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Unlock the potential of India’s markets with your wholly-owned subsidiary company. We provide comprehensive legal assistance in establishing a subsidiary company in India, helping you understand the eligibility, process, cost, and documents.
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IMPORTANT DISCLAIMER
We are a professional consulting firm specialising in company registration, taxation, accounting, payroll, compliance, and intellectual property rights (IPR) services to assist new and existing businesses in India. We provide our professional services at a reasonable fee, explaining the eligibility, process, and documents required for setting up and maintaining a business. We also prepare and file necessary applications with relevant government agencies such as the Registrar of Companies (ROC) and the Income Tax Department. We do not directly provide government documents or represent ourselves as a government agency.
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How to establish a Subsidiary Company in India
- Professional Fee
Our package starts @ USD 499/- (Best Rate Guarantee)
- Timeline
Approx 15 Days after completing the documentation
- Minimum Requirements
- India Resident Directors
- Minimum two signatories to MOA
- A Registered Address and Unique Name
- Adequate Capital (No Min or Max Limit)
- Stepwise Process
The Process of Incorporation of an Indian Subsidiary by a foreign company is 100% online, and there is no need to visit India for this purpose. Get full assistance from our experts!
- How we help!
- Expert Consultation
- Eligibility Check & Advisory
- Name Availability Search
- Drafting of the Main Object
- Drafting of MOA & AOA
- Representation Drafting
- Post Incorporation Assistance
- Tax Advisory
Comprehensive Legal Services!
Setindiabiz provides comprehensive legal and consultation services for foreign businesses starting operations in India. Our services include advising on incorporation, corporate law, and tax matters. And provide legal support to the Indian subsidiary in accounting, tax filing, and payroll, as well as protect the IPR.
Different Forms of Doing Business in India
India is an open economy that welcomes investors worldwide. The Make in India initiative perfectly aligns with a favourable tax structure of just 15% for manufacturing activities. The legal framework in India allows foreign investors to do business in India either as a foreign company by setting up a Liaison, Branch, or Project office in India with prior approval of the RBI or by setting up an independent corporate structure and registering a local company or LLP in India. You can find all the options in the table below.
As a Foreign Company
(With permission of RBI and Central Govt)
Key Points
- Act as an extension of foreign company
- Limited Scope of Activity
- Income Tax Rate is 40%
- Can not participate in Local Tenders
- Can bid in Global Tenders
By setting up Indian Corporate Entity
(registration before ROC)
- Wholly Owned Subsidiary (Company)
- Joint Venture Company
- Limited Liability Partnership
Key Points
- Is a separate legal entity in India
- Recognised at par with other companies
- Income Tax rate is 15-25%
- Allowed to pursue all activities
- Can Participate in Local/Global Tenders
Confused?
Indian laws may seem overwhelming and confusing. Worry not; our specialists on FDI and FEMA are here to answer your questions. Entry into the indian market is regulated by FEMA Regulations and government policies. We offer no-obligation consultation services to foreign companies when they evaluate establishing a subsidiary in India.
India is a preferred destination for setting up a company.
The new policy initiatives by the government of India have made it one of the most popular manufacturing destinations in the country. The tax rate for companies incorporated in India is just 15% in case the indian company is engaged in manufacturing activities and 22% in all other cases. Due to the availability of a vast talent pool and robust market, India continues to attract foreign companies to set up factories in India. Many large corporations worldwide have established manufacturing units in India to take advantage of make-in-India initiatives and lower corporation tax. Our FDI experts are here to guide you on the eligibility, process, cost, and documentation needed to establish a wholly subsidiary company in India.
Benefits of Establishing a Manufacturing Subsidiary in India
Income Tax is Only 15%
World's Best Tax Rate
Easy Availability
of Skilled Labour
Manufacturing Hub Led
By New Central Govt.
