Subsidiary Company Registration in India [2025 Guide for Foreign Businesses]

India is revving its economic engine with a solid 6.4% real GDP growth in 2025, holding its title as one of the world’s fastest-growing economies. It means…a giant buffet of opportunities for global businesses—think buzzing consumer markets, a talent pool sharper than your office stapler, and reforms that make life easier instead of harder.

And here’s the smart move: if you’re a foreign company ready to make your mark, subsidiary company registration in India is your best play. Think of it as setting up base camp with perks, operational control, limited liability, and tax benefits all bundled into one.

This guide is your cheat sheet: what exactly a subsidiary company is, why it’s a crowd-favorite among international investors, and how to register one in 2025 without losing sleep (or hair) over legal formalities.

1. What is a Subsidiary Company in India?

Under the Companies Act, 2013, a subsidiary company is basically a company that’s got a “big sibling” watching over it. Officially, this happens when the parent (or holding) company:

• Owns more than 50% of its share capital, or
• Calls the shots on how the Board of Directors is formed.

For foreign businesses, Registering a Limited Liability Partnership in India creates a separate legal entity with limited liability, while the parent company enjoys expansion benefits and stays compliant with Indian regulations.

1.1 Types of Subsidiary Companies in India

Thinking of setting up shop in India? A foreign subsidiary company gets two ways to roll: either keep full control like a solo act or team up with locals for a joint gig. It’s all about how much control you wanna keep.

1.1.1 Wholly Owned Subsidiary (WOS)

In this setup, the foreign parent holds all the shares in its Indian baby—yep, a full 100%.

• That means it’s calling all the shots: total ownership, total control, and no need to ask anyone before making business moves. It’s the corporate version of “my house, my rules.”
• It is the most preferred structure for companies entering sectors where 100% Foreign Direct Investment (FDI) is allowed under the automatic route (e.g., IT services, manufacturing, consultancy).

Also read: Navigating Foreign Direct Investment (FDI) in India: A Guide for Startups  

1.1.2 Partially Owned Subsidiary

Here, the foreign company owns more than 50% but less than 100% of the shares, while the rest is held by Indian shareholders.

• This structure is common in sectors with FDI caps or strategic partnerships.
• The foreign entity still enjoys a controlling stake, but certain decisions may require shareholder consent or collaboration.

Curious how a wholly owned subsidiary’s features and functions can quietly strengthen your business strategy.Take a detour through our blog and discover the advantages it brings to your growth strategy.

1.2 Subsidiary vs. Branch Office/Liaison Office

• A subsidiary in India? That’s the real deal—it can run full-fledged business operations, rake in revenue, and pocket profits like any local company.
• On the other hand, opening a branch office in India is simpler and more limited in scope, usually focusing on trading, consultancy, or research activities.
• And then there’s the liaison office: the minimalist of the trio. It’s just there to talk, not transact—strictly no income, just a polite “hello” from HQ.

Subsidiary vs Branch Office vs Liaison Office

Aspect	Subsidiary Company	Branch Office	Liaison Office
Legal Status	Separate legal entity under the Companies Act, 2013	Extension of the foreign parent company	Extension of the foreign parent company
Ownership	Foreign parent holds >50% (up to 100%) shareholding	No shareholding; operates as a branch	No shareholding; operates as a liaison
Business Operations	Can carry out full business activities, earn revenue & profits	Limited to trading, consultancy, research & service-related activities	Cannot undertake any commercial activity; only acts as a communication channel
Taxation	Taxed as an Indian company	Taxed at a higher rate (40% + surcharge & cess)	No taxation (cannot earn income)
Compliance	Companies Act, FEMA, RBI & Income Tax Act	FEMA, RBI & Income Tax Act	FEMA, RBI & Income Tax Act

2. Why Set Up a Subsidiary Company in India?

With India cruising toward a $4.19 trillion economy by 2025 (yep, trillions with a “T”), and real GDP growth fueling the fire, it’s no wonder foreign investors are lining up like it’s Black Friday. For those ready to dive in, setting up a subsidiary isn’t just smart, it comes with some juicy, tangible perks:

2.1 Access to India’s Booming Consumer Market

• With 1.4+ billion people and a consumer spending estimate of trillions by 2025, India presents an unmatched opportunity.
• A growing middle-class population (approx. 550 million) drives demand across sectors, IT, e-commerce, manufacturing, healthcare, and fintech.

