax returns and GST returns (if applicable)
Non-compliance may result in penalties, so it’s advisable to work with a professional compliance partner for timely filings.
Why Professional Assistance Matters
The Indian subsidiary registration process can be complex due to legal, tax, and regulatory frameworks. A professional consulting firm ensures proper documentation, quick approval, and post-incorporation compliance. It saves time and minimizes the risk of rejection by the authorities.
If you’re planning to expand your business into India, seeking expert guidance can make the entire process smooth and hassle-free.
Conclusion
Registering an Indian subsidiary is the most efficient way for foreign companies to enter India’s thriving market. It allows international brands to operate independently while adhering to Indian laws. With the right professional support, your company can establish a strong presence in one of the world’s fastest-growing economies.
FAQs
1. Can a foreign company own 100% of an Indian subsidiary?
Yes, in most sectors, foreign companies can own up to 100% under the automatic route without prior government approval.
2. How long does it take to register an Indian subsidiary?
Typically, it takes around 15–20 working days if all documents are in order and properly submitted.
3. Is it mandatory to have a local director?
Yes, at least one director must be a resident of India who has stayed in the country for at least 182 days in the previous year.
4. Can a foreign company repatriate profits from an Indian subsidiary?
Yes, profits earned by the subsidiary can be repatriated to the parent company after paying applicable taxes.
