Setting Up an Indian Subsidiary of a Foreign Company
Incorporate a wholly owned subsidiary or joint venture in India with FDI and FEMA steps handled alongside company law formalities.
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An Indian subsidiary is a company incorporated in India under the Companies Act, 2013 in which a foreign company or foreign investors hold the shares, either wholly or together with an Indian partner. Overseas businesses use it to sell, serve customers, build teams or manufacture in India through a separate legal entity. Foreign investment must follow the FDI policy and FEMA rules, which set the permitted route, sector conditions and reporting duties, and at least one director must be resident in India. Our team handles incorporation, share allotment documentation and the RBI reporting that follows the inflow of funds, so that company law and FEMA are both satisfied.
Who provides this service: our team of Company Secretaries and compliance specialists.
Who Needs Indian Subsidiary of Foreign Company?
- Foreign companies that want a locally incorporated entity to sell, serve or manufacture in India
- Overseas groups setting up development or support centres in India
- Foreign investors forming a joint venture with an Indian partner
- Foreign founders who want to own an Indian operating company directly
Key Benefits
- A sector review against the FDI policy before you commit, so you know whether the automatic or approval route applies
- Incorporation planned around foreign subscribers, including document legalisation and a resident director arrangement
- Share issue documents reviewed against FEMA pricing and timing rules before any money moves
- Coordination with your Indian bank on inward remittance records and the foreign investment reporting that follows
- A compliance calendar covering ROC, tax, transfer pricing and annual foreign investment returns
- One team covering company law, FEMA and tax angles instead of separate advisors who may not coordinate
How It Works
Assess sector and route
We check your business activity against the consolidated FDI policy to see whether foreign investment is allowed, whether it falls under the automatic or the government route, and which sector conditions apply.
Plan the structure
We settle shareholding, directors, name and the resident director, and prepare foreign subscribers and directors for the notarisation or apostille their documents need for MCA filing.
Incorporate the company
We obtain digital signatures and DIN, reserve the name and file the incorporation application on the MCA portal with the memorandum and articles, then collect the certificate, PAN and TAN.
Receive funds and issue shares
The foreign investor remits the subscription money through banking channels to the company account in India, and shares are issued within the permitted time at a price that meets FEMA valuation norms.
Report to the RBI
Through your Authorised Dealer bank we file the foreign investment reporting on the RBI portal, including the form for the share allotment, within the time the FEMA rules allow.
Set up ongoing compliance
We assist with GST, payroll, bank and tax registrations as the business needs, and build a calendar for ROC returns, the annual foreign liabilities and assets return and beneficial ownership declarations.
Documents Required
- Certificate of incorporation and constitutional documents of the foreign parent, notarised and apostilled or legalised as required
- Board resolution of the foreign parent approving the investment and naming an authorised signatory
- Passport and address proof of foreign directors and subscribers, with notarisation or apostille as required
- PAN, Aadhaar and address proof of the resident Indian director, with digital signature and DIN details
- Proof of the registered office in India: rent agreement or ownership paper, owner NOC and a recent utility bill
- Details of the ultimate beneficial owners of the foreign parent
- Valuation report supporting the share issue price, where required
- Bank advice or remittance certificate showing the inward funds and the remitter details
Timeline and Fees
Indicative timeline: Incorporation commonly takes a few weeks once the legalised foreign documents are ready, and that preparation can itself take time. RBI reporting follows share allotment, and timing depends on the Authorised Dealer bank and the authorities.
Professional fee: Our fee depends on the sector and FDI route, the number of foreign shareholders and directors, whether valuation and share issue documents are included and the scope of FEMA reporting. Government charges are paid at actuals. Contact our team for a written quote.
What Can Go Wrong if This Is Missed or Done Incorrectly
- Investing in a sector closed to foreign investment, or above a cap, breaches FEMA and can invite enforcement action
- Late or incorrect reporting of foreign investment to the RBI can require compounding and added cost
- Issuing shares below the permitted price or outside the permitted time creates FEMA problems that are hard to unwind
- Failing the resident director requirement can block incorporation or cause later default under company law
- Missed ROC and annual foreign investment returns lead to penalties and can slow later fundraising
Frequently Asked Questions
Can a foreign company fully own its Indian subsidiary?
In many sectors, yes, under the automatic route. In others the FDI policy sets a cap or requires government approval, and some sectors are closed to foreign investment altogether. The answer depends on your exact activity, so we map it to the current policy before incorporation and tell you which route and conditions apply.
Is a resident director compulsory for an Indian subsidiary?
Yes. Company law requires at least one director who has stayed in India for a total of not less than 182 days in the previous calendar year. Foreign nationals can serve as other directors, but they need a DIN and a digital signature. Many parents nominate a trusted local professional or a senior employee for the resident seat.
Should the subsidiary be a private limited or a public company?
Most foreign groups choose a private limited company for its lighter compliance and flexibility. A public company becomes relevant if you plan to raise money from many investors or list on an exchange. A private company needs at least two shareholders and two directors, and any nominee holding must be properly disclosed.
What reporting is needed after a foreign investor subscribes to shares?
When shares are allotted against foreign funds, the company must report the issue to the RBI through its Authorised Dealer bank on the RBI portal, using the form for fresh issue of shares (FC-GPR), within the time fixed by the FEMA rules. Delay can require compounding. Annual returns on foreign liabilities and assets follow.
Can a foreign company use a branch or liaison office instead of a subsidiary?
Yes, a foreign company can set up a branch, liaison or project office with the permissions the RBI framework requires, but these are extensions of the foreign company and are limited in what they may do. A subsidiary is a separate Indian company with its own liability. The right choice depends on what you intend to do in India.
Are there extra conditions for investors from neighbouring countries?
Investments where the investor or its beneficial owner is based in, or is a citizen of, a country sharing a land border with India have been subject to prior government approval under the FDI policy. Policy positions can change, so we confirm the current rule for your investor structure before any commitment is made.
Official Sources
Rules, forms and fees change. Check the current position on the official portal:
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Disclaimer: The information on this page is for general informational purposes only and does not constitute professional legal, tax or compliance advice. Requirements vary by situation. Please consult a qualified CA or CS for advice specific to your needs. Government fees and timelines are subject to change; verify with the relevant authority before proceeding.