Establishing an Indian Subsidiary: A Comprehensive Guide
Expanding your business into India presents vast growth opportunities, given its emerging economy, large consumer base, and investor-friendly policies. One of the most effective and strategic ways for foreign companies to enter the Indian market is by setting up an Indian subsidiary, which enables full operational control, local market presence, and seamless global integration. This structure ensures compliance with Indian corporate laws and tax regulations, facilitates resource optimization, builds brand credibility, and positions the company for long-term success in one of the world’s fastest-growing economies.
What is an Indian Subsidiary ?
An Indian subsidiary is a company incorporated under Indian law but majority-owned and controlled by a foreign parent company. This structure enables international businesses to legally operate in India while maintaining limited liability, a separate legal identity, and financial autonomy.
When is Establishing an Indian Subsidiary Beneficial ?
Setting up an Indian subsidiary is advantageous in several scenarios:
✔ Expanding into the Indian Market – Companies looking to tap into India’s diverse and growing consumer base.
✔ Lowering Operational Costs – Businesses aiming to reduce production, labor, and operational costs by leveraging India’s cost-effective resources.
✔ Enhancing Local Presence – Companies seeking legal and market credibility by having an India-registered entity.
✔ IT, Manufacturing, and Service Sector Growth – Tech firms, manufacturers, and service providers planning to expand in India’s booming industrial sectors.
✔ Foreign Direct Investment (FDI) Opportunities – Businesses looking to benefit from India’s FDI policies and government incentives.
Essential Documents for Indian Subsidiary Registration
To register an Indian subsidiary, the following documents are required:
For the Foreign Parent Company:
📌 Certificate of Incorporation – A certified copy of the parent company’s registration.
📌 Board Resolution – A resolution authorizing the formation of an Indian subsidiary.
📌 Memorandum & Articles of Association (MoA & AoA) – Company objectives and governance rules.
For Directors & Shareholders:
📌 Identity Proof – Passport copies for all foreign directors and shareholders.
📌 Address Proof – Recent utility bills, bank statements, or driver’s license.
📌 Photographs – Passport-sized photographs of all directors and members.
For the Indian Registered Office:
📌 Office Address Proof – Latest electricity bill, water bill, or rent agreement.
📌 No Objection Certificate (NOC) – From the property owner if the premises are rented.
Additional Documents:
📌 Director Identification Number (DIN) – Unique identification for Indian company directors.
📌 Digital Signature Certificate (DSC) – Electronic signature required for online filings.
📌 Permanent Account Number (PAN) & Tax Deduction Account Number (TAN) – Essential for tax registration and compliance.
Step-by-Step Process for Registering an Indian Subsidiary
Setting up an Indian subsidiary involves a structured process to ensure legal compliance and smooth operations:
1. Obtain Digital Signature Certificate (DSC)
✔ All directors must acquire DSC to digitally sign official documents.
2. Apply for Director Identification Number (DIN)
✔ Directors must obtain DIN by filing Form DIR-3 with the Ministry of Corporate Affairs (MCA).
3. Reserve Company Name
✔ Submit RUN (Reserve Unique Name) Form to the MCA for name approval.
✔ The name should be unique and relevant to the business activities.
4. Draft MoA & AoA
✔ Memorandum of Association (MoA) – Defines the company’s objectives and scope.
✔ Articles of Association (AoA) – Specifies the company’s management structure and operational rules.
5. Filing of Incorporation Application
✔ Submit SPICe+ (Simplified Proforma for Incorporating Company Electronically) along with all required documents.
6. Obtain Certificate of Incorporation
✔ After successful verification, the Registrar of Companies (RoC) issues the Certificate of Incorporation, legally establishing the subsidiary.
7. Post-Incorporation Compliance
✔ Apply for PAN & TAN – Required for taxation and financial transactions.
✔ Open a Corporate Bank Account – Necessary for business transactions in India.
✔ GST Registration (if applicable) – Required for companies engaged in goods and services trade.
Advantages of Setting Up an Indian Subsidiary
✔ Limited Liability – The parent company’s risk is limited to its shareholding in the subsidiary.
✔ Market Access & Brand Presence – Expanding into India provides direct access to one of the world’s largest markets.
✔ 100% Foreign Ownership (in Allowed Sectors) – Foreign companies can have full control in permitted business sectors.
✔ Tax Benefits & Incentives – Access to government incentives, tax exemptions, and FDI benefits.
✔ Operational Flexibility – Companies can engage in trading, manufacturing, IT services, and more without restrictions.
Why Choose VSB Consultants ?
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Frequently Asked Questions (FAQs)
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+1. What is an Indian subsidiary ?An Indian subsidiary is a company incorporated in India but owned and controlled by a foreign parent company.
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+2. How much capital is required to register an Indian subsidiary ?There is no minimum capital requirement, except in specific regulated sectors.
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+3. Can foreign nationals be directors of an Indian subsidiary ?Yes, foreign nationals can be directors, but at least one director must be an Indian resident.
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+4. How long does it take to register an Indian subsidiary ?Typically, the registration process takes 15-20 working days, subject to regulatory approvals.
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+5. What are the tax implications for an Indian subsidiary ?Subsidiaries are taxed as domestic companies, with corporate tax rates ranging from 15% to 30%, depending on the turnover and sector.