Great Urban &
Industrial Infrastructure
One of the World's
Fastest Economy
India is the World's
Largest Democracy
Foreign Direct Investment in India (FDI)
The FDI (Foreign Direct Investment) plays an important role in the growth and expansion of the Indian economy. The FDI Policy of India permits the FDI in most sectors under an automatic route, wherein no specific permission is required before the establishment of a company or Indian subsidiary. The companies that are incorporated under the automatic route are required to file simplified FDI Reports in the form FC-GPR. However, certain strategic sectors have sectoral caps, and foreign investments beyond the specified limit are allowed, subject to prior approval from the central government.
Automatic Route of FDI
- No prior permission
- Most of the sectors are covered
- Easy to incorporate the subsidiary
- Only an intimation is filed to RBI.
Government Approval Route of FDI
- Sectors of strategic importance
- Defence
- Media
- Pharma
- Multi-brand retail, etc
Note: FDI from countries that share a land border with India
In 2020, the government of India introduced a major change in the FDI policy, wherein restrictions were placed on the FDI originating from some countries that share land borders with India. These countries include Pakistan, Bangladesh, Bhutan, Nepal, China, and Afghanistan. The FDI originating from these countries, whether directly or indirectly, requires prior permission from the government of India. Read more on Press Note 3 of 2020
Checklist for Incorporation of Wholly Owned Subsidiary in India
To set up a subsidiary company in India, the following are following the minimum eligibility requirements. To evaluate your eligibility, you are encouraged to contact us.
Parent Company Standing
The applicant company must be an incorporated legal entity in the home country. Documents such as a Certificate of incorporation, articles and board resolution are required.
Two Representatives
A minimum of two signatories for the parent company is required to represent 100% shareholding. Both the signatories can be foreign nationals or non-residents of India.
India Resident Director
A minimum of two directors is required, with at least one being a resident of India. This resident director ensures compliance with local laws and regulations.
Permitted Activities
The company's object should be legal. Most of the sectors are open to FDI; check the permitted sectors in which foreign companies can invest.
Capital Requirements
No minimum or maximum level of capital is prescribed. However, allocating sufficient capital to support the subsidiary's initial operations and future growth is advisable.
Unique Name Selection
Choose a distinct name for your subsidiary that complies with the Companies Act 2013 and is not already registered by another entity.
List of Documents For the Indian Subsidiary Company Registration
List of Documents
Proper documentation plays a significant role in quickly incorporating a subsidiary company in India. The following is the list of documents required to set up an Indian Subsidiary from the parent company, its authorised signatories, and the proposed first directors.
Parent Company
- Certificate of Incorporation
- Memorandum/Articles of Company
- Current Address Proof
- List of Directors
- List of Shareholders
Directors /Authorised Person
- Colour Photo
- Passport
- Residential Address Proof
- National ID card
Registered Office
- Electricity or Utility Bill of Address
- No Objection Letter from the owner of the premises
Incorporation Of Communication Address:
In India, the Indian subsidiary can be registered at a “communication address” even before securing a permanent office. This temporary address helps you start the formalities while searching for the ideal premises. It’s essential to remember that within 30 days of incorporation, you need to establish a physical “registered office” in the same state and file Form INC-22 with the Registrar of Companies (ROC) to report the official address change.
Attestation or Legalisation of Foreign Documents
The documents that are signed or executed overseas need to be attested before they can be used for filing with the Registrar of Companies, RBI or any other government department. Such documents include a certificate of incorporation & articles of foreign company, passport and address proof of foreign directors, MOA, AOA, and certain declarations for the Indian subsidiary incorporation. The method of legalisation may vary depending on the location of the documents.
| Method of Legalisation | Applicability |
|---|---|
|
Notary Public |
Applicable in the countries which are part of the Commonwealth. Please refer to the List of Commonwealth Countries to know more. |
|
Apostille |
The apostille is a simplified method of legalising documents for countries that are members of the Hague Convention |
|
Indian Embassy or Consulate |
If your country is not a member of the Commonwealth Nations and is also not part of the Hague Convention. The only option for legalising your documents is to present them to the Indian Embassy for attestation. This option is a last resort and can be exercised in all scenarios. |
Incorporation Process of Indian Subsidiary of a Foreign Company
We take care of the entire process of establishing a subsidiary company for a foreign corporation in India. Following are the major milestones to be achieved for the incorporation of a subsidiary in India.
