Indian Subsidiary Company Registration Process

A subsidiary company is a company in which the parent company (based either in India or abroad) holds a majority stake (more than 50% of the shareholding). Setting up a subsidiary in India allows foreign companies to tap into the Indian market while maintaining legal independence.

Step 1: Choose the Type of Company

In India, a subsidiary can be set up as a Private Limited Company or a Public Limited Company. For most businesses, the Private Limited Company is preferred.

Step 2: Obtain Digital Signature Certificate (DSC)

To initiate the registration process, the Director(s) of the subsidiary company must obtain a Digital Signature Certificate (DSC). This is necessary for signing the e-forms and submitting the documents online.

Step 3: Apply for Director Identification Number (DIN)

Each of the proposed directors of the subsidiary needs to apply for a Director Identification Number (DIN), if they don’t have one already.

Step 4: Choose and Reserve the Company Name (SPICe+ Part A)

The proposed name of the subsidiary company must be unique and should not be similar to any existing company or trademark in India.

Step 5: Prepare the Memorandum and Articles of Association (MOA & AOA)

MOA (Memorandum of Association) outlines the company’s objectives, scope, and capital structure.
AOA (Articles of Association) defines the internal governance of the company, such as rights, duties, and responsibilities of the directors and shareholders.

Step 6: File the Incorporation Documents with the Registrar of Companies (ROC)

Once the name is approved, and the MOA & AOA are ready, the next step is to file the incorporation application with the Registrar of Companies (ROC).

Step 7: Obtain Certificate of Incorporation (COI)

Upon successful submission of the documents, the Registrar of Companies (ROC) will issue a Certificate of Incorporation (COI) along with a Corporate Identification Number (CIN), which legally establishes the subsidiary company.

Step 8: Apply for PAN & TAN

PAN (Permanent Account Number) is required for tax purposes.
TAN (Tax Deduction and Collection Account Number) is required for TDS (Tax Deducted at Source) compliance.

Step 9: Open a Bank Account

After obtaining the Certificate of Incorporation and PAN, you can open a current bank account in the name of the subsidiary company.

Step 10: GST Registration (If Applicable)

If the subsidiary’s business turnover exceeds ₹20 lakh (₹10 lakh for special category states) or if it deals in interstate trade, then GST registration is mandatory.

Step 11: Business Licenses & Compliances

Depending on the nature of the business, additional licenses or permits might be required:

Time & Cost for Registration

Time Required: The entire registration process typically takes around 15 to 30 days, depending on document readiness and government processing time.

Cost: The cost can vary depending on the authorized capital, professional fees, government fees, and stamp duty. Generally, the cost ranges from ₹10,000 to ₹50,000.

Post-Registration for Subsidiary Company

Annual Filings: You must file Annual Return (MGT-7) and Financial Statements (AOC-4) with the Registrar of Companies (ROC).

Income Tax Return Filing for the subsidiary, as per Indian tax regulations.

GST Returns (If registered for GST).

Maintaining Books of Accounts and Statutory Audits if turnover exceeds certain limits.

1. Limited Liability Protection

01 Subsidiary companies are treated as separate legal entities from their parent company.

02 The parent company's liability is limited to the capital invested in the subsidiary, offering protection to the parent company's assets.

03 Personal assets of the parent company’s directors or shareholders are protected from business liabilities in India.

2. Direct Access to the Indian Market

01 A subsidiary company can directly tap into the Indian market, which has a large consumer base (over 1.4 billion people) and a growing middle class.

02 It allows the parent company to expand its presence and sales in India without relying on intermediaries.

03 It also opens the door to Indian government tenders and business contracts that require the company to be registered in India.

3. Easier Fundraising & Investment Opportunities

01 Subsidiaries in India can raise funds from Indian banks, investors, or venture capitalists more easily.

02 They are also eligible for various government incentives and schemes, such as those offered for Make in India, Startup India, and MSME initiatives.

03 Indian financial institutions may offer more favorable loan terms to a locally registered entity.

4. Brand Recognition & Credibility

01 Having a subsidiary in India improves the brand image and credibility of the parent company.

02 It signals a commitment to the Indian market, making the company more trusted by local customers, suppliers, and business partners.

03 Local presence boosts customer confidence and helps to develop a stronger relationship with Indian consumers.

5. Tax Benefits and Incentives

01 Indian subsidiaries are eligible for various tax benefits such as deductions for R&D, depreciation benefits, and investment incentives.

02 India offers several tax treaties with foreign countries, which may help to avoid double taxation.

03 The tax rate on subsidiaries is generally competitive, and subsidiaries can enjoy benefits like lower rates on dividends and tax exemptions under certain conditions (e.g., for setting up in Special Economic Zones - SEZs).

