Entity Structure · India Entry

Setting Up a Subsidiary
Company in India

A wholly owned subsidiary (WOS) is the most common structure for foreign companies entering India. Here is exactly how to set one up correctly – legal structure, FDI route, RBI compliance, and transfer pricing.

What it is

Subsidiary vs. branch vs. liaison office

A subsidiary company in India is a separate Indian legal entity – typically a Private Limited Company – where the foreign parent holds 100% (or majority) of the shares. It is the most common structure for foreign companies entering India for full commercial operations.

Unlike a branch office, a subsidiary is a distinct legal person. It can enter contracts, hire employees, open bank accounts, raise funding, and hold assets in its own name. The parent's liability is limited to its investment in the subsidiary.

A wholly owned subsidiary (WOS) is a subsidiary where the foreign parent holds 100% of shares – the standard for most foreign companies entering India.

Why most foreign companies choose a subsidiary

Operations

Full commercial operations

Can earn revenue, sign contracts, hire employees across all functions.

How to set up a wholly owned subsidiary in India

FDI eligibility checkDay 1

Confirm your sector permits 100% FDI under the Automatic Route. Restricted sectors require Government approval and have investment caps.

Share capital & structureDays 1–2

Determine authorised and paid-up share capital. For most subsidiaries, ₹1–10 lakh is sufficient to start.

Resident directorDays 1–5

At least one director must be an Indian resident. This can be a nominee director if your team is entirely overseas.

Documents & DSCDays 3–7

Draft MOA and AOA, obtain Digital Signature Certificates for all directors, prepare apostilled parent company documents.

SPICe+ filingDays 7–19

The consolidated MCA filing – covers company name, directors, registered office, PAN, TAN, and GSTIN. Certificate typically issues within 7–12 working days.

FEMA & RBI complianceWithin 30 days

File FC-GPR with RBI through the FIRMS portal. Mandatory for all foreign investment. Missing this window requires a compounding application.

Post-incorporation setupWeeks 4–6

Bank account, GST registration, TDS registration, payroll setup, compliance calendar. Full operational readiness.

Subsidiary setup in practice

UK · Fintech Company · FCA Regulated

London fintech set up a regulated India subsidiary in 24 days

The Challenge

FCA-regulated company needed India presence with zero risk of PE exposure or RBI non-compliance flagging their UK auditors. Any misstep would trigger a reporting obligation to the FCA.

What We Delivered

Wholly owned subsidiary incorporated, RBI FCGPR filed within 30 days, GST registration complete, compliance calendar aligned to their UK reporting cycle.

Zero RBI or FEMA notices in 2 years of operation. Clean records for the FCA-regulated parent.

What goes wrong with subsidiary setups

No transfer pricing policy at incorporation

Every intercompany transaction between the subsidiary and parent – management fees, royalties, service charges – requires transfer pricing documentation under Indian law. Most companies set this up a year later, after transactions have already occurred, creating back-audit exposure.

Wrong FDI route for the sector

Some sectors look unrestricted but have hidden caps or approval requirements. Fintech, pharma, e-commerce, and multi-brand retail all have sector-specific conditions. We check this before any filing.

Missing nominee director requirement

Forgetting the Indian resident director requirement stalls incorporation. Many foreign companies discover this late and have to find a nominee urgently, delaying the entire process.

Treating subsidiary and parent as the same entity

A subsidiary is a separate Indian company. It needs its own bank account, its own contracts, its own compliance filings. Sharing infrastructure with the parent without proper intercompany agreements creates PE risk.

Engagement Models · USD

Simple, transparent pricing.

Fixed fees. No hidden billings. Choose the engagement that matches where you are.

NRI company registration in India

For NRIs investing in or starting a company in India under the FEMA NRI route.

Starter

Starts at

$180one-time

Core incorporation for an NRI-owned entity, filed correctly under the right FEMA route.

What's included

✓NRI route check
✓Name reservation
✓MOA/AOA
✓SPICe+
✓DIN/DSC for up to 2 directors
✓Certificate of Incorporation
✓PAN
✓TAN
✓PF/ESI

Frequently asked questions about subsidiary setup

A subsidiary is any company where the foreign parent holds more than 50% of shares. A wholly owned subsidiary (WOS) is where the foreign parent holds 100%. In India, most foreign companies set up a WOS to retain full control and simplify governance.

Yes – once incorporation is complete and a bank account is opened, the subsidiary can hire employees and run payroll. GST registration and TDS registration should be in place before the first payment cycle.

FC-GPR (Foreign Currency Gross Provisional Return) is the mandatory RBI filing for foreign investment. It must be filed within 30 days of share allotment. Missing this deadline requires a compounding application with the RBI – a formal regularisation process with penalties.

Yes. After paying corporate tax and complying with Companies Act distribution requirements, a subsidiary can declare dividends to the foreign parent. Dividends are subject to withholding tax – typically 20% under Indian domestic law, reduced under applicable DTAA.

Yes, if there are any international transactions with the foreign parent or other related parties. Transfer pricing documentation (Form 3CEB and TP study) is required for every financial year in which such transactions occur. We recommend setting this up at incorporation.

Setting Up a SubsidiaryCompany in India