2.2 Easier Compliance Compared to Other Structures

• Unlike branch or liaison offices, the Indian subsidiary of a foreign company enjoys greater operational freedom and can engage in full-scale business activities, from manufacturing to service delivery.
• No need for multiple RBI approvals for routine operations.

2.3 Limited Liability & Separate Legal Entity Status

• The liability of the parent company is restricted to the capital invested.
• Global assets remain shielded from Indian liabilities, a key advantage in emerging markets.

2.4 Tax Benefits & DTAA Advantage

• Foreign subsidiaries may qualify for a 22% corporate tax rate (plus surcharge & cess), while branch offices face 30–40%. That’s some serious tax savings!
• Thanks to 90+ Double Taxation Avoidance Agreements (DTAAs), businesses can avoid getting taxed twice on the same income.

3. Eligibility Criteria for Foreign Companies

Before jumping into the Indian market with a shiny new subsidiary, foreign businesses need to tick a few legal boxes—think of it as the desi red tape dance. The key players? The Companies Act, 2013, and India’s Foreign Direct Investment policy. No skipping steps, compliance first, chai later.

3.1 FDI Regulations – Automatic vs Approval Route

• Automatic Route: No red tape, no waiting—foreign investors can bring in up to 100% FDI without prior government approval in most sectors like IT services, manufacturing, and eCommerce marketplaces. Just plug and play!
• Approval Route: Some sectors play hard to get. Areas like defense, print media, and multi-brand retail need a formal nod from the DPIIT and RBI before you can dive in.

3.2 Sectoral Caps and Restrictions

FDI Caps Vary by Sector – It’s not one-size-fits-all! Depending on the industry, the government sets different FDI limits.

For example:

Sector	FDI Limit & Route
Defence	Up to 74% gets automatic route and beyond 74% requires approval
Insurance	FDI limit raised to 100% (2025 Budget), replacing the earlier 74%; automatic route applies with conditions
Multi-Brand Retail	Only up to 51% FDI is permitted, and that too with government approval
Telecommunications	Up to 100% FDI is allowed, though some telecom services and sub-sectors above 49% need government approval
Private Banking	Up to 74% FDI is permitted in the private banking sector
Airlines	Domestic airlines allow up to 100% FDI, while foreign airlines investing in Indian carriers are capped at 49%
Pharmaceuticals	100% FDI allowed; approvals needed above 74%
Real Estate Development	FDI allowed only in development, not trading (buying and selling), of real estate

Prohibited Sectors: Atomic energy, lottery businesses, and some gambling sectors remain prohibited for FDI.

3.3 Resident Indian Director Requirement

• According to the Companies Act, 2013, every foreign subsidiary in India needs at least one director who’s practically an Indian insider, someone who’s spent at least 182 days on Indian soil in the last calendar year. Basically, a local face to keep things grounded!
• This ensures local governance and compliance.

4. Step-by-Step Process for Subsidiary Company Registration (2025)

Setting up a foreign subsidiary is like building your dream house—minus the overpriced marble countertops and surprise raccoon tenants. You’ll need a rock-solid foundation (hello, legal entity), blueprints drawn to perfection (think: tax strategy, governance structure), and décor so compliant it makes the legal inspectors want to frame it.

Ready to roll up your sleeves and lay those bricks without any mysterious leaks or bureaucratic black mold?

Here’s your step-by-step guide to nail it!

Step 1: Name Reservation – Branding Before Business

Before you kick off, snag a name that’s not just catchy but also MCA-approved.

• Why it matters: Your company name is your very first handshake—with regulators, banks, and customers alike. Make it count!
• How it works: File through RUN or SPICe+ Part A on MCA’s portal.
• Pro Tips:
  • Check MCA & trademark databases—name rejections delay everything.
  • Add relevance—e.g., “TechSolutions Private Limited” says more than “XYZ Holdings.”
• Timeframe: 3–5 days (if no objections).