6. Full Control Over Operations

01 The parent company can maintain full control over the subsidiary, as it typically owns more than 50% of the shares.

02 This allows for unified management, ensuring the subsidiary operates in line with the parent company’s business strategy and objectives.

03 Unlike joint ventures, subsidiaries are fully owned and managed by the parent company, giving them autonomy in decision-making.

7. Ability to Enter into Contracts

01 An Indian subsidiary can enter into contracts (such as supply contracts, distribution agreements, joint ventures) in its own name.

02 It can also sue or be sued as an independent entity, which gives it a legal standing in India that a branch office or representative office wouldn’t have.

03 It also provides the ability to own property, such as real estate, and conduct other corporate activities.

8. Easier Transfer of Technology & Intellectual Property (IP)

01 A subsidiary company makes it easier to transfer technology and intellectual property (IP) from the parent company to the Indian market, as the subsidiary can legally own and protect IP in India.

02 The subsidiary can sign contracts for technology transfer, licensing agreements, and IP rights management in India.

9. Opportunity for Hiring Local Talent

01 Subsidiary companies are allowed to hire local talent more easily.

02 It provides access to India’s skilled workforce, which can be an advantage in sectors like IT, manufacturing, and services.

03 Hiring local employees helps the company adapt to the Indian market and understand local consumer behavior better.

10. Simplified Legal & Regulatory Compliance

01 A subsidiary company is governed by the Companies Act, 2013, which is more straightforward compared to the legal complexity of a foreign company operating without incorporation.

02 It allows for better compliance with Indian laws (e.g., taxation, employment regulations, labour laws, and foreign exchange regulations).

11. Perpetual Succession

01 A subsidiary has perpetual succession, meaning that its existence is not affected by changes in ownership, the death of a director, or any other event that affects the parent company.

02 This gives the subsidiary stability and allows the business to continue operations even if the parent company undergoes changes.

12. Better Business Environment in India

01 India is known for its business-friendly policies, such as ease of doing business reforms and increasing support for foreign direct investment (FDI).

02 The government provides several initiatives like Make in India, Startup India, and Atmanirbhar Bharat, making it an ideal time for foreign businesses to set up subsidiaries.

Conclusion

Registering a subsidiary company in India provides your foreign company with legal status, limited liability, and access to Indian markets. The process, while straightforward, involves legal documentation, filings, and some compliance, which can be easily managed with the help of a professional.

FAQs

What is an Indian Subsidiary Company?

An Indian subsidiary company is a locally registered business entity that is controlled and majority-owned by a foreign parent company. It operates as a separate legal entity, subject to Indian laws and regulations.

What are the Key Steps in Registering an Indian Subsidiary?

The key steps include selecting a unique name, obtaining Director Identification Numbers (DIN) and Digital Signature Certificates (DSC), filing incorporation documents, and ensuring compliance with regulatory requirements.

Is There a Minimum Capital Requirement for Indian Subsidiary Registration?

No, India does not impose a minimum capital requirement for the registration of subsidiary companies, providing flexibility for businesses to determine their capital structure.

Can a Foreign Company Hold 100% Ownership in an Indian Subsidiary?

Yes, a foreign company can hold 100% ownership in an Indian subsidiary. Alternatively, a combination of two foreign nationals can also be shareholders, and it is not mandatory to have an Indian resident as a shareholder.

What Compliance Regulations Apply to Indian Subsidiary Companies?

Indian subsidiary companies must comply with various regulations, including the Companies Act, 2013, Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) compliances, and the Income Tax Act, 1961.

Are There Concessional Tax Rates for Specific Sectors in India?

Yes, specific sectors such as oil exploration, air transportation, and shipping businesses may benefit from concessional tax rates in India.

What Documents are Required for Annual Compliance Filing?

Annual compliance filing typically requires documents such as financial statements, auditor reports, and other relevant records. The specific requirements may vary based on the regulatory framework.

Can Registering a Subsidiary in India be Done Entirely Online?

Yes, the registration process for an Indian subsidiary can be conducted online. This includes obtaining digital signatures, filing incorporation documents, and interacting with regulatory authorities through online portals.

Is It Necessary for the Subsidiary to Have an Indian Resident Director?

Yes, as per the Companies Act, 2013, a minimum of two directors is mandatory for a subsidiary company, and at least one director must be an Indian resident. Nominee directorship services can be utilized if needed.

Start Your Journey with Us Today!

Get in touch with our consultants for a free consultation and take the next step towards success.

Start Now →

Company Registration

Tax & Govt. Registrations

IPR & Other