Now, I'm not going to lie, if you're a stranger to the Indian corporate world, it can get a little overwhelming and confusing to get your head around the Indian laws. That is why I have broken this down for you. I mean no filler, no gibber-jabber, and no confusing vocabulary. Instead, I will provide you with the facts you need to know about how to register a foreign subsidiary company in India and the pros and cons of it as your vehicle to expand your business.
India's thriving economy, large consumer base, and friendly investor policies have made it a good place for international businesses to set up shop. If you are a foreign company or entrepreneur looking to come to India, then one of the best and smartest ways to do that is through Indian Subsidiary Company Registration.
What is an Indian Subsidiary Company?
Simply put, an Indian subsidiary is one company incorporated in India that is more than 50% owned by a foreign entity. As with all companies, a subsidiary/resident company is defined under the Indian Companies Act 2013 and is classified as a private limited company.
There are two types of subsidiary:
Wholly Owned Subsidiary (WOS): where 100% of the shares are owned by the foreign company.
Partially Owned Subsidiary: where more than 50% of the shares are owned by the foreign company, but less than 100%.The benefits of an Indian subsidiary are that it is treated as a domestic
Why Create a Subsidiary in India?
Let's discuss the "why" before we tackle the "how." Registering a subsidiary in India provides a whole range of benefits:
✅ Access to the Indian Market
You can directly trade, manufacture, or provide services in India without relying on intermediaries. This provides you with access to over 1.4 billion potential customers.
✅ Full Control of Operations
Functioning as a registered company in India will allow your subsidiary to open bank accounts, hire local staff, rent office space, and undertake day-to-day operations without dependence on your parent company.
✅ Tax Benefits
The subsidiary will enjoy rates and benefits as a resident Indian company is entitled to efficient tax rates and advantages allocated to businesses that reside in India
✅ Protection of Intellectual Property Rights
Companies registered in India are entitled to own and protect trademarks, patents, copyrights, and other rights to intellectual property under Indian law.
✅ Limited Liability
Liability of the parent company shall be limited to the capital it invested, therefore providing financial relief.
Step-by-Step Process of Registering an Indian Subsidiary Company
Now, let’s move on to the actual process. Setting up a subsidiary company is rather easy, particularly with help. This is the general procedure:
Step 1 - Digital Signatures (DSC)
The first step is to get Digital Signature Certificates for at least one Indian director and the foreign directors (if applicable). Digital signature certificates (DSCs) will be used to sign documents electronically.
Step 2 - Director Identification Number (DIN)
A DIN is unique to every company director in India and is required by law. You can apply for your DIN at the same time that you file your company incorporation forms.
Step 3 - The Company Name
You will need to obtain MCA approval for your company name. Your preferred name must not be the same and must meet name guidelines.
Step 4 - Drafting your incorporation documents
These will typically include:
Memorandum of Association (MOA) – states the objectives of the company
Articles of Association (AOA) – defines the internal company rules and regulations
Identification and address proof for directors
Proof of registered office address in India.
Step 5: Submit Incorporation Documents to MCA
Submit the SPICe+ (Simplified Proforma for Incorporating Company electronically) form, which covers Name Reservation, DIN, PAN, TAN, and Incorporation.
Step 6: Obtain the Certificate of Incorporation
After submission of this form, if everything has been filed correctly, the Registrar of Companies (RoC) will issue you a Certificate of Incorporation containing your company's Corporate Identification Number (CIN), which makes it legally recognized.
Step 7: Compliance after incorporation
Finish…not quite. Once you have registered, you must:
Open a current bank account in the company's name
Apply for GST registration (if applicable)
Appoint an auditor within 30 days
Complete the annual returns and statutory records
Documents Required for Registration of an Indian Subsidiary
The following information and documents are usually requested from both the foreign parent company and the Indian subsidiary
From the Foreign Company:
Certificate of incorporation
Board resolution to open a subsidiary
Proof of address (translated and notarized if not in English)
Copy of passports of foreign directors
From Indian Directors:
PAN card and Aadhaar (For Indian citizens, it is mandatory)
Proof of address (utility bill or bank statement)
Passport-sized photographs
Digital signatures
FDI Compliance for a Subsidiary
Several sectors in India permit 100% Foreign Direct Investment (FDI) through the automatic route, so you may not need to seek prior approval. However, several sectors, such as defense, telecoms, and insurance, require the prior approval of the Government of India via the Department for Promotion of Industry and Internal Trade (DPIIT). Thus, before you plunge right in, you will need to ascertain that your business activity is permitted under the norms of FDI.
How Kanakkupillai Can Help
Launching a subsidiary in India can feel like a labyrinth. Between cross-border documentation with numerous legal filings and compliance, it could become overwhelming. This is where Kanakkupillai comes to the rescue - we believe that back office work should be easy.
When you work with Kanakkupillai, you will have access to end-to-end subsidiary registration services, where we do all the heavy lifting, such as:
Reservation of the Company name
Drafting of legal documents
Filing with MCA
FDI compliance
Conclusion
Setting up an Indian subsidiary is a great way for foreign businesses to access one of the fastest-growing economies in the world. Whether you are a start-up considering the possibilities or a multinational increasing your footprint, a subsidiary brings you an established legal entity, operational flexibility, and local support.
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