Foreign Subsidiary Company Registration

With a projected real GDP growth of 5.9% in 2025, India remains one of the fastest-growing economies in the world. For a foreign company, establishing a local unit here opens up a world of opportunities. The best way to do so is often through foreign subsidiary company registration.
While starting a business in a new country presents unique challenges, the foreign company subsidiary registration process in India is a well-defined path. This guide provides the clarity needed to navigate your entry into the Indian market successfully.

What is a Foreign Subsidiary in India?

A foreign subsidiary is an Indian company established and controlled by a parent company based in another country. The parent company usually holds more than 50% of the shares, giving it control over major business decisions of the subsidiary.
Under Indian law, a foreign subsidiary is treated as a regular Indian company and must comply with all applicable local regulations. These include, but are not limited to, the Companies Act, 2013, the Foreign Exchange Management Act (FEMA), the Income Tax Act, and other relevant labor and commercial laws. This compliance framework allows foreign businesses to operate seamlessly in India as if they were local entities.

Wholly-Owned Subsidiary vs. Joint Venture

When considering market entry in India, foreign companies must choose between maintaining full control through a wholly-owned subsidiary or sharing ownership and expertise in a joint venture.

    Aspect                                                 Wholly-Owned Subsidiary (WOS)                                                               Joint Venture (JV)

  Ownership                                     100% owned by the foreign parent company                             Foreign parent owns more than 50%; Indian partner owns the rest

    Control                                  Complete control over operations, decisions, and profits                  Shared control; major decisions usually require consensus
 
Decision-Making                          Full autonomy in strategic and operational decisions                     Requires collaboration and consensus with the Indian partner
 
Establishment Legal Route     Only allowed in sectors permitting 100% FDI under the Automatic Route    Allowed in sectors where FDI up to a certain limit is permitted or with                                                                                                                                                                            government approval

Local Expertise                                    Limited local input without Indian partners                               Access to local knowledge, networks, and cultural understanding

Regulatory Navigation                        Managed solely by the foreign parent company                        Indian partner aids in navigating regulations and business culture

Profit Sharing                                         All profits go to the foreign parent company                     Profits are shared between the foreign parent and the Indian partner

Risk Sharing                                          All risks borne by the foreign parent company                    Risks and liabilities are shared with the Indian partner

Flexibility and Speed                              More agile due to centralized decision-making                    Decisions may take longer due to the need for consensus

Market Entry Advantage                    Total independence, but may face entry barriers alone            Easier access to markets through the local partner’s network

Common Usage                                Preferred by companies seeking full control and autonomy         Preferred in sectors with restrictions on 100% FDI or when local insight is                                                                                                                                                                    critical

Compliance                                             Compliance is entirely managed by a foreign company                    Joint compliance responsibility with the Indian partner

Examples of sectors for WOS     IT, E-commerce (where 100% FDI under the automatic route is allowed)    Sectors like defense, telecom, where JV or partnerships often                                                                                                                                                                                      prevail  due to FDI limits

Choosing between a WOS and a JV is a big decision. It depends on your business goals, your need for control, and how much you value local partnership.

Documents Required for Foreign Subsidiary Registration

To complete the registration, you will need to gather several documents. It is best to prepare these in advance to avoid delays. The documents must be clear, valid, and properly certified.
Here is a simple checklist of what you'll need.

1. From the Foreign Parent Company
These documents prove the existence and authority of the parent company.
Certificate of Incorporation: A copy of the parent company's registration certificate from its home country. This must be "apostilled" or "notarized" by the Indian embassy in that country. An apostille is a special type of certification recognized internationally.
Charter Documents: A copy of the parent company's constitution, like its MoA and AoA or equivalent documents. These also need to be apostilled.
Board Resolution: A formal decision passed by the parent company's Board of Directors. This board resolution for investment in a foreign subsidiary company should state its intention to set up a subsidiary in India, name the authorized representative who will sign documents, and confirm the investment amount. This must also be apostilled.

2. For Foreign National Directors and Shareholders
If the directors or shareholders are foreign nationals, they need to provide the following:
Proof of Identity: A copy of their passport. This must be notarized and apostilled.
Proof of Address: A copy of a recent document, like a bank statement, electricity bill, or driver's license, showing their address. This also needs to be notarized and apostilled.
Photograph: A recent passport-sized photograph.
Business Visa: If the foreign director intends to work in India, they might need a valid Business Visa.

3. For the Indian Resident Director
The director, who is a resident of India, needs to provide:
PAN Card: A copy of their Permanent Account Number (PAN) card.
Aadhaar Card: A copy of their Aadhaar card.
Proof of Identity and Address: A copy of their passport, voter ID, or driver's license, along with a recent bank statement or utility bill.

