What an Indian subsidiary is
An Indian subsidiary is an Indian company in which a foreign company holds more than half of the share capital or controls the board. When the parent holds all the shares, directly and through a nominee, it is called a wholly owned subsidiary.
In law it is an Indian company like any other. It is incorporated under the Companies Act, 2013, taxed as a domestic company, and can sign contracts, hire staff, invoice customers and own assets in its own name. The parent's liability is limited to the capital it puts in.
Most foreign parents choose a private limited company because it needs only two directors and two shareholders. A public company is possible, but it adds a third director, seven members and extra compliance (see public limited company).
Looking at the reverse route, an Indian business setting up abroad? See Singapore company registration and UAE company setup.
Subsidiary, branch or liaison office?
Choose a subsidiary if you want to earn revenue in India with a separate company. Choose an office only if you want to operate as the foreign company itself.
| Point | Indian subsidiary | Branch office | Liaison office |
|---|---|---|---|
| Legal status | Separate Indian company | Extension of the foreign company | Extension of the foreign company |
| Set up under | Companies Act and FEMA NDI Rules | FEMA regulations, approval through an AD bank | Same as a branch office |
| Can earn income in India | Yes, any activity the FDI rules allow | Only permitted activities | No |
| Parent's track record needed | No | Profit-making track record in the last five financial years, net worth of at least US$100,000 | Profit-making track record in the last three financial years, net worth of at least US$50,000 |
| Income tax | Domestic company rates | Foreign company rate | Should have no taxable income |
The office route is covered on our branch, liaison and project office page.
Check your FDI route first
Before you choose a name, confirm that your business activity is open to foreign investment and on which route. This decides whether you can incorporate and invest straight away or need government approval first.
The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 set out who may invest, in which sectors and up to what limit.
- Automatic route. Most sectors, including most manufacturing, IT and services, allow up to 100% foreign investment without prior approval. You invest and report afterwards.
- Government route. Some sectors need prior approval from the government, applied for on the Foreign Investment Facilitation Portal, and some have a cap on the foreign shareholding or conditions to meet.
- Prohibited sectors. A few activities, such as lottery, gambling and betting, chit funds, Nidhi companies, real estate business and the manufacture of tobacco cigarettes, are closed to foreign investment.
We map your activity to the sector entries and give you the route, the cap and any conditions in writing before you remit anything.
Investors connected to a land-border country
If the investing entity is from a country that shares a land border with India, or its beneficial owner is situated in or is a citizen of such a country, the investment needs government approval. This rule came in with Press Note 3 (2020 Series).
Press Note 2 (2026 Series), dated 15 March 2026, and the Non-debt Instruments Amendment Rules notified on 2 May 2026 refined it. Beneficial ownership is now tested under the Prevention of Money-laundering Act, 2002 framework, and some indirect holdings that do not need approval must still be reported. Send us the full ownership chain up to the ultimate owners and we will tell you which side of the line you fall on.
Requirements for an Indian subsidiary
A private limited subsidiary needs two directors, two shareholders, a registered office in India and a name the ROC approves. There is no minimum capital under company law, although some sectors carry their own capital conditions.
- Directors. At least two individuals, one of whom must stay in India for 182 days or more during the financial year (section 149(3), Companies Act, 2013). The resident director can be an Indian national or a foreign national living in India. Foreign directors need a DIN, which we obtain through SPICe+ for up to three directors.
- Shareholders. At least two. The parent usually holds all shares but one, and a second shareholder (often an individual or a group company) holds one share as the parent's nominee.
- Parent's approval. A board resolution of the parent approving the investment, naming its nominee and authorising a representative to sign.
- Registered office. An address in India with a recent utility bill and the owner's no-objection letter. A serviced office works if the paperwork is in order.
- Bank. A current account with an AD Category-I bank, which receives the share capital from abroad and does the KYC of the foreign investor.
Documents from the parent and the directors
Documents signed or issued abroad must be notarised and apostilled in countries that are part of the Apostille Convention, or consularised at the Indian mission in other countries.
| From | Documents |
|---|---|
| Foreign parent company | Certificate of incorporation, charter documents (memorandum and articles or equivalent), proof of registered address, board resolution for the investment, authority for the signatory and nominee |
| Foreign national directors and subscribers | Passport, proof of residential address, photograph, email and mobile number |
| Indian resident director | PAN, Aadhaar or another identity proof, address proof not older than two months, photograph |
| Registered office in India | Utility bill not older than two months, owner's no-objection letter, rent or lease agreement |
| Every director and signatory | Class 3 digital signature certificate (DSC) |
Name mismatches between passport, address proof and the parent's records are the most common reason for resubmission. We check every document against the SPICe+ fields before it goes for apostille.
