Foreign Subsidiary Company Registration in India

India continues to attract the global investors as one of the most promising emerging markets. For foreign businesses seeking to establish operations in India, forming a Foreign Subsidiary Company is the most structured and legally compliant route under the Companies Act, 2013.

This guide explains everything you need to know, from eligibility and documentation to FDI compliance, in line with the latest procedures from the Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and Foreign Exchange Management Act (FEMA).

What is a Foreign Subsidiary Company?

A Foreign Subsidiary Company is an Indian company incorporated under the Companies Act, 2013, in which a foreign company:

• Holds more than 50% of the share capital, or
• Controls the composition of the Board of Directors.

A subsidiary incorporated in India is treated as a domestic company for taxation and compliance purposes, though it remains controlled by its foreign parent.

Types of Subsidiaries

• Wholly Owned Subsidiary (WOS): 100% shares held by the foreign parent (permitted only in sectors allowing 100% FDI under the Automatic Route).
• Partly Owned Subsidiary: The foreign parent holds more than 50% but less than 100% of shares.

Key Benefits of Setting Up a Foreign Subsidiary in India

1. Full Ownership & Control:

Where 100% FDI is allowed under the automatic route, no prior government approval is required.

2. Separate Legal Entity & Limited Liability:

The subsidiary is a separate Indian legal person. Liability of the parent company is limited to its shareholding.

3. Access to the Indian Market:

Direct access to the one of the world’s fastest-growing consumer bases.

4. Tax Benefits & DTAA Relief:

India’s Double Taxation Avoidance Agreements (DTAA) help minimize double taxation.

5. Ease of Profit Repatriation:

Dividends and royalties can be repatriated under FEMA guidelines.

Eligibility & Basic Requirements

• Directors: Minimum two directors, one of whom must be a resident in India, i.e., has stayed in India for at least 182 days during the previous calendar year (as per Section 149(3) of the Companies Act, 2013).
• Shareholders: Minimum two shareholders (individuals or corporate entities). The foreign parent can be one.
• Registered Office: Must have a registered office in India. Proof such as a utility bill, electricity bill or rent agreement and NOC from the property owner is required.
• Capital: No minimum paid-up capital requirement under the Companies Act. However, FDI valuation and pricing norms apply under FEMA.

Step-by-Step Registration Process

Step 1: Obtain Digital Signatures (DSC)

All proposed directors must obtain Digital Signature Certificates (DSC) to sign e-forms.

Step 2: Apply for the Director Identification Number (DIN)

Directors must have a DIN, applied through the SPICe+ Form on the MCA portal.

Step 3: Name Reservation

Use SPICe+ Part A (or RUN) to reserve your company name. The name should align with your business and end with “Private Limited” or “Limited.”

Step 4: Draft MOA and AOA

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA).

Step 5: File SPICe+ Part B with Documents

Submit the incorporation form (INC-32) with: -

• MOA & AOA
• Proof of registered office
• ID/address proofs of directors and shareholders
• Board resolution from the foreign parent company
• Apostilled/Consularised documents of foreign entities

Step 6: Certificate of Incorporation (COI)

Upon approval, MCA issues the Certificate of Incorporation (CIN). PAN & TAN are auto-generated.

Step 7: FDI Reporting to RBI

Once shares are allotted, file Form FC-GPR through RBI’s FIRMS/SMF portal within 30 days of allotment.

Documents Required

For the Foreign Parent Company:

• Certificate of Incorporation (notarised and apostilled)
• MOA and AOA
• Board Resolution approving investment in the Indian subsidiary

For Directors and Shareholders:

• Passport (mandatory for foreign nationals)
• Address proof (utility bill or bank statement)
• Passport-size photograph

For Registered Office:

• Recent electricity/water bill (within 2 months)
• Rent agreement and NOC (if rented)

Post-Incorporation Compliances

• Appointment of Auditor: Within the duration of 30 days of incorporation.
• First Board Meeting: Within 30 days.
• Issue of Share Certificates: Within 60 days.
• File FC-GPR: Within 30 days of share allotment.
• Annual Filings:
• Form AOC-4 – Financial Statements
• Form MGT-7 – Annual Return
• FLA Return: File annual Foreign Liabilities & Assets (FLA) return with RBI by 15 July each year (extended to 31 July 2025 for FY 2024–25).

Taxation of Foreign Subsidiaries

A foreign subsidiary is treated as a domestic company for taxation purposes.

• Corporate Tax Rate:
• 22% (plus surcharge & cess) under normal regime.
• 15% (plus surcharge & cess) for new manufacturing companies under Section 115BAB.

Tax rates are subject to change based on the Union Budget; always confirm the latest rates before filing.

FDI Routes in India

• Automatic Route: No prior government approval required (e.g., IT, manufacturing, consulting).
• Government Route: Prior approval needed for sensitive sectors like defence, telecom or media.

Conclusion

Establishing a foreign subsidiary in India allows global companies to tap into a vibrant, high-growth market with full ownership (in eligible sectors) and a secure legal framework under Indian law. By following the official MCA and RBI procedures, businesses can ensure smooth incorporation, compliance and operation.

Disclaimer:

This blog is intended for the general informational purposes only and reflects laws and procedures as of November 2025. Regulatory provisions, FDI caps and tax rates are subject to periodic changes. For case-specific advice, please consult a chartered accountant, company secretary or legal professional or refer directly to official sources such as the Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT).