Expanding into the Indian market is an exciting opportunity for foreign companies. With its fast-growing economy, diverse consumer base, and favorable business environment, India offers immense potential for global businesses. One of the most effective ways to establish a presence here is through Indian subsidiary registration.
This process allows a foreign company to set up a locally incorporated entity that operates under Indian laws, giving it credibility, tax benefits, and operational flexibility. While the steps are straightforward, understanding the legal requirements beforehand can save time and prevent costly errors.
What is an Indian Subsidiary?
An Indian subsidiary is a company incorporated in India but controlled by a foreign parent company. The foreign entity owns more than 50% of the share capital, making it the majority shareholder. This structure allows the subsidiary to function independently while benefiting from the resources and guidance of its parent company.
Benefits of Indian Subsidiary Registration
- Full operational control under Indian law while maintaining ties to the parent company
- Access to local markets with a trusted business identity
- Ease of compliance under the Companies Act, 2013
- Tax advantages and eligibility for government schemes
- Separate legal entity, limiting the liability of the parent company
Step-by-Step Registration Process
- Obtain Digital Signature Certificate (DSC) for proposed directors
- Apply for Director Identification Number (DIN)
- Name approval through the Ministry of Corporate Affairs (MCA) portal
- Drafting of incorporation documents such as Memorandum of Association (MoA) and Articles of Association (AoA)
- Filing with the Registrar of Companies (ROC) along with required fees
- Receiving the Certificate of Incorporation and PAN/TAN for the company
Compliance Requirements
Once registered, the subsidiary must follow Indian corporate laws. This includes annual filings, maintaining statutory records, holding board meetings, and complying with FEMA (Foreign Exchange Management Act) provisions for foreign investments.
Common Challenges and How to Overcome Them
Many foreign companies face delays due to incomplete documentation or misunderstanding of local compliance rules. Partnering with a professional consultancy can streamline the process, ensuring all requirements are met on time.
FAQs
1. Can a foreign company own 100% of an Indian subsidiary?
Yes, in most sectors, 100% foreign ownership is permitted under the automatic route, except for restricted industries.
2. How long does it take to register an Indian subsidiary?
On average, it takes 15–20 working days, depending on documentation and approvals.
3. Do I need a local director for an Indian subsidiary?
Yes, at least one director must be an Indian resident.
4. Is there a minimum capital requirement?
There is no statutory minimum capital requirement, but practical business needs often dictate the initial investment.
