Setting up a subsidiary company in India is one of the most structured and scalable ways to enter the Indian market, whether you’re a foreign parent company expanding into India or an Indian holding company creating a new business arm.
By the end of this blog, you’ll clearly understand:
- What a subsidiary company is
- The types of structures available
- FDI and FEMA rules you must check first
- Step-by-step registration process
- Documents, timelines, costs, and post-incorporation compliance
Table of Contents
What Is a Subsidiary Company in India?
Simple definition
A subsidiary company is a company incorporated in India that is controlled by another company (the parent or holding company) through ownership of more than 50% of its share capital or control over its board and management decisions.
Subsidiary vs holding/parent company
- Parent/Holding Company: Owns or controls the subsidiary
- Subsidiary Company: A separate legal entity incorporated in India, even if fully owned
Important: A subsidiary is legally independent, meaning it has its own PAN, bank account, compliance, and liabilities.
Wholly-owned subsidiary vs joint venture
- Wholly-Owned Subsidiary (WOS)
- Parent owns 100% shares
- Full operational and strategic control
- Joint Venture (JV)
- Ownership shared with Indian or foreign partners
- Useful for regulated sectors, local expertise, or risk-sharing
Why Set Up a Subsidiary in India?
India remains one of the fastest-growing large economies, offering:
- Access to a massive consumer and enterprise market
- Cost-efficient talent for tech, operations, and R&D
- Strong startup and digital ecosystem
- Ability to invoice Indian customers locally
- Easier fundraising from Indian and global investors
For many global companies, a subsidiary offers credibility, scalability, and long-term presence compared to temporary structures.
Types of Setups for Entering India
Private Limited subsidiary
The most common and recommended structure.
Best for: Foreign companies planning long-term operations, hiring teams, raising funds, or generating revenue in India.
LLP as an alternative
LLPs can be considered for professional services or low-capital operations, but have limitations with FDI and fundraising.
Branch office/liaison office vs subsidiary
- Branch Office: Can conduct business, but limited activities and RBI approvals are required
- Liaison Office: Only for marketing and coordination (no revenue allowed)
- Subsidiary: Full business operations, contracts, invoicing, and growth flexibility
Which one should you choose?
Eligibility and Minimum Requirements
Who can form a subsidiary
- Foreign companies
- Foreign LLPs
- Indian companies
- Foreign individuals (subject to FDI rules)
Minimum legal requirements
- Minimum 2 shareholders
- Minimum 2 directors
- Paid-up capital: No minimum prescribed (practical capital depends on business needs)
- Registered office address in India
Resident director requirement
At least one director must be a resident of India, meaning they have stayed in India for 182 days or more in the previous calendar year.
FDI and FEMA Basics You Must Check Before Incorporation
Automatic route vs government route
- Automatic Route: No prior government approval required (most sectors like IT, SaaS, manufacturing)
- Government Route: Approval needed before investment (defence, telecom, media, etc.)
Some sectors have:
- Ownership caps (e.g., 74%, 49%)
- Conditional approvals
- Complete restrictions
Always map your actual business activity, not just the company name.
Common “FDI mismatch” mistakes
- Registering as “software services” but operating as a fintech
- Ignoring downstream investment rules
- Incorrect shareholding structure at incorporation
These can trigger penalties later.
Step-by-Step Process to Register a Subsidiary in India
Step 1: Decide structure + shareholding
Finalise:
- Wholly-owned vs JV
- Shareholding percentage
- Capital contribution
Step 2: Get DSC for proposed directors
Directors must obtain Digital Signature Certificates (DSC) to sign MCA forms.
Step 3: Name approval
Apply for company name approval with MCA, ensuring it aligns with:
- Business activity
- Trademark availability
- Naming guidelines
Step 4: Draft MoA and AoA
- The MoA (Memorandum of Association) defines business objectives
- The AoA (Articles of Association) defines internal governance
Step 5: File incorporation forms on MCA
File SPICe+ forms along with:
- Director details
- Shareholding structure
- Registered office details
Step 6: Pay fees + get Certificate of Incorporation
Once approved, MCA issues the Certificate of Incorporation (COI) with CIN, PAN &TAN
Step 7: Post-incorporation essentials (Checklist)
- Open a bank account
- Issue share certificate
- Appoint a statutory auditor
- File FDI reporting (if applicable)
- Register for GST (if required)
Documents Required for Subsidiary Registration
Parent company documents
- Certificate of incorporation/registration
- Board resolution approving the Indian subsidiary
- Authorised signatory proof
- Constitutional documents (Charter, MoA/AoA, etc.)
Director/shareholder KYC documents
- ID and address proof
- Passport-sized photographs
- For foreign nationals:
- Passport
- Address proof
- Required notarisation/apostille
Registered office documents in India
- Address proof
- Utility bill
- NOC or lease agreement
Apostille/notarisation note for foreign documents
Foreign documents usually need notarisation and apostille/consularisation, depending on the country of origin.
Timeline and Cost Breakdown (2026)
Typical timeline
- Indian parent/directors: 10–15 working days
- Foreign parent/directors: 3–5 weeks (mostly due to document attestation)
What decides the total cost?
