India continues to rise as a preferred investment destination for global businesses. With its fast-growing economy, massive consumer base, skilled English-speaking workforce, and favorable startup ecosystem, the country offers fertile ground for international expansion.
For foreign companies, setting up a 100% foreign-owned subsidiary is often the most efficient and flexible structure to operate in India.
But establishing a subsidiary here is not just a matter of filing a form. It involves navigating the legal framework set out by the Companies Act, 2013, FEMA (Foreign Exchange Management Act), and compliance with Reserve Bank of India (RBI) norms.
If you’re planning to set up a foreign subsidiary in India, here’s everything you need to know.
A foreign subsidiary in India is a private limited company incorporated under Indian law, where more than 50% of the shareholding is held by a foreign entity. When the foreign parent owns 100% of the equity, it is termed a wholly owned subsidiary (WOS).
Legally, this subsidiary is considered a separate Indian entity, which means it can enter into contracts, hire employees, own property, and carry out business operations independently although it remains under the strategic and financial control of the parent company.
While foreign companies can choose between a Liaison Office, Branch Office, Project Office, or Subsidiary Company, the Private Limited Company is the most preferred format for a foreign subsidiary.
Here’s why:
It allows 100% Foreign Direct Investment (FDI) in most sectors under the automatic route (no prior government approval needed).
It offers limited liability, a separate legal identity, and better brand credibility in the Indian market.
It enables local hiring, banking, GST billing, and compliance with Indian laws.
To incorporate a foreign subsidiary, certain director and shareholder norms must be followed:
The company must have at least two directors, and one of them must be a resident Indian (i.e., living in India for 182+ days in the previous calendar year).
There must be a minimum of two shareholders. The foreign parent company can be one of the shareholders and may hold up to 100% of the equity.
All directors must obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC) for digital filings.
The incorporation process requires documentation from both the Indian side and the foreign parent company. These include:
Board Resolution from the parent company authorizing investment and setting up the Indian subsidiary.
Certificate of Incorporation, Memorandum of Association (MoA), and Articles of Association (AoA) of the foreign company.
Identity and address proofs of foreign directors.
✅ All foreign documents must be apostilled or notarized in the country of origin, depending on whether the country is part of the Hague Convention.
The incorporation process is managed via the MCA (Ministry of Corporate Affairs) portal using the SPICe+ form, which streamlines multiple services into one application. Here's a simplified breakdown:
Obtain DSC & DIN: Digital signatures and identification numbers for proposed directors.
Reserve Company Name through the RUN service.
Draft Incorporation Documents including MoA, AoA, identity proofs, address of registered office.
File SPICe+ Form covering incorporation, PAN/TAN, GST, EPFO/ESIC registration, and bank account.
Receive Incorporation Certificate from the ROC.
Complete Post-Incorporation Compliances.
🕒 The average registration timeline is 2–4 weeks.
Once incorporated, the subsidiary must:
Open an Indian bank account to receive FDI.
Issue share certificates and update statutory registers.
File Form FC-GPR with the RBI within 30 days of share allotment.
Register for GST, Shops & Establishment, Professional Tax, etc.
Hold board meetings, pass resolutions, and maintain minutes.
File annual returns, income tax returns, and maintain accounting records.
Failure to meet these can result in heavy penalties or even suspension of operations.
Not appointing a resident Indian director.
Submitting improperly notarized/apostilled foreign documents.
Ignoring RBI/FEMA filings.
Delaying statutory registrations post-incorporation.
Missing annual compliance deadlines.
Setting up a 100% foreign subsidiary is one of the most strategic ways to enter India’s thriving market but only if it’s done right. From documentation and director appointments to RBI filings and tax registrations, every step demands legal precision.
👉 Let CA Vijay Singh & Co. be your trusted compliance partner.
We help NRIs, global companies, and startups register and operate compliant subsidiaries in India hassle-free and on time.
📞 Book your free consultation today
Legal setup done? Know what comes next.
📘 Complete Guide to Setting Up a Foreign Subsidiary in India
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