Step 2: DSC & DIN – The Digital Gatekeepers

Think of the DSC and DIN as your keycards to India Inc.

• DSC (Digital Signature Certificate): Like an e-signature, mandatory for directors signing incorporation documents.
• DIN (Director Identification Number): Unique ID for each director—foreign and Indian.
• Resident Director Rule: At least one director must have lived in India for 182+ days in the previous year.
• Why it matters: No DSC or DIN, no filing—this is your legal entry ticket.
• Timeframe: 2–5 days.

Step 3: Draft MoA & AoA – The Subsidiary’s Constitution

Well, consider the MoA and AoA as your company’s instruction manual:

Ever wondered what MOA and AOA really mean (besides sounding like secret codes)? Dive into our complete guide where we break down their meaning, key differences, and why they actually matter when starting or running a company. No legal jargon overload—we promise!

• MoA (Memorandum of Association): The company’s “mission statement” — spells out its purpose and what it’s allowed to do.
• AoA (Articles of Association): The rulebook for running the show — covers governance, voting powers, and day-to-day operations.
• FDI Clause Alert: If foreign investors are in the mix, the MoA and AoA need special clauses to comply with FEMA and RBI rules. No cutting corners here!
• Pro Tip: Avoid vague objectives; MCA frowns on them and may ask for clarifications.
• Timeframe: 2–3 days for drafting & approvals.

Step 4: Filing Incorporation Application – The Legal Upload

With documents ready, file your incorporation application via SPICe+ Part B.

• Platform: SPICe+ Part B (linked with AGILE-PRO for GST, EPFO, ESIC).
• Documents Needed:

You’ll need apostilled or notarized parent company documents—think of these as your company’s VIP passport:

• Certificate of Incorporation
• Charter Documents
• Board Resolution

These official papers prove your parent company’s identity and authority, no questions asked!

• Director KYC (Passport, Address Proof, etc.).
  • Proof of Registered Office in India.
• Why it matters: This is the final push before MCA approval—errors here = delays.
• Timeframe: 4–7 days (if documents are clean).

Step 5: Certificate of Incorporation – Your Business Birth Certificate

Once approved, the Certificate of Incorporation (COI) lands in your inbox.

• What You Get:
  • Certificate of Incorporation (COI).
  • Corporate Identification Number (CIN).
• Why It’s Big: This is the legal “GO” signal – your subsidiary now exists under Indian law.
• Pro Tip: Safeguard COI – it’s required for tax, banking, and statutory filings.
• Timeframe: 3–5 days post-filing.

Step 6: PAN, TAN & Bank Account – Setting Up Financial Identity

• PAN (Permanent Account Number): Your tax identity with the Indian Income Tax Department.
• TAN (Tax Deduction Account Number): For deducting and remitting TDS (Tax Deducted at Source).
• Bank Account: Mandatory for capital infusion from the parent company.
• Pro Tip: Choose a bank with a strong international presence, it speeds up foreign currency compliance.
• Timeframe: 5–7 days.

Step 7: Post-Incorporation Compliances – Playing By the Rules

Congrats, you’re live. Now stay compliant:

• FDI Reporting: File Form FC-GPR with RBI for capital inflow within 30 days of allotment of shares.
• GST & Shops & Establishments Registration: Depends on what you’re selling and where you’re setting up shop—no one-size-fits-all here!
• Annual Compliances: Keep your statutory books tidy, hold those board meetings like clockwork, file ROC returns on time, and don’t forget your taxes.
• Pro Tip: Miss a deadline, and the penalty party can cost you ₹10,000 to over ₹1,00,000. Trust me, that’s a party you want to skip!

5. Documents Required for Subsidiary Company Registration

The paperwork for subsidiary registration isn’t just ticking boxes, it’s your proof of legitimacy, ownership, and full compliance with Indian laws.

Here’s what you’ll need to get started:

5.1 Parent Company Documents

Want to bring your global empire to India? First, let’s talk paperwork, because even the most ambitious expansion starts with a solid stack of documents.

