Indian Subsidiary Registration — Foreign Parent Company
Establish your India operations with full compliance under Companies Act 2013, FEMA 1999, and FDI Policy. TaxClue handles incorporation, FEMA reporting, FC-GPR filing, transfer pricing setup, and ongoing compliance. Parent company need not visit India.
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What You Need to Know
An Indian subsidiary is a private limited company incorporated in India where a foreign company holds more than 50% of total share capital (Section 2(87), Companies Act 2013). It is the most common vehicle for foreign companies to establish operations in India.
The incorporation follows the standard SPICe+ route but requires additional FEMA/FDI compliance — sectoral caps verification, entry route check (automatic vs government), share pricing at FMV, foreign director KYC, AD Bank reporting, and FC-GPR filing with RBI.
TaxClue manages the entire process — from FDI feasibility assessment and incorporation to FEMA compliance, FC-GPR filing, and ongoing transfer pricing advisory.
What is an Indian Subsidiary?
Under Section 2(87) of the Companies Act 2013, a company is a subsidiary if another company (holding/parent) controls its Board or holds more than 50% of total share capital.
A foreign company under Section 2(42) is a company incorporated outside India with a place of business in India.
Key characteristics:
- Incorporated as a Private Limited Company under Companies Act 2013
- Foreign parent holds >50% equity
- Separate legal entity — distinct from parent company
- Limited liability — parent's exposure limited to invested capital
- Must comply with FEMA 1999, FDI Policy, NDI Rules 2019, RBI directions
- At least 1 director must be Indian resident (≥120 days)
- Not eligible for small company exemption under Rule 9B regardless of financial metrics
Why Register an Indian Subsidiary?
Market Access
Legal presence to operate, sell, and hire in India.
100% FDI
Automatic route in most sectors — IT, e-commerce, manufacturing, services.
Limited Liability
Parent's exposure limited to invested capital only.
Tax Efficiency
22% corporate tax (115BAA); 15% for new manufacturing (115BAB); DTAA benefits.
Profit Repatriation
Dividends to parent (subject to TDS and DTAA rate).
Local Contracts
Bid for govt tenders, sign local contracts, hire employees.
IP Protection
Separate entity for licensing IP from parent company.
ESOP for India Team
Issue stock options to Indian employees.
Benefits of Indian Subsidiary
| Benefit | Description |
|---|---|
| Separate Legal Entity | Fully independent from parent company |
| 100% FDI (Most Sectors) | Automatic route — no government approval needed |
| Limited Liability | Parent's risk capped at investment amount |
| Tax Optimisation | 22%/15% corporate tax; DTAA benefits available |
| Profit Repatriation | Dividends to parent (TDS + DTAA rate) |
| Local Operations | Hire, contract, sell, bid for tenders in India |
| IP Licensing | License parent's IP to subsidiary |
| ESOP for India Team | Issue stock options to Indian employees |
Is This Right For You?
Foreign Companies
Entering India for the first time.
US/UK/EU Tech Companies
Setting up India development centres.
Global Manufacturers
Establishing India production facilities.
E-commerce/SaaS Companies
Indian customers needing local entity for compliance.
Consulting/Services Firms
Multinational firms with India operations.
Foreign Investment Funds
SPVs for India-focused investments.
Eligibility Criteria
| Requirement | Details |
|---|---|
| Parent Company | Any foreign company or body corporate |
| Indian Directors | At least 1 director resident in India (≥120 days) |
| Foreign Directors | DSC and DIN required; passport + overseas address proof |
| FDI Route | Verify sectoral cap and entry route (automatic vs govt approval) |
| Prohibited Sectors | Lottery, gambling, chit funds, certain real estate, tobacco manufacturing |
| Capital | No statutory minimum; FEMA requires shares at FMV |
| Registered Office | Must be in India |
| Small Company | Subsidiaries NOT eligible for small company exemption (Rule 9B) |
Documents You'll Need
Certificate of Incorp
Apostilled/notarised
Board Resolution
Authorising subsidiary
Registered Address
Parent company address
Passport
All pages (apostilled)
Overseas Proof
Apostilled address
PAN / Form 49A
PAN application
DSC + Photo
Indian CA-issued DSC
PAN + Aadhaar
Mandatory
Address Proof
Standard KYC
DSC + Photo
Class-3 DSC
Rent Agreement
Or sale deed
NOC
From landlord
Utility Bill
< 2 months old
Prepared by TaxClue
FDI feasibility note, share valuation report (FMV), e-MOA/AOA with FDI-compliant objects, KYC of foreign subscribers, FEMA documentation.
Step-by-Step Process
FDI Feasibility Assessment
Verify sector, FDI caps, entry route (automatic/govt), prohibited activities.
Obtain DSCs
For all directors (Indian + foreign). Foreign DSCs via Indian certifying authorities.
Reserve Name
SPICe+ Part A on MCA portal.
Draft MOA/AOA + Valuation
FDI-compliant objects. Share valuation at FMV per FEMA/RBI norms.
File SPICe+ Part B
Incorporation form with all director/shareholder details including foreign entity KYC.
Certificate of Incorporation
CIN, PAN, TAN issued.
Open Bank Account
With Authorised Dealer (AD) Bank for foreign remittances.
Receive FDI Capital
Parent remits capital at FMV. Bank issues FIRC (Foreign Inward Remittance Certificate).
File FC-GPR with RBI
Within 30 days of share allotment via AD Bank on FIRMS portal.
Post-Incorp Compliance ✅
INC-20A, auditor, annual compliance, FLA Return, transfer pricing.