The set-up process, step by step
Setting up runs in two tracks: company law (MCA) and foreign exchange (RBI through your bank). The order matters.
| Step | What happens | Deadline or note |
|---|---|---|
| 1. FDI route check | Sector, route, cap, land-border review, written advice | Before anything else |
| 2. Government approval (only if needed) | Application on the Foreign Investment Facilitation Portal | Only for government-route cases |
| 3. Documents and apostille | Parent and director documents notarised and apostilled or consularised | Arrange early; this usually sets the pace |
| 4. DSCs and name | DSCs for signatories; SPICe+ Part A name reservation | Name held for 20 days |
| 5. Incorporation | SPICe+ Part B with e-MoA, e-AoA, DINs, PAN, TAN | Certified by a professional |
| 6. Bank account and remittance | Current account opened; parent remits share capital through banking channels; bank issues the foreign inward remittance certificate and KYC | Keep the remittance date on record |
| 7. Share allotment | Board allots shares to the parent and nominee | Within 60 days of receiving the money, or refund within the next 15 days |
| 8. FC-GPR | Reported on the RBI FIRMS portal with the valuation certificate and bank KYC | Within 30 days of allotment |
| 9. Commencement | INC-20A declaration with proof of subscription money | Within 180 days of incorporation |
Subscriber shares taken at incorporation are issued at face value. Later allotments to the non-resident parent must be priced at or above fair value under the FEMA pricing rules, supported by a valuation report.
Fees for setting up an Indian subsidiary
We quote after the FDI route check, because the work depends on the sector, the number of foreign signatories and whether government approval is needed.
| Fee | Amount |
|---|---|
| Professional fee (Regikart) | On quote, in writing before we start |
| Name reservation, SPICe+ Part A | ₹1,000 |
| MCA incorporation fee, authorised capital up to ₹15,00,000 | Nil |
| MCA incorporation fee, above ₹15,00,000 | Charged by authorised capital; quoted before filing |
| DIN for up to three directors through SPICe+ | No separate fee |
| PAN / TAN | ₹66 / ₹65 |
| Stamp duty on e-MoA and e-AoA | Depends on the state and capital; quoted before filing |
| FC-GPR and FLA filings with the RBI | No government fee |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 22 September 2026.
Notary, apostille and courier charges abroad are paid in the parent's country and are not included.
Penalties (separate from fees). Late FEMA reporting attracts a late submission fee of ₹7,500 plus 0.025% of the amount involved for each year of delay, capped at the amount involved. Not filing INC-20A within 180 days attracts a penalty of ₹50,000 on the company and ₹1,000 a day per officer in default, up to ₹1,00,000.
FEMA reporting after set-up
A foreign-owned company reports its foreign investment to the RBI, through the FIRMS and FLAIR portals, on top of its MCA filings. None of these carries a government fee, but delays attract a late submission fee.
| Filing | When | Detail |
|---|---|---|
| Entity master registration | Before the first FC-GPR | The company registers on the RBI FIRMS portal |
| FC-GPR | Within 30 days of each allotment to a non-resident | Bank KYC, remittance proof, valuation certificate, company secretary's certificate |
| FLA return | By 15 July every year | Annual return on foreign liabilities and assets for the year ended 31 March |
| FC-TRS | Within 60 days of a share transfer between a resident and a non-resident, or of receipt or remittance of funds, whichever is earlier | See share transfer |
| Downstream investment | When the subsidiary itself invests in another Indian company | Reporting and conditions apply; see FDI filing |
Company law compliance every year
An Indian subsidiary can never be a small company, because section 2(85) excludes holding and subsidiary companies. It therefore follows the full compliance regime of a private company.
| Filing or duty | Due |
|---|---|
| Board meetings | At least four a year, with no more than 120 days between two meetings |
| AGM | Within six months of the financial year end (30 September); first AGM within nine months |
| AOC-4 (financial statements, with the statutory audit) | Within 30 days of the AGM |
| MGT-7 (full annual return, not MGT-7A) | Within 60 days of the AGM |
| DIR-3 KYC Web | Once every three financial years, by 30 June; directors already compliant are next due on 30 June 2028 |
| Income-tax return (ITR-6) | For FY 2025-26 under the Income-tax Act, 1961: 31 October 2026 for audit cases |
Late AOC-4 and MGT-7 filings carry an additional fee of ₹100 a day per form, with no cap. Our ROC compliance package and accounting service cover the year-round work.
How the subsidiary is taxed
The subsidiary is taxed as a domestic company, not at the foreign company rate that applies to a branch office.
- FY 2025-26 (AY 2026-27), Income-tax Act, 1961: 25% where turnover in FY 2023-24 did not exceed ₹400 crore, otherwise 30%, plus surcharge and 4% cess; or 22% under section 115BAA with a 10% surcharge and 4% cess if the company gives up specified deductions.
- Tax Year 2026-27 onwards, Income-tax Act, 2025: the 22% option continues under section 200.
Transactions with the parent. Payments between the subsidiary and its parent, such as service fees, royalties, cost recharges and loans, are international transactions with an associated enterprise. For FY 2025-26 they must be at arm's length under sections 92 to 92F of the Income-tax Act, 1961, with an accountant's report; from Tax Year 2026-27 the Income-tax Act, 2025 carries equivalent transfer pricing rules. Remittances to the parent may also need Form 15CA and 15CB. Apply for GST registration as soon as the business activity starts.
How we work with foreign parents
Regikart is a CA and CS firm with 250+ clients. Indian subsidiary work is led by our foreign investment team and reviewed by CA Ganpat Khemka.
- Route first, then filing. You get the FDI route, the cap and the document list for your country in writing before anything is signed.
- Both tracks in one place. MCA incorporation, bank coordination, FC-GPR, FLA and annual compliance.
- Remote by design. Documents are signed and apostilled in your country and shared by email; no director needs to visit India to incorporate.
- Offices in Kolkata (Head Office), Delhi and Bengaluru.
Related: branch, liaison and project office · FDI filing · FC-GPR filing · FLA return · private limited company