How to Register a Subsidiary in India

For a US, UK, or European company, registering a subsidiary in India is the most robust way to build a local presence. Unlike a Liaison Office (which can’t pull in revenue) or a Branch Office (taxed at a higher 40% rate), an Indian Subsidiary is a domestic entity. It enjoys lower tax rates, full commercial freedom, and the ability to repatriate profits back home.

This guide details the process to register a subsidiary in India, focusing on the specific hurdles global founders face.

1. Key Requirements for Foreign Entities

Before starting the subsidiary setup in India, you must satisfy these three legal pillars:

• Two Directors: At least one must be a Resident Director (stayed in India for 182+ days in the previous year).

  Pro-Tip: If you don’t have a local team yet, we provide Nominee Resident Director services to fulfill this requirement while you maintain 100% operational control.

• Two Shareholders: A Wholly Owned Subsidiary (WOS) can have 100% foreign ownership, but Indian law requires a minimum of two shareholders. Usually, the Parent Co holds 99.9% and a “Nominee” (another company officer) holds 0.1%.

• Registered Office: You must have a physical address in India. A virtual office is generally not sufficient for the final incorporation.

2. Subsidiary vs. Branch Office: Which is better?

Most Western entrepreneurs struggle with this choice. Here is why a Subsidiary usually wins:

3. Step-by-Step Registration Process

The process to register a subsidiary in India is now 100% digital through the MCA’s SPICe+ portal, but it requires “Legalization” of foreign documents.

1. Apostille & Notarization: This is the longest step. All documents signed in your home country (Board Resolutions, Passports) must be Apostilled (for Hague Convention countries like the US/UK) or Embassy-legalized. KYC documents like passport also should be appostiled and notarised.

2. Digital Signature (DSC): We obtain electronic signatures for your foreign directors.

3. Name Reservation: We check your global brand name against the Indian Trademark registry to ensure no conflicts.

4. Incorporation Filing: Submission of the MoA and AoA to the Registrar of Companies (ROC).

5. RBI Compliance (FC-GPR): Within 30 days of sending your initial capital to India, you must report the “Foreign Direct Investment” to the Reserve Bank of India. Missing this results in heavy compounding penalties.

4. Repatriation: How do I get my money out?

A common fear for US and European founders is that their capital will be “trapped.” India has a very clear, liberalized framework for moving money back:

• Dividends: Profits can be sent back to the Parent Co after paying corporate tax. India has Double Taxation Avoidance Agreements (DTAA) with the US, UK, and most of Europe, ensuring you aren’t taxed twice.

• Service Agreements: The Indian subsidiary can pay the Parent Co for “Management Services,” “Royalties,” or “Software Licensing,” provided these are at Arm’s Length (market rates).

• Share Buybacks: The company can buy back its shares from the parent to return surplus cash.

5. Timeline & Estimated Costs (2026)

• Timeline: 3 to 5 weeks. (Note: 2 weeks are usually spent just getting documents apostilled in your home country).

• Setup Cost: Expect to spend between $1,500 to $3,500 for a full setup, including Government fees, Stamp duty (which varies by state), and professional compliance for FEMA/RBI.

6. Things Founders Usually Miss (The “Gotchas”)

• Statutory Audit is Mandatory: Even if your Indian subsidiary has zero revenue in Year 1, you must appoint an auditor and file annual returns.

• Director Identification (DIN): Foreign directors do not need an Indian Visa to get a DIN, only a valid Passport.

• GST for Exports: If your Indian team is providing services to your US/UK entity, you are technically “Exporting.” You must register for GST to claim tax refunds.