STEP
01
Parent Company Authorisation
The parent company’s board must approve and authorise a signatory for the incorporation of an Indian subsidiary. The legalisation of the board resolution and POA is required.
STEP
02
Name Approval for Indian Subsidiary
The Indian subsidiary may use either a new name or the parent company name followed by “India”. However, the proposed name must not infringe on someone else’s trademark in India.
STEP
03
Drafting of MOA, AOA, & Declarations
The Memorandum and Articles of Association are legal documents that outline a company’s purpose and internal rules. Additional declarations are required for promoters to sign.
STEP
04
The legalisation of the Documents
The MOA, AOA, and declarations signed in a foreign require attestation or legalisation, as explained above. When the signatory visits India on a Business Visa, attestation can be done in India.
STEP
05
Filing of Spice Plus Application to ROC
SPICE Plus is the e-form used to incorporate an Indian subsidiary. Scanned copies of documents are attached, and the form is digitally signed by promoters and professionals.
STEP
06
Issue of Incorporation Certificate
The Registrar of Companies issues a Certificate of Incorporation after a satisfactory review. The certificate provides conclusive proof of the company’s incorporation and includes the CIN, PAN, and TAN numbers.
Frequently Asked Questions
1. What is the meaning of a wholly owned subsidiary company?
A wholly-owned subsidiary in India is incorporated under the provisions of the Companies Act 2013 and is considered a separate legal entity with a distinct existence. The majority of the subsidiary’s shares are owned by its parent company, also known as a holding company. In cases where the holding company owns 100% of shares in the Indian Company, it is known as a Wholly Owned Subsidiary.
2. What is the difference between a Branch office and a Subsidiary Company?
The main difference between a subsidiary and a branch office in India is their legal status and taxation. A subsidiary is at par with any domestic company and is subject to the same taxes and regulations. A foreign company’s branch office is an extension of its foreign holding company. The branch of a foreign company is subject to higher Income Tax.
3. Can a foreign company hold 100% shares in an Indian subsidiary company?
Yes! According to India’s FDI policy, foreign companies are allowed to invest and hold 100% shares in their Indian subsidiaries in most of the sectors. You can refer to the recent FDI policy to know whether a 100% foreign shareholding is permitted in your industry.
4. What is the significance of the RBI Notification or Press Note for foreign subsidiaries?
The Reserve Bank of India (RBI) issues notifications or press releases that serve as guidelines for Foreign Direct Investment (FDI) limits across various sectors in the country. These notifications specify the permissible Limits and modes of FDI approval. For instance, press note 3 of 2020 is so significant that it has restricted the inflow of FDI from neighbouring countries such as China.
5. What minimum capital must be invested in the Indian Subsidiary?
No minimum or maximum amount of capital must be infused in the Indian Subsidiary of a foreign corporation. This means that you have the flexibility to decide the capital level of the Indian Subsidiary company. However, we always advise evaluating the immediate capital requirement for the initial setup and meeting the expenses until the Indian subsidiary starts earning its own revenue.
6. What is the role of transfer pricing in a subsidiary's operations?
Transfer pricing is a crucial mechanism that safeguards the fairness of transactions between related parties, such as the subsidiary and its foreign parent company. The transaction must be carried out at arm’s length between the associated entities.
7. How are dividends from an Indian subsidiary taxed?
Companies in India are no longer required to pay tax on the declaration and distribution of dividends (DDT). However, the dividend in the hands of the recipient shareholder continues to be taxable.
