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.
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An Overview of 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.
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.
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.
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.
Eligibility Criteria
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.
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.
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).
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 do not 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.
Documents Required
Registration Process
Step 1: Obtain DSC and DIN
Before you can file any online forms, the proposed directors need two things:
Step 2: Reserve Your Company Name (RUN Service)
You need a unique name for your subsidiary. The name should not be the same or too similar to any existing company or trademark in India.
Step 3: Draft MoA and AoA
These two documents are the constitution of your company.
Step 4: File the Integrated SPICe+ Form
The SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a single, integrated web form used for company incorporation in India, streamlining multiple processes into one application to make the registration faster and more efficient.
Step 5: Get Your Certificate of Incorporation (COI)
Once the MCA officials check and approve your SPICe+ form and all the documents, they will issue the Certificate of Incorporation .
Step 6: Post-Incorporation Formalities
Once the company is registered, several crucial post-incorporation steps must be completed to ensure full compliance.
Fees & Charges
| Fee Component | Amount |
|---|---|
| Registration Fee | For filing the SPICe+ form in companies with an authorized capital of up to ₹15 lakhs (approx. $18,000). This fee is often waived to encourage new businesses. |
| Name Reservation (RUN) | A small fee of ₹1,000 for reserving the company name. |
| Stamp Duty | This is a state tax paid on the MoA and AoA. The amount varies from state to state. It depends on the authorized capital of the company. |
| PAN and TAN Application | The fee for applying for PAN and TAN is ₹143. |
| Director Identification Number (DIN) and Digital Signature Certificate (DSC) | DIN application is now part of the SPICe+ form. The cost of a DSC can range from ₹1,000 to ₹2,500 per director and is valid for two to three years. |
| DIN application is now part of the SPICe+ form. | Contact for pricing |
| The cost of a DSC can range from ₹1,000 to ₹2,500 per director and is valid for two to three years. | Contact for pricing |
| Expert Services | Professional fees cover services like drafting documents (MoA, AoA, resolutions), filing forms correctly, providing advice, and coordinating with government departments. |
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