- Number of foreign documents
- Apostille/notarisation charges
- Professional fees
- Government filing fees
Tax, Reporting, and Annual Compliance for a Subsidiary
Corporate tax basics
- Corporate tax applies to Indian income
- Concessional tax regimes may apply
GST registration
Required if:
- Supplying taxable goods/services
- Crossing prescribed thresholds
- Engaging in inter-state supply
FEMA/FDI reporting
- Form FC-GPR
- Annual FLA return
- RBI reporting timelines must be followed
Transfer pricing
Mandatory if there are transactions with the foreign parent (management fees, licensing, cost sharing, etc.).
Operational Setup After Incorporation
Opening a bank account
Usually requires:
- COI
- Board resolution
- KYC of directors and shareholders
Hiring employees and payroll setup
- PF and ESIC registrations
- Payroll compliance
- Employment contracts
Contracts and invoicing readiness
- Customer/vendor agreements
- Inter-company agreements
- Proper invoicing format
Licenses you may need
Depending on your sector:
- Shops & Establishment
- Import-export code (IEC)
- Industry-specific approvals
Common Challenges and How to Avoid Them
- Delayed apostille: Start document collection early
- Wrong FDI classification: Validate sector activity upfront
- Resident director gap: Appoint early or use interim solutions
- Post-incorporation non-compliance: Plan compliance calendar from Day 1
Razorpay Rize for Company Registration
Razorpay Rize is your trusted partner in simplifying and redefining the company registration journey. You can seamlessly register your company at the lowest rates, anytime and anywhere.
What is included in our package?
- Company Name Registration
- 2 Digital Signature Certificates
- 2 Directors’ Identification Numbers
- Certificate of Incorporation
- MoA & AoA (Applicable for Private Limited Companies and OPCs)
- LLP Agreement (Applicable for LLPs)
- Company PAN & TAN
*May include additional documents depending on the type.
Conclusion
Registering a subsidiary company in India is not just a legal step- it’s a strategic foundation for your India growth story. While the process is structured, the real complexity lies in FDI alignment, documentation, and post-incorporation compliance.
If planned correctly, a subsidiary gives you:
- Full operational freedom
- Long-term scalability
- Regulatory clarity
- Investor confidence
Approach the setup with clarity, patience, and the right advisory support, and your India entry can be smooth, compliant, and future-ready.
Frequently Asked Questions (FAQs)
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
One Person Company
(OPC)
- Freelancers, Small-scale businesses
- Businesses looking for minimal compliance
- Businesses looking for single-ownership
Private Limited Company
(Pvt. Ltd.)
- Service-based businesses
- Businesses looking to issue shares
- Businesses seeking investment through equity-based funding
Limited Liability Partnership
(LLP)
- Professional services
- Firms seeking any capital contribution from Partners
- Firms sharing resources with limited liability
Frequently Asked Questions
Can a foreign company own 100% of an Indian subsidiary?
Yes, in most sectors, a foreign company can own 100% of an Indian subsidiary. India allows 100% Foreign Direct Investment (FDI) under the Automatic Route in many sectors, such as:
- IT & software services
- SaaS and technology platforms
- Manufacturing
- E-commerce (marketplace model)
- Consulting and professional services
What’s the difference between a wholly-owned subsidiary and a JV in India?
The key difference lies in ownership and control.
Wholly-Owned Subsidiary (WOS)
- Foreign parent owns 100% of shares
- Full strategic and operational control
- Faster decision-making
- Common choice for global startups and MNCs
Joint Venture (JV)
- Ownership is shared with an Indian or foreign partner
- Used when:
- Sector has FDI caps
- Local expertise or distribution is required
- Risk or capital needs to be shared
How long does it take to register a subsidiary company in India in 2026?
The timeline depends mainly on whether foreign documents are involved.
- Indian parent / Indian directors only: 10–15 working days
- Foreign parent and/or foreign directors: 3–5 weeks
What documents need apostille/notarisation for foreign parents/directors?
Foreign documents usually require notarisation and apostille (or consularisation) in the country of origin.
For a foreign parent company
- Certificate of incorporation
- Constitutional documents (Charter / MoA / AoA or equivalent)
- Board resolution approving the Indian subsidiary
For foreign directors/shareholders
- Passport
- Address proof (bank statement, utility bill, etc.)
Do we need a physical office address in India to incorporate?
Yes, a registered office address in India is mandatory. However, it does not have to be a commercial office. It can be:
- A co-working space
- A virtual office (if legally valid)
- A residential address (with NOC)
What are the annual compliance requirements after incorporation?
Once incorporated, the subsidiary is treated as an Indian company and must meet ongoing compliance obligations.
Key annual compliances include:
ROC (Companies Act)
- Annual financial statements filing (AOC-4)
- Annual return filing (MGT-7 / MGT-7A)
- Statutory audit
Tax
- Corporate income tax return
- TDS returns (if applicable)
- Advance tax (if applicable)
FDI / FEMA (for foreign-owned subsidiaries)
- Annual FLA return
- FC-GPR filings for share issuance
- Compliance with RBI timelines
Other (as applicable)
- GST returns
- Transfer pricing documentation
- Board meetings & shareholder meetings
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Mukesh Goyal is a startup enthusiast and problem-solver, currently leading the Rize Company Registration Charter at Razorpay, where he’s helping simplify the way early-stage founders start and scale their businesses. With a deep understanding of the regulatory and operational hurdles that startups face, Mukesh is at the forefront of building founder-first experiences within India’s growing startup ecosystem.
An alumnus of FMS Delhi, Mukesh cracked CAT 2016 with a perfect 100 percentile- a milestone that opened new doors and laid the foundation for a career rooted in impact, scale, and community.