Here’s your “starter pack” for registering a foreign subsidiary (no, a fancy logo won’t cut it):

1. Certificate of Incorporation: Your official “we exist” badge from the home country.
2. Board Resolution: A formal “go for it” from the top brass, giving the green light to set up shop in India and appointing your local champions.
3. Charter Documents: The DNA of your company, aka the Memorandum & Articles of Association (or whatever your country calls them).
4. Authentication: No shortcuts here: Every document must be apostilled or notarized in its country of origin, and translated into English if it’s doing a non-English vibe.

5.2 Directors & Shareholders Documents

1. Passport – Your golden ticket! Must be valid and apostilled—no expired pages or mystery stamps, please.
2. Address Proof –  Bring the receipts—literally. A utility bill, bank statement, or driver’s license works, as long as it’s not older than 2 months and clearly shows your current address.
3. Identity Proof – Government-issued ID card or national ID.
4. Resident Indian Director – PAN card and Aadhaar card required in addition to the above.

5.3 Registered Office Proof (India)

1. Utility Bill (Electricity/Water/Gas) – Not older than 2 months.
2. Rent Agreement/Lease Deed – If office space is rented.
3. Owner’s NOC (No Objection Certificate) – Allowing use of premises as registered office.

6. Compliance & Regulatory Requirements Post-Registration

Setting up your subsidiary is just the opening move; staying compliant is how you stay in the game (and off the regulator’s radar). 

Here are the key compliance must-dos for every foreign subsidiary in India:

6.1 Annual Compliance with MCA – Staying in the Ministry’s Good Books

According to the mighty Companies Act, 2013, every subsidiary, whether it’s a corporate giant or just a baby startup in corporate onesies, has to play by the same annual compliance rulebook. No dodging, no ducking, no “but we’re small” excuses.

• ROC Filings: File your annual returns and financial statements with the Registrar of Companies (ROC) on time. No slacking!
• Statutory Audit: Every subsidiary needs a statutory audit, regardless of turnover. Yep, even the tiny ones.
• Board & General Meetings: Hold regular board and general meetings, and keep minutes plus statutory registers neat and tidy. Paper trail = peace of mind.
• Due Dates to Remember:
  • AOC-4 (Financial Statements) – within 30 days of AGM.
  • MGT-7 (Annual Return) – within 60 days of AGM.

6.2 FEMA & RBI Compliance – Keeping the Central Bank in the Loop

Since foreign investment is involved, RBI compliance under FEMA (Foreign Exchange Management Act) is crucial.

• FDI Reporting: Report foreign investment to the Reserve Bank of India (RBI) through Form FC-GPR within 30 days of share allotment.
• Annual Return on Foreign Liabilities and Assets (FLA): Mandatory filing for all foreign subsidiaries by 15th July every year.

6.3 Tax Filings & TDS Compliance – Playing by the Taxman’s Rules

You may be born elsewhere, but for Indian tax purposes, you’re one of us now, an Indian company, with all the delightful obligations that come with it. Here’s your to-do list, dressed up with a little personality:

• Income Tax Return (ITR): Whether you’re raking in rupees or just burning through budget, you must file your ITR every year. No income? Big loss? No excuse.  
• Tax Deducted at Source (TDS): Playing employer or making payments to vendors? Then don’t forget to snip off the TDS before paying. Deduct it, deposit it, and do it on time — or face the wrath of penalties (they’re not as fun as they sound).
• Transfer Pricing Compliance: Got an amazing deal going with your parent company abroad? Well, the taxman says: “Keep it fair, keep it arm’s-length.” Disclose, document, and justify those cross-border transactions like a pro economist with receipts.

7. Timeline & Cost of Setting Up a Subsidiary in India

Starting a foreign subsidiary doesn’t have to feel like watching paint dry or sitting through a five-day cricket Test. With the right prep and paperwork, you can go from idea to incorporation in just 20–30 business days, faster than your team orders its second round of chai.

