How does a foreign company set up a subsidiary in India?

Short answerA foreign company sets up an Indian subsidiary by incorporating a Private Limited company in India with the foreign company (and/or individuals) as shareholders. At least one director must be resident in India, the share pricing must follow FEMA, and the investment is reported to the RBI via Form FC-GPR.

Incorporate an Indian Pvt Ltd

Standard SPICe+ incorporation, with the foreign parent as shareholder.

Resident director + FEMA/FC-GPR

One India-resident director, FEMA-compliant pricing, and FC-GPR reporting. Our India-entry service handles it.

The end-to-end setup and ongoing compliance

Setting up the subsidiary is a company incorporation with a FEMA layer. You incorporate a Private Limited company through SPICe+ with the foreign parent (and/or individuals) as shareholders and at least one India-resident director; the foreign directors’ documents must be apostilled, and a board resolution of the parent authorising the investment and naming its authorised signatory is needed. When the parent subscribes to or is allotted shares, the price must meet the FEMA pricing guidelines (a valuation supports it for anything beyond face value at incorporation), the funds must come through banking channels, and the allotment is reported to the RBI in Form FC-GPR within 30 days. After that, the subsidiary lives as a normal Indian company — statutory audit, AOC-4 and MGT-7, income-tax return — with extra FEMA items: the annual FLA return to the RBI, and FC-TRS reporting if shares later transfer between residents and non-residents. The sector decides the route: most are 100% automatic, some carry caps or need approval. Sequencing the incorporation, the inward remittance and the FC-GPR together, and confirming the sector route first, is what keeps both the MCA and RBI sides clean from day one.

Talk to CA Vijay R Singh

Setting up an Indian subsidiary? You can message him directly, or book a short call to talk through your situation.

This answer is general information for founders, not tax or legal advice. Tax rates, thresholds and forms change with each Finance Act — please confirm the current position for your own facts, or speak to us, before acting.

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