4. For the Registered Office Address in India
You must provide proof that you have a legal right to use the registered office address.
Proof of Premises: If the property is rented, a copy of the rent agreement. If it is owned, a copy of the sale deed or property deed.
No Objection Certificate (NOC): A letter from the property owner stating that they have no objection to the company using their premises as a registered office.
Utility Bill: A recent utility bill (like electricity or water bill) for the address, not more than two months old.

• Fastest-Growing Major Economy: Projected growth of 6.6% for 2025–26, far outpacing other major global economies.
• Massive Consumer Base: Access to a population of 1.4+ billion, with a middle class expected to reach 450 million by 2030.
• 100% FDI Automatic Route: In most sectors (IT, manufacturing, e-commerce), foreign entities can own 100% equity without prior government approval.
• Favorable Tax Regime: Subsidiaries are treated as domestic entities, with corporate tax rates as low as 22% (or 15% for new manufacturing units).
• Cost-Efficient Talent: Large pool of English-speaking, STEM-educated professionals at competitive costs. 

To incorporate a Private Limited Subsidiary, the following are mandatory: 

Personnel:
Minimum 2 Directors (at least one must be an Indian Resident who stayed in India for 182+ days in the previous calendar year).
Minimum 2 Shareholders (can be individuals or the foreign parent company).

Infrastructure:
A Physical Registered Office in India with valid proof (rent agreement and recent utility bill).
Capital: No mandatory minimum paid-up capital requirement, though a nominal amount like ₹1 Lakh is typical for setup.

Documentation:
Apostilled/Notarized Certificate of Incorporation and Board Resolution from the parent company.
Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for all proposed directors. 

Category                                      Key Requirement                                          Timeline

RBI (FEMA)               Form FC-GPR (Report foreign investment)                   Within 30 days of share allotment

RBI (FEMA)               FLA Return (Annual return on assets/liabilities)              By July 15 every year

MCA                          Form INC-20A (Commencement of business)                 Within 180 days of incorporation

MCA                          Annual Filings (AOC-4 & MGT-7)                                     Within 30/60 days of the AGM

Tax                             Transfer Pricing (Form 3CEB)                                        By Nov 30 if dealing with the parent company

Tax                          GST Returns (if turnover > ₹20 Lakh)                             Monthly/Quarterly (GSTR-1, GSTR-3B)

Audits                        Statutory Audit by a practicing CA                                      Annuall

Key Requirements for Subsidiary Registration in India
Before you begin the foreign company subsidiary registration process in India, you need to meet some basic requirements. These rules are set by the Indian government to ensure that all companies operate properly. Let's look at the key requirements in simple terms.

1. Director Requirements
A private limited subsidiary must have a minimum of two directors.
Minimum Directors: You need at least two directors to form a private limited subsidiary.
Resident Director: At least one of the directors must be an Indian resident. A resident is a person who has lived in India for at least 182 days in the previous calendar year. This person does not have to be an Indian citizen. A foreign national living in India can also be the resident director.

2. Shareholder Requirements
Shareholders are the owners of the company. They invest money in the company by buying shares.
Minimum Shareholders: You need a minimum of two shareholders.
Second Shareholder: To fulfill this minimum requirement, the second shareholder can be either an individual or a corporate nominee appointed by the foreign parent company. This means the foreign parent can nominate a person or another company related to it to hold shares on its behalf.
Parent Company as Shareholder: For a subsidiary, the foreign parent company will be the main shareholder. Another person or entity (from the parent company or a nominee) can be the second shareholder to meet the minimum requirement.
100% Foreign Ownership: For a wholly-owned subsidiary, the parent company and its nominee will hold all the shares.

3. Capital Requirements
This is about the money invested in the company to start its business.
No Minimum Capital: There is no minimum capital requirement by law to start a private limited subsidiary in India. You can start with any amount you feel is sufficient for your business.
Authorized Capital: You must state an "authorized capital" in your company documents. This is the maximum amount of capital the company is allowed to raise. You can increase it later by paying a fee. There is no fixed limit, but it is common to start with an authorized capital of ₹1,00,000 (around $1,200).

4. Registered Office Requirement
Every company in India must have an official address. This is called the registered office.
A Physical Address: The registered office must be a physical address in India. It cannot be a P.O. box. This is where all official letters and notices from the government will be sent.
Can Be Rented or Owned: You can use a rented property or a property you own as the registered office.
Timing: You don't need to have this address on day one of the process. However, you must have it before you apply for registration, and the company must have it within 30 days of being officially formed.
Meeting these foundational requirements is the first step in the registration process for a foreign subsidiary in India.