7.1 Timeline – How Long Does It Take?

Stage	Duration (Approx.)	Key Activities
Name Reservation	Day 1–5	Reserve company name via RUN or SPICe+ Part A.
DSC & DIN Procurement	Day 6–10	Obtain Digital Signature Certificates & Director Identification Numbers.
Drafting of MoA & AoA	Day 11–15	Prepare FDI-compliant charter documents & notarize parent company docs.
Incorporation Filing	Day 16–20	Submit SPICe+ Part B and await MCA approval.
Post-Incorporation Setup	Day 21–30	PAN, TAN, bank account opening & initial compliance registration.

7.2 Cost – What Should You Budget?

Expense	Approx. Cost (₹ / $)	Remarks
Government Fees	₹7,000 – ₹12,000	Based on authorized capital.
Professional Fees	₹40,000 – ₹75,000	For CA/CS handling incorporation & compliance.
Notarization & Apostille Charges	$500 – $1,000	For parent company documents overseas.
Miscellaneous (Stamp Duty, PAN, TAN)	₹10,000 – ₹15,000	State-wise variation.

Estimated Total Cost: ₹1.2 – ₹2.5 lakhs

8. Common Challenges of Setting Up a Subsidiary in India & How to Overcome Them

Setting up a subsidiary in India is like navigating a busy marketplace, full of opportunity but with some detours. 

8.1 Approval Route Delays

The Challenge:

If your business operates in regulated sectors like defense, telecom, or media, you’ll need to pass through the government approval route, which means getting the nod from the RBI or relevant ministries. And yes, this can take several weeks to a few months.

How to Overcome:

• Start early and build in extra time.
• Submit flawless, complete documents to avoid delays.
• Work with professionals experienced in FDI approvals to speed things up.

8.2 Sectoral Restrictions

The Challenge:

Some sectors in India, like multi-brand retail, lottery, and real estate, come with FDI caps or outright restrictions, which can seriously cramp your investment style.

How to Overcome:

• Check the FDI Policy 2025 before you lock in your business model.
• Consider joint ventures or franchise models when sectors are off-limits.
• Get legal advice to structure your investments smartly and stay within the lines — because no one likes surprise penalties!

8.3 Bank Account Opening for Foreign Entities

The Challenge:

Foreign-owned subsidiaries often face delays of 2–4 weeks in opening a bank account due to KYC norms and RBI checks.

How to Overcome:

• Pick a bank that knows the foreign company game – experience matters when juggling international accounts.
• Have your apostilled and notarized docs ready – passports, incorporation certificates, board resolutions… the whole paperwork party upfront.
• Start with a public sector or large private bank to breeze past compliance hurdles and get your account opened faster.

9. Why Choose Professional Assistance?

Think registering a foreign subsidiary in India is a walk in the park? Try a park full of paperwork, forms that look like riddles, and approvals that play hard to get. One wrong checkbox and- poof- you’re stuck in delay limbo.

Better to call in the experts. We know the maze, speak fluent compliance, and get your business rolling without the bureaucratic heartbreak.

9.1 Avoiding Compliance Errors

• Between the Companies Act, FEMA rules, RBI quirks, and FDI dos-and-don’ts, it’s less “let’s register a company” and more “survive the paperwork jungle.”
• One small error? That’s a fast track to delays, rejections, or worse—penalties.
• The experts keep your incorporation documents clean, your FDI filings tight, and your compliance checklist audit-ready from day one.

9.2 Ensuring Faster Approval & Seamless Documentation

• Professionals handle everything, from name approval to bank account setup—while navigating regulatory requirements.
• They anticipate common pitfalls (wrong stamp duty, missing notarization, incomplete RBI reporting) and fix them before they derail the process.

9.3 Where LegalWiz Fits In

We’ve helped numerous foreign businesses establish subsidiaries in India with end-to-end support, right from company registration to compliance management, making expansion smoother, faster, and stress-free.

Conclusion: Big Indian Market, Complex Setup—Let’s Build It Right

India isn’t just a high-potential market—it’s your launchpad into the Asia-Pacific, with 1.4+ billion consumers, a thriving tech ecosystem, and a growth curve that’s only rising.

For foreign businesses, establishing a subsidiary here isn’t just a compliance requirement; it’s a strategic move for long-term expansion.

Of course, navigating India’s regulatory landscape can be complex. That’s where LegalWiz comes in, offering expert support, seamless documentation, and end-to-end compliance assistance.