FEMA CRITICAL — Pricing & Reporting
Shares must be issued at or above Fair Market Value (FMV). FMV by SEBI-registered Merchant Banker or CA (DCF method). FC-GPR within 30 days of allotment. FLA Return by 15 July annually. Non-compliance → FEMA compounding penalties.
Turnaround Time
| Step | Timeline |
|---|---|
| FDI feasibility & documentation | 3–5 days |
| DSC (foreign directors) | 3–7 days |
| Name reservation | 2–4 days |
| MOA/AOA + valuation | 3–5 days |
| SPICe+ filing & CoI | 5–10 days |
| Bank account + FDI receipt + FC-GPR | 15–30 days |
| Total | 15–30 working days |
Government Fees & Charges
| Component | Amount |
|---|---|
| DSC (per director) | ₹1,500–₹2,500 |
| Name reservation | ₹1,000 |
| SPICe+ (MCA fees) | Based on authorised capital |
| Stamp duty | Varies by state |
| PAN + TAN | ₹196 |
| FC-GPR filing | No govt fee (via AD Bank on FIRMS portal) |
Post-Registration Compliance
| Compliance | Deadline | Details |
|---|---|---|
| INC-20A | Within 180 days | Commencement of Business |
| FC-GPR (RBI) | Within 30 days of allotment | Via AD Bank on FIRMS portal |
| FLA Return (RBI) | By 15 July annually | Foreign Liabilities & Assets |
| Annual Return (MGT-7) | 60 days after AGM | Standard Companies Act |
| Financial Statements (AOC-4) | 30 days after AGM | Audited financials |
| Transfer Pricing (Form 3CEB) | By 31 October | If international transactions |
| Board Meetings | Min 4/year | — |
| AGM | Within 6 months of FY-end | — |
| Demat (Rule 9B) | By 30 June 2025 | Subsidiaries NOT exempt |
Subsidiaries NOT Eligible for Small Company Exemption
Under Rule 9B, subsidiaries must comply with mandatory dematerialisation regardless of their paid-up capital or turnover. No exemption available.
Penalties for Non-Compliance
| Default | Penalty |
|---|---|
| Non-filing FC-GPR | FEMA compounding penalties (can be substantial) |
| Late FLA Return | RBI notice + penalty |
| Transfer pricing non-compliance | TP adjustment + penalty under Sec 271G (2% of transaction value) |
| Non-filing INC-20A | ₹50K on company; ₹1K/day. Strike-off risk. |
| Late annual filings | ₹100/day (no cap) |
| Rule 9B non-compliance | ₹10K + ₹1K/day (Section 450) |
Why Choose TaxClue?
FDI Feasibility Experts
Sector, cap, route analysis for every industry.
FEMA/RBI Specialists
FC-GPR, FLA, AD Bank coordination, FIRMS portal.
Foreign Director Support
DSC, DIN, PAN coordination for non-residents.
Transfer Pricing Setup
Framework for all international transactions (Section 92).
100% Remote
Parent company need not visit India — everything online.
5,000+ Businesses
4.9/5 Google Rating. Trusted by multinationals.
TaxClue's Process
FDI Feasibility
Sector, caps, route analysis. Confirm permissibility.
Documents & DSC
Collect parent company + director docs. Arrange foreign DSCs.
Name + MOA/AOA + Valuation
Reserve name. Draft FDI-compliant documents. FMV valuation.
SPICe+ + CoI
File incorporation. Receive Certificate with CIN, PAN, TAN.
Bank + FDI + FC-GPR
Open AD Bank account. Receive capital. File FC-GPR within 30 days.
Post-Incorp Compliance ✅
INC-20A, auditor, FLA Return, transfer pricing, demat, annual filings.
What Our Clients Say
Indian Subsidiary Across Industries
Comparison with Alternatives
| Parameter | Subsidiary (Pvt Ltd) ✅ | Branch Office | Liaison Office |
|---|---|---|---|
| Legal Entity | Separate (Indian company) | Extension of foreign co | Extension |
| Activities | Full business operations | Limited (RBI approval) | Only liaison — no revenue |
| Revenue | ✓ Can earn | Limited | ✗ Cannot earn |
| FDI Compliance | Yes (automatic route) | RBI approval needed | RBI approval needed |
| Taxation | Indian corp tax (22%/15%) | Tax on India income | Generally not taxable |
| Permanence | Perpetual | Temporary (renewable) | 3 years (renewable) |
| Best For | Full India operations | Project-based work | Market research only |
Frequently Asked Questions
Amendments (2024–2026)
- 2020Consolidated FDI Policy; NDI Rules 2019 in force
- Oct 2023Rule 9B — subsidiaries must comply with demat (no small company exemption)
- Jul 2024Budget 2024: Corp tax unchanged; LTCG on unlisted shares 12.5%
- Feb 2025Budget 2025: 115BAA/BAB continue. Rule 9B extended to 30 June 2025
- 2026FLA Return deadline: 15 July. FIRMS portal for FC-GPR continues.
Real Clients. Real Results.
US SaaS Company — Bengaluru
Set up India development subsidiary. 100% FDI, automatic route, IT sector. Incorporated in 18 days. FC-GPR filed within 25 days of capital receipt.
UK Manufacturing Firm — Pune
India manufacturing unit. TaxClue handled FDI compliance, Section 115BAB eligibility assessment, and transfer pricing framework setup.
Singapore Investment Fund — Mumbai
SPV subsidiary for India real estate investment under permitted categories. Full FEMA structuring and ongoing compliance management.
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