8. Can the name of a subsidiary company in India be identical to its foreign parent company?
Yes, it can be identical to the parent company. However, “India” is usually added at the end to distinguish it from the parent or holding company.
9. Is there a need for an Indian resident director for a subsidiary?
Yes, according to the provisions of the Companies Act, 20213, at least one director of the subsidiary company must be a resident of India and must have lived in the country for more than 120 days in the last financial year.
10. Is FDI allowed for retail subsidiary registration in India?
As per the latest FDI regulations in India, 100% FDI is allowed in single-brand retail trading under the automatic route. However, for multi-brand retail trading, FDI is subject to certain conditions and requires government approval.
11. Why is company incorporation in India important?
Incorporating a company in India is crucial for startups as it offers limited liability protection, keeping shareholders’ personal assets secure. Additionally, it boosts credibility, simplifies fundraising, and provides a structured framework for business operations, ensuring compliance with Indian laws.
12. Is the Indian Company Formation process online?
The process of forming a company in India has become completely digital, which means that much of the process can now be conducted online. The Ministry of Corporate Affairs (MCA) has introduced an online portal that allows for company registration and compliance procedures to be done electronically. This includes filing necessary documents and obtaining Digital Signature Certificates (DSC) online. The introduction of this online system has improved efficiency, reduced paperwork, and streamlined the overall company formation process in India.
13. What are the Benefits of Company Registration in India?
Registering your business as a company can provide you with many advantages. These include legal protection, opportunities for growth, operational benefits, and tax advantages. It offers a separate legal identity that ensures your personal assets are protected, and it limits the liability of shareholders. It can also make it easier to get capital, open bank accounts, and diversify your business. A registered company structure streamlines administrative tasks and provides tax benefits and exemptions.
14. How long is the time taken for company registration in India?
Registering a company online in India typically takes between 2 to 7 days. However, if the documents submitted are not in order, if the details provided in the application are incorrect, or if the ROC Office is experiencing an unusual workload, then the process might take longer than expected.
15. What are the requirements for pvt ltd company registration online in India?
Requirements for Pvt Ltd Company Registration in India:
- 2 Shareholders & 2 Directors
- At Least One Indian Resident Director
- A valid and unique company name
- A Registered Office
- Identity and Address Proof of Promoters
- Digital Signature of Authorised Director
- Proof of Registered Address
- NOC from the registered premises owner
16. What is the process of company name registration?
To register a company name in India, you need to choose a unique name and check its availability on the MCA website. Once you have a unique name, you need to file an application for name approval with the ROC of the state in which you want to register your company. The ROC will either approve or reject your application based on the availability of the name and any conflicts with existing trademarks. It is advisable to consult a company registration consultant or a legal expert to help you with the process of company name registration to avoid any errors or issues.
17. Can I do the new company registration process myself?
It is indeed possible to complete the new company registration process on your own. Simply visit the MCA website, register and create an account. All application forms, documents, and fees can be submitted online, making the process highly convenient. If you require further clarification, please feel free to contact our experts for a free consultation
18. What Happens after the Incorporation of the company?
Once a company is incorporated, the ROC issues a Certificate of Incorporation. Along with it, companies also receive their PAN and TAN for Income Tax and TDS compliance. To commence their business operations, they must meet a few post-incorporation compliances:
- Appointment of First Auditor
- Organise First Board Meeting
- Intimate Registered Office Address within 30 days
- Submit Declaration of Business Commencement (INC-20A)
- Issue Share Certificates within 60 Days
19. How do you check the company registration status online?
If you want to check the registration status of a company, you can do it easily online via the Ministry of Corporate Affairs website. Just follow these steps
- Go to the “MCA Services” option on the official MCA website.
- From the dropdown, select “View Company / LLP Master Data”.
- Enter the CIN of the company you wish to check the status.
- The company registration status will display on your screen.