Foreign Subsidiary in India
Establish your Foreign Subsidiary Company in India with comprehensive legal, compliance, and registration support.
About Subsidiary Company
Foreign companies willing to establish operations in India can set up the business which can be related or unrelated to the parent company. A foreign subsidiary company is one in which a Parent foreign company owns 50% or more of the company's equity shares. In this scenario, the foreign company is referred to as the holding company or parent company.
Before you incorporate subsidiaries company one must bear the difference between Subsidiary and Wholly Owned Subsidiary (WOS) and accordingly should take decisions.
Subsidiary vs Wholly Owned Subsidiary (WOS)
Key differences to help you make the right choice
| Aspect | Subsidiary | Wholly Owned Subsidiary (WOS) |
|---|---|---|
| Ownership | Parent company owns more than 50% but less than 100% | Parent company owns 100% of the equity shares |
| Control | Parent company controls but must consider minority shareholders | Complete control with no external interference |
| Minority Shareholders | Yes | No |
| Decision-Making | Consider minority shareholders' rights and interests | Decisions made solely by parent company |
| Financial Reporting | Proportionate ownership with minority interests | Entire financials consolidated without minority adjustments |
| Purpose | Partnerships, joint ventures, strategic investments | Full control, international expansion, brand consistency |
Benefits of Forming Subsidiary Company in India
Diverse Commercial Activities
Engage in manufacturing, trading, services, and R&D, enabling direct revenue generation and market penetration.
100% Ownership
Foreign companies can hold up to 100% ownership in most sectors under automatic route.
Limited Liability
Parent company not directly responsible for subsidiary's debts or obligations.
Profit Repatriation
Profits, dividends, and royalties can be repatriated subject to FEMA compliance.
Separate Legal Entity
Operates as distinct legal entity from parent company with compliance relaxations.
Multi-Location Operations
Open offices, warehouses, factories across India without RBI/MCA intervention.
Taxation Benefits for Subsidiary Company
Domestic Tax Treatment
Taxed as domestic companies under Income Tax Act, 1961
Significantly lower rates than branch offices (40% + surcharge)
Flat Corporate Tax Rates:
15% (plus surcharge @ 10% and cess 4%) for new manufacturing companies under Section 115BAB
Net effective tax: 17.16%
22% (plus surcharge @ 10% and cess 4%) for other companies under Section 115BAA
Net effective tax: 25.17% instead of 30%
Additional Tax Advantages
Startup Tax Benefits
Exemptions under Section 80-IAC (3 consecutive years exempt)
R&D Benefits
Weighted deductions under Section 35(2AB)
Transfer Pricing
Regulated transactions with parent company
Tax Loss Carry-Forward
Up to 8 assessment years under Section 72
GST Input Tax Credit
Reduce net GST liability
Basic Requirements
Essential Criteria
- At least one Indian resident director
- Up to 100% foreign ownership (sector-dependent)
- Registered office address in India
- Parent company documents apostilled/consularized
Documentation
- Proof of identity and address for directors
- MOA and AOA (apostilled)
- Board resolution from parent company
- Registered office proof and NOC
What You Get from Register Your Startup
Complete package for your Foreign Subsidiary establishment
Certificate of Incorporation
From Registrar of Companies
MOA & AOA
Memorandum & Articles of Association
RBI Approval
Complete RBI compliance
PAN & TAN
Tax registration numbers
Digital Signatures
For all directors
Bank Account
Opening support
ESI & EPF
Employee registration
GST Registration
Goods and Services Tax
Step-by-Step Process for Forming a Subsidiary Company in India
Complete guide from pre-incorporation to operational compliance
1. Pre-Incorporation Approvals
Foreign Direct Investment (FDI) Compliance: The process starts with deciding if the subsidiary falls under Automatic or Approval route.
Action Required: If under approval route, obtain prior approval from FIPB or concerned authority.
2. Name Reservation
Platform: Ministry of Corporate Affairs (MCA) portal using SPICe+ Part A
Action: Reserve company name ensuring compliance with naming guidelines under Companies Act, 2013
3. Digital Signature Certificates (DSC)
Obtain DSCs for proposed directors and shareholders for e-filing purposes
4. Director Identification Number (DIN)
Apply for DIN for individuals who will be directors of the subsidiary, through SPICe+ Part B
5. Drafting Incorporation Documents
Key Documents:
- MOA: Outlines company objectives (Duly apostilled)
- AOA: Governs internal operations (Duly apostilled)
- INC-9 declaration forms
- DIR-2 declarations with identity proofs
- PAN declaration for foreign subscribers
6. Filing Incorporation Application
Platform: MCA portal using SPICe+ Part B form
Action: Submit details of directors, shareholders, registered office, and incorporation documents
Integrated Services: Automatic PAN and TAN allotment, Optional GST registration
7. Certificate of Incorporation (COI)
Upon successful scrutiny, MCA issues COI containing Corporate Identification Number (CIN)
8. RBI Reporting for Foreign Investments
FDI Reporting: Report inward remittance through Form FC-GPR within 30 days of allotment
Provide foreign investment details to Authorized Dealer Bank for onward RBI reporting
9. Open Bank Account
Submit COI, PAN, Director list, Board Resolution, MOA, and AOA to open current account for business transactions
Document Legalization Requirements
What is Apostilling?
Apostilling is a form of certification under the Hague Convention, recognized in India, that validates foreign-issued documents.
When is Consularization Required?
If the parent company's home country is not a signatory to the Hague Convention, consularization by the Indian Embassy or Consulate in that country is necessary.
Important: Ensure all apostilled or consularized documents are accompanied by certified English translations if they are in a foreign language.
Foreign Subsidiary Incorporation Checklist
Complete documentation requirements for smooth incorporation
Indian Director/Shareholder
(Existing DIN)
- Proof of identity and address (PAN & Aadhar)
- Email ID and Phone number
- Passport Size Photo
Indian Director/Shareholder
(No DIN)
- Proof of identity (Passport/Driving License/Voter ID)
- Email ID and Phone number
- Passport Size photo
- Duration of stay at address
- Educational qualification
- Residential address proof
- PAN and Aadhar
- Occupation
Foreign Individual
- Apostilled copy of Passport (Proof of identity)
- Apostilled address proof (Utility bill/Bank statement)
- Email ID and Phone number
- Passport Size photo
Note: Address proof must be notarized by Public Notary and apostilled in country of residence
Registered Office Requirements
- Proof of Registered Office Address (Utility Bill not older than 2 months)
- Lease Deed/Rent Agreement
- NOC from the Owner of Premises
- PAN of the Owner
Foreign Company Documents
- Apostilled Board Resolution (authorizing representative and share subscription)
- Apostilled ID Proof of authorized representative
- Apostilled Charter of Foreign Company
- Name of one Resident Director
- Name of Nominee (for WOS incorporation)
Post-Incorporation Compliances
Essential compliance requirements after establishing your subsidiary
Immediate Compliances (Within 30-180 days)
Commencement of Business
File Form INC-20A within 180 days with proof of subscription money received
Appointment of Auditor
Appoint statutory auditor within 30 days at first Board Meeting
Share Certificates
Issue share certificates within 60 days with proper stamping
First Board Meeting
Conduct within 30 days to appoint directors, auditor, and approve expenses
Registered Office
File INC-22 with office details within 30 days if not provided earlier
Statutory Registers
Maintain Register of Members, Directors, and Charges
Subsidiary & Wholly Owned Subsidiary (WOS) FAQs
Subsidiary & Wholly Owned Subsidiary (WOS) FAQs
For more information on establishing a Subsidiary Company in India, write to info@registeryourstartup.com
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