India is one of the fastest-growing economies in the world, and global businesses are increasingly setting up their presence here to tap into its vast consumer base, skilled workforce, and strategic market potential.
If you're a foreign company looking to enter India, forming a wholly-owned or joint venture subsidiary company is the most effective and compliant way to establish a long-term business presence.
What Is a Subsidiary Company in India?
A subsidiary company is an Indian company where more than 50% of shares are held by a foreign parent company. When the foreign parent holds 100% of the shares, it is called a Wholly Owned Subsidiary (WOS).
Subsidiary companies in India are incorporated as Private Limited Companies under the Companies Act, 2013, regulated by the Ministry of Corporate Affairs (MCA).
Why Form a Subsidiary in India?
Full Ownership: A WOS allows 100% foreign ownership in most sectors under the automatic FDI route.
Separate Legal Entity: The subsidiary is a distinct legal entity, limiting the parent company's liability.
Access to Indian Market: Enables full business operations including sales, hiring, contracts, and billing in India.
Tax Efficiency: Eligible for tax treaties under India's DTAA network with 90+ countries.
Repatriation of Profits: Dividends and profits can be repatriated subject to applicable taxes and FEMA compliance.
Eligibility & FDI Route
Most sectors allow 100% FDI under the automatic route — meaning no prior government approval is required. Sectors requiring government approval include defence, media, and certain financial services.
The Foreign Exchange Management Act (FEMA) and RBI regulations govern all foreign investment into India.
Step-by-Step Registration Process
Step 1 — Obtain DSC & DIN All proposed directors must obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) from MCA.
Step 2 — Name Approval File RUN (Reserve Unique Name) application on the MCA portal. The name must comply with MCA naming guidelines.
Step 3 — Incorporation Filing (SPICe+) File the SPICe+ form with MCA including the Memorandum of Association (MOA) and Articles of Association (AOA).
Step 4 — Obtain PAN & TAN Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) are issued with the Certificate of Incorporation.
Step 5 — Open Bank Account Open a bank account in India in the company's name. Foreign funds can be remitted via the FEMA-compliant route.
Step 6 — Foreign Investment Reporting File Form FC-GPR with RBI within 30 days of receiving foreign investment.
Step 7 — Post-Incorporation Registrations Register for GST, Professional Tax, PF/ESI (once employees are hired), and other applicable registrations.
Documents Required from Foreign Parent Company
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Certificate of Incorporation of the parent company (apostilled/notarised)
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Board resolution authorising investment in India
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Memorandum & Articles of Association of parent company
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Address proof of parent company's registered office
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Identity and address proof of proposed directors
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Passport copies of foreign directors (apostilled)
Taxation of Indian Subsidiary
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Corporate tax rate: 22% (for domestic companies under Section 115BAA) + surcharge + cess
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Dividend Distribution: Dividends paid to foreign parent are subject to withholding tax (rates vary by DTAA)
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Transfer Pricing: All transactions between the Indian subsidiary and foreign parent are subject to Indian transfer pricing regulations
Post-Registration Compliance
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Annual filing with MCA (Form AOC-4 and MGT-7)
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Annual statutory audit
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GST monthly/quarterly returns
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TDS returns (quarterly)
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Annual transfer pricing report (Form 3CEB) if international transactions exceed INR 1 crore
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FEMA filings: Annual Performance Report (APR), Annual Return on Foreign Liabilities and Assets (FLA)
How PGA & Co. Can Help
Our team of CAs, Company Secretaries, and international tax specialists has assisted 100+ foreign companies set up operations in India. We handle everything from incorporation to post-setup compliance — so you can focus on your business.
Our CA team advises foreign companies on company setup every day. Book a free 30-minute consultation.