How to Register a Subsidiary of a Foreign Company in India (2026 Complete Guide)

What is a Subsidiary of a Foreign Company in India?

A subsidiary of a foreign company in India is an Indian private limited company where the majority of shares are owned by a foreign parent company.

In most sectors, India allows 100% foreign ownership under the automatic FDI route, which means no government approval is required.

Foreign companies commonly use Indian subsidiaries for:

• software development centers
• back-office operations
• engineering and R&D teams
• manufacturing units
• Indian sales and distribution

The subsidiary is treated as a separate legal entity under Indian law, even though it is owned by the foreign parent company.

Key Requirements to Register a Foreign Subsidiary in India

To incorporate a subsidiary in India, you must meet the following requirements.

Most foreign companies structure it as:

• Shareholder 1: Foreign parent company (99.9%)
• Shareholder 2: Nominee director or founder (0.1%)

This is standard practice and fully compliant with Indian law.

Why Foreign Companies Choose a Subsidiary Instead of Branch Offices

Foreign businesses often ask whether they should open a branch office, liaison office, or subsidiary.

In practice, the subsidiary structure is preferred.

Subsidiary Company

✔ Can conduct full commercial operations
✔ Limited liability
✔ Eligible for 100% foreign ownership
✔ Easier hiring and contracting

Branch Office

✖ Limited business activities
✖ Higher regulatory scrutiny
✖ Approval required from RBI

Liaison Office

✖ Cannot generate revenue
✖ Only allowed for market research or representation

For 99% of foreign companies entering India, a private limited subsidiary is the best option.

Step-by-Step Process to Register a Subsidiary of a Foreign Company in India

The registration process is largely online and usually takes 3–5 weeks if documents are prepared correctly.

Step 1: Prepare the Foreign Parent Company Documents

Documents required from the parent company:

• Certificate of Incorporation of the foreign company
• Board resolution approving the Indian subsidiary (we prepare this)
• Passport copies of directors
• Proof of address of shareholders

Most foreign documents must be notarised and apostilled under the Hague Convention.

Step 2: Appoint Directors

An Indian subsidiary must have at least two directors.

At least one director must qualify as a resident director, meaning they stayed in India for 120 days or more during the financial year.

Foreign companies often appoint:

• one founder or executive director
• one resident nominee director

Resident director services are commonly used by foreign companies during the initial setup stage.

Step 3: Obtain Digital Signature Certificates (DSC)

All directors must obtain Digital Signature Certificates.

These are used to sign electronic filings with the Ministry of Corporate Affairs (MCA).

The process is fully online and usually completed through video verification.

Step 4: Reserve the Company Name

The next step is to reserve the name of the Indian subsidiary.

The application is submitted through the SPICe+ portal of the Ministry of Corporate Affairs.

If the name is related to the foreign parent company, approval is usually straightforward.

Example:

ABC Technologies Singapore Pte Ltd
→ ABC Technologies India Private Limited

Step 5: File Incorporation Forms with MCA

Once the name is approved, incorporation documents are filed with MCA.

These include:

• SPICe+ incorporation form
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• director identification details

After approval, the government issues:

• Certificate of Incorporation
• PAN (tax identification number)
• TAN (tax deduction number)

This typically takes 7–10 working days.

Step 6: Open the Bank Account

After incorporation, the company must open a current account with an Indian bank.

Popular banks used by foreign subsidiaries include:

• HDFC Bank
• ICICI Bank
• HSBC India
• Standard Chartered

The bank account is required to receive the initial share capital investment.

Step 7: Transfer Share Capital

The foreign parent company sends the initial capital through an international wire transfer.

Once the funds arrive in India, the bank issues a document called:

Foreign Inward Remittance Certificate (FIRC)

This confirms that foreign investment has been received.

Step 8: FEMA Compliance (FC-GPR Filing)

India regulates foreign investment under FEMA (Foreign Exchange Management Act).

After receiving the investment, the company must report the share issuance to the Reserve Bank of India (RBI).

This is done through Form FC-GPR.

Important rule:

The FC-GPR must be filed within 30 days of share allotment.

Missing this deadline can lead to penalties.

Taxation of Foreign Subsidiaries in India

Once operational, the Indian subsidiary becomes a tax resident company in India.

Corporate Tax

New manufacturing and service companies typically face an effective tax rate of approximately 25% including surcharge and cess.

GST

If the Indian subsidiary provides services to the foreign parent company, those services are generally treated as export of services.

Exports are zero-rated under GST, meaning no GST is payable.

Transfer Pricing

Transactions between the foreign parent and the Indian subsidiary must follow arm’s-length pricing rules.

Companies must maintain transfer pricing documentation to comply with Indian tax laws.

Typical Timeline to Register a Foreign Subsidiary in India

Most foreign subsidiaries become operational within 4–6 weeks.

Case Example: US Technology Company Setting Up in India

A US SaaS company recently engaged our firm to establish an Indian subsidiary for a development center.

The company wanted to hire software engineers and support staff in India.

The process involved:

• preparing apostilled US documents
• registering the Indian subsidiary
• opening a bank account
• completing FEMA compliance

The incorporation was completed in 18 days, and the company hired its first employees within one month.