Expanding into India can be an exciting opportunity for global businesses. With its vast consumer base, growing digital economy, and investor-friendly policies, India has become a preferred destination for foreign investors. However, to operate seamlessly, setting up an Indian subsidiary is the most strategic route. This guide breaks down the process of Indian Subsidiary Registration—its meaning, process, benefits, and key compliance requirements.

What is an Indian Subsidiary Company?

An Indian subsidiary company is a business entity registered in India where a foreign company holds more than 50% of the total share capital. The parent company thus has controlling rights in the subsidiary. It operates under Indian laws and is treated as a separate legal entity from its parent organization.

A subsidiary can be either:

• Wholly Owned Subsidiary (WOS): Where 100% of the shares are held by the foreign company.

• Partly Owned Subsidiary: Where more than 50% but less than 100% of shares are held by the foreign parent company.

This structure allows global companies to establish a local presence, engage with Indian customers, and comply with the country’s legal and taxation framework.

Why Set Up an Indian Subsidiary?

Establishing a subsidiary in India offers numerous advantages to foreign businesses. Some key benefits include:

1. Access to a Fast-Growing Market

India’s population of over 1.4 billion offers an enormous consumer base for products and services across sectors.

2. Limited Liability Protection

The liability of shareholders is limited to their investment, shielding personal assets from company debts or liabilities.

3. Independent Legal Entity

A subsidiary operates independently under Indian laws. This helps maintain clear separation between the parent and the Indian company in terms of financial and legal accountability.

4. Ease of Repatriation and Compliance

Profits earned in India can be repatriated to the parent company under RBI guidelines. India’s improving business environment also ensures a smoother compliance process.

5. Tax and Operational Benefits

Subsidiary companies can enjoy tax benefits under various double taxation avoidance agreements (DTAAs) between India and other countries.

Prerequisites for Indian Subsidiary Registration

Before registering a subsidiary in India, foreign companies must ensure the following basic requirements are met:

• Directors: Minimum two directors are required, with at least one being an Indian resident.

• Shareholders: Minimum two shareholders are required. The foreign company can hold a majority of shares.

• Registered Office: The company must have a registered office address in India.

• Capital: There is no minimum capital requirement, but it should be sufficient for operations.

• Business Activity Approval: Certain sectors may require prior approval from the Reserve Bank of India (RBI) or relevant ministries.

Step-by-Step Process for Indian Subsidiary Registration

The registration process for an Indian subsidiary involves several legal and administrative steps. Here’s a simplified breakdown:

Step 1: Obtain Digital Signature Certificates (DSC)

All directors must have DSCs for signing electronic documents.

Step 2: Apply for Director Identification Number (DIN)

A DIN is required for each proposed director of the company.

Step 3: Name Reservation

Submit a name reservation application through the MCA portal (RUN service). The name must be unique and comply with the Companies Act guidelines.

Step 4: Drafting of Documents

Essential incorporation documents include the Memorandum of Association (MOA) and Articles of Association (AOA), which define the company’s objectives and internal governance.

Step 5: Filing for Incorporation

Once all documents are ready, the SPICe+ form is filed on the MCA portal. This single form covers company incorporation, PAN, TAN, and GST registration.

Step 6: Certificate of Incorporation

After verification, the Registrar of Companies (ROC) issues the Certificate of Incorporation, marking the official establishment of the Indian subsidiary.

Step 7: Opening a Bank Account

Post-registration, the company must open a current account in India to manage its financial transactions.

Post-Incorporation Compliance

Setting up the company is just the first step. Maintaining compliance ensures smooth functioning and legal protection.

Some mandatory compliances include:

• Appointment of an auditor within 30 days of incorporation

• Filing of annual returns and financial statements with the ROC

• Conducting board meetings as per the Companies Act, 2013

• Filing income tax returns annually

• Adherence to FEMA (Foreign Exchange Management Act) regulations

• Regular maintenance of statutory registers and records

Failure to comply can result in penalties or cancellation of business licenses. Therefore, it’s advisable to consult experts or professional firms specializing in corporate compliance.

Documents Required for Indian Subsidiary Registration

Here’s a checklist of documents commonly required:

For the Parent Company:

• Certificate of incorporation and charter documents

• Board resolution authorizing investment in India

• Proof of address of the parent company

• ID and address proof of authorized signatory

For the Indian Subsidiary:

• Passport and address proof of directors and shareholders

• Proof of registered office address (utility bill, rental agreement, NOC)

• MOA and AOA signed by shareholders

• Digital Signature Certificates (DSCs) of directors

All foreign documents must be notarized and apostilled or consularized, as per Indian regulations.

Key Points to Remember

• A foreign company can hold up to 100% equity in most sectors except a few restricted by FDI policy.

• Profits can be repatriated after paying applicable taxes.

• Subsidiaries must comply with both Indian corporate laws and FEMA guidelines.

• It is recommended to hire professional assistance for drafting documents, filing applications, and maintaining ongoing compliance.

Why Choose Professional Assistance?

While it’s possible to register an Indian subsidiary independently, the process involves several legal and regulatory nuances. Professional firms like Enterslice or Corpfilings assist businesses by managing end-to-end services—from company incorporation to post-registration compliance—ensuring accuracy, timeliness, and adherence to Indian laws.

Their expertise minimizes risks of rejection or penalties and helps foreign businesses focus on growth rather than paperwork.

Conclusion

Indian Subsidiary Registration is a strategic move for any foreign company aiming to establish a long-term presence in India. With the right guidance and compliance framework, the process can be straightforward and rewarding.

India’s economic landscape is evolving rapidly, making now the perfect time to enter this market. By understanding the legal requirements and following a systematic approach, your business can thrive in one of the world’s most promising economies.

FAQs

1. Can a foreign company own 100% of an Indian subsidiary?
Yes, in most sectors, a foreign company can own 100% of shares unless restricted under India’s FDI policy.

2. How long does it take to register an Indian subsidiary?
Generally, it takes 2 to 3 weeks if all documents are in order and approvals are granted on time.

3. What is the difference between a branch office and a subsidiary?
A branch office is an extension of the foreign company, while a subsidiary is a separate legal entity under Indian law.

4. Are there any minimum capital requirements?
No, there is no mandatory minimum capital requirement, though the capital should align with business needs.