Expanding into India is a smart move for businesses worldwide. With its growing economy, young workforce, and thriving consumer market, India offers enormous opportunities for foreign companies. One of the most effective ways for a foreign entity to establish its presence here is through Indian subsidiary registration.
Setting up a subsidiary not only allows companies to access the Indian market but also ensures credibility, compliance, and smooth operations. If you are planning to expand, understanding the process and benefits of registering an Indian subsidiary is the first step toward sustainable growth.
What is an Indian Subsidiary?
An Indian subsidiary is a company incorporated in India that is either partially or wholly owned by a foreign entity. In most cases, foreign businesses choose to set up a private limited company as a subsidiary since it is considered reliable, investor-friendly, and compliant with Indian business laws.
A subsidiary must adhere to the provisions of the Companies Act, 2013, and other local regulations. Depending on ownership, it can be classified as:
Wholly-owned subsidiary: Where 100% of the shares are held by the foreign parent company.
Partially-owned subsidiary: Where more than 50% but less than 100% of shares are held by the foreign parent.
Why Choose Indian Subsidiary Registration?
Foreign businesses often explore various entry strategies like liaison offices, branch offices, or joint ventures. However, registering an Indian subsidiary offers several advantages:
Full market access: Unlike branch or liaison offices, subsidiaries can conduct full-scale business operations in India.
Credibility: Customers, suppliers, and investors in India prefer dealing with registered entities.
Limited liability: The parent company’s liability is limited to its shareholding.
Separate legal identity: The subsidiary is treated as an independent legal entity.
Ease of compliance: Compared to branch offices, subsidiaries enjoy easier compliance with taxation and regulatory frameworks.
Process of Indian Subsidiary Registration
The process might look complicated at first, but with proper guidance, it becomes manageable. Here’s a step-by-step breakdown:
Step 1: Obtain Digital Signature Certificate (DSC)
Every proposed director must have a DSC to sign electronic documents during the registration process.
Step 2: Apply for Director Identification Number (DIN)
All directors must obtain a DIN from the Ministry of Corporate Affairs (MCA).
Step 3: Name Approval
The company name must be unique and approved by the MCA. It should reflect the business activities and avoid conflicts with existing registered names.
Step 4: Drafting of Documents
Essential documents like the Memorandum of Association (MOA) and Articles of Association (AOA) are prepared, along with identity proofs and address proofs of directors and shareholders.
Step 5: Filing for Incorporation
All documents are submitted online through the MCA portal using the SPICe+ form. Once approved, the Certificate of Incorporation is issued.
Step 6: Post-Incorporation Compliance
After incorporation, the subsidiary must open a bank account, register for PAN and TAN, and comply with Goods and Services Tax (GST) requirements if applicable.
Documents Required
Foreign businesses must keep the following documents ready:
- Identity and address proof of directors and shareholders
- Passport copies of foreign directors
- Address proof of registered office in India
- MOA and AOA signed by directors and shareholders
- Board resolution from the parent company authorizing subsidiary formation
Key Compliance Requirements
Once incorporated, subsidiaries must follow ongoing compliance obligations. These include:
- Filing annual returns and financial statements with the MCA
- Maintaining proper accounting records and statutory registers
- Conducting board meetings and shareholder meetings as required
- Complying with taxation laws like income tax, GST, and transfer pricing regulations
Non-compliance can result in penalties, so it is advisable to work with professional advisors.
Benefits of Setting Up an Indian Subsidiary
Registering an Indian subsidiary opens doors to multiple opportunities. Some of the major benefits include:
- Access to India’s vast consumer base
- Eligibility for government incentives and schemes
- Ease of raising local funding and investments
- Ability to hire local talent and expand operations
- Building trust and credibility with Indian stakeholders
Conclusion
Indian subsidiary registration is an excellent pathway for foreign companies to establish and grow their presence in one of the world’s fastest-growing economies. While the process involves legal and regulatory requirements, with expert assistance, it becomes straightforward and hassle-free.
If you are considering expanding into India, setting up a subsidiary can be your best decision. It ensures legal recognition, operational freedom, and a foundation for long-term success in the Indian market.
FAQs
1. How long does it take to register an Indian subsidiary?
Typically, it takes about 15–20 working days, depending on documentation and approvals.
2. Can a foreign company hold 100% shares in an Indian subsidiary?
Yes, in most sectors, 100% foreign direct investment (FDI) is allowed. However, some restricted sectors may require prior government approval.
3. What type of company is best for a subsidiary in India?
Most foreign businesses prefer setting up a private limited company due to limited liability and easier compliance.
4. Is it mandatory to have an Indian director for subsidiary registration?
Yes, at least one director must be a resident of India.
