Introduction
Setting up a Subsidiary in India involves several legal, corporate, foreign investment, tax, employment, and ongoing compliance steps. India is one of the top five FDI destinations in the world. Foreign companies entering the Indian market commonly use a wholly owned subsidiary — a private limited company incorporated in India and owned by the foreign parent.
A subsidiary gives a foreign company full operational control, a domestic tax identity, the ability to hire employees, sign contracts, own assets, and receive payments in India.
But setting up a subsidiary in India involves more than filing one form. There are pre-incorporation decisions, incorporation filings with the Ministry of Corporate Affairs, FEMA filings with the Reserve Bank of India, tax registrations, bank account opening, employment compliance, and an annual compliance calendar that starts from the first day of operations.
Each step has its own timeline, authority, and consequences for delay.
This guide explains the complete process in plain language — what a subsidiary is, the decisions to make before incorporation, each registration step, and the ongoing compliance requirements.
What Is a Subsidiary Company When Setting Up a Subsidiary in India?
A subsidiary is a company in which another company, known as the parent or holding company, holds more than 50% of the total share capital or controls the composition of the board of directors, as described under Section 2(87) of the Companies Act, 2013.
A wholly owned subsidiary (WOS) is a company in which the foreign parent holds 100% of the equity shares. This is a common structure used by foreign companies entering India because it provides the parent with control over the Indian business without the complications of a joint venture partner.
Key Features of an Indian Subsidiary
- It is a separate legal entity from the parent company.
- The parent’s liability is generally limited to its investment in the subsidiary.
- It is treated as an Indian company for applicable tax purposes.
- It can hire employees, own property, enter contracts, borrow money, and sue or be sued in its own name.
- It is subject to Indian company law, tax law, FEMA, employment law, and other applicable regulations.
- The foreign parent is a foreign investor for FEMA purposes, and the subsidiary must comply with the applicable FDI framework.
Setting Up a Subsidiary in India vs Other Entry Structures
| Feature | Subsidiary (Pvt Ltd) | Branch Office | Liaison Office |
| Separate legal entity | Yes | No | No |
| Can earn revenue in India | Yes | Limited activities only | No |
| Tax rate | Domestic | Foreign | Not taxable on income |
| RBI approval required | FDI reporting applicable | Yes, prior approval | Yes, prior approval |
| Can hire employees | Yes | Yes, limited | Yes, limited |
| Best for | Full-scale operations | Export/import, IT support | Market research only |
For businesses comparing an Indian subsidiary with other entry structures, professional company law and FDI guidance can help identify the appropriate structure. ELT Law Firm – Company Law Services
Before Setting Up a Subsidiary in India, the foreign parent should finalize the proposed company structure, shareholders, directors, capital, and registered office.
Setting Up a Subsidiary in India: Key Pre-Incorporation Decisions
Before filing any form, five important decisions must be made. Getting these details right can help reduce delays after incorporation.
1. Company Name
The name must be unique and should not be identical or confusingly similar to an existing registered company. It must also comply with applicable incorporation rules and end with “Private Limited”.
Check name availability through the MCA21 portal before preparing the incorporation documents. Two name options can be submitted through the SPICe+ process.
2. Registered Office Address
Every Indian company must have a registered office in India from the date of incorporation. The address must satisfy applicable requirements and be supported by appropriate documents such as a utility bill and No Objection Certificate from the premises owner.
The registered office address is filed with the ROC and is used for official communications.
3. Share Capital Structure
Decide the authorised share capital and paid-up share capital. There is no minimum paid-up capital requirement for a private limited company under the Companies Act. However, the capital structure should be appropriate for the business and comply with applicable FEMA pricing requirements where foreign investment is involved.
4. Directors
A private limited company requires a minimum of two directors. At least one director must satisfy the resident-director requirement under the Companies Act.
The second director can be a foreign national. Directors require the applicable DIN and DSC. For foreign national directors, documents may require notarisation, apostille, or consularisation, as applicable.
5. Shareholders
A private limited company requires a minimum of two shareholders. For a wholly owned subsidiary, the foreign parent may hold the overwhelming majority of shares, with a nominee holding the remaining share where required by the structure.
Pre-incorporation preparation is important because issues involving company names, addresses, foreign documents and DIN applications can delay the incorporation process.
The process of Setting Up a Subsidiary in India begins with selecting the appropriate company structure and completing the required incorporation filings.
Step 1 —Setting Up a Subsidiary in India: Incorporation Through SPICe+
Setting Up a Subsidiary in India generally begins with incorporation through the SPICe+ process on the MCA21 portal.
SPICe+ is an integrated incorporation process that can cover company name reservation, DIN for eligible new directors, incorporation, PAN, TAN and linked registrations/services, subject to the applicable process and eligibility.
The MCA’s official SPICe+ guidance provides the current filing framework and documentation requirements.
Documents Required for SPICe+
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Registered office proof
- Utility bill
- No Objection Certificate from the premises owner
- Identity and address proof of directors and shareholders
- Apostilled documents for applicable foreign nationals
- Board resolution of the foreign parent authorising incorporation
- DSC of proposed directors
- Declaration by the first directors
The Certificate of Incorporation (COI) contains the company’s Corporate Identification Number (CIN).
PAN and TAN are generally integrated into the incorporation process through SPICe+.
Step 2 — Setting Up a Subsidiary in India: Open a Bank Account
After incorporation, the subsidiary needs an appropriate bank account with an Authorised Dealer Category-I bank for relevant foreign exchange transactions.
The company may require:
- Certificate of Incorporation
- MOA and AOA
- PAN
- Board resolution
- KYC documents of directors
- Registered office proof
- Authorised signatory details
Bank account opening may take additional time for foreign-owned companies because banks can conduct enhanced KYC and AML checks on the foreign parent.
The bank account should be ready before the foreign parent remits the subscription amount. The bank provides relevant remittance and KYC documentation required for subsequent foreign investment reporting.
Step 3 — Setting Up a Subsidiary in India: FDI and FC-GPR Compliance
When the foreign parent remits the subscription amount to the Indian subsidiary, the investment is treated as foreign direct investment subject to the applicable FEMA and FDI framework.
Two important actions follow:
Allot Shares Within 60 Days
The Indian subsidiary must allot shares to the foreign parent within the applicable 60-day period following receipt of the remittance.
The company should:
- Pass the required board resolution
- Complete the share allotment
- Issue share certificates
- Update the register of members
- Prepare the pre- and post-allotment shareholding pattern
File FC-GPR Within 30 Days of Allotment
Form FC-GPR is filed through the RBI’s FIRMS reporting framework within the prescribed period after share allotment.
Before filing, the company must complete the applicable FIRMS registration and Entity Master requirements.
Typical supporting documents include:
- Valuation report
- Board resolution for allotment
- FIRC
- KYC report
- FEMA compliance certificate
- Pre- and post-allotment shareholding pattern
Late reporting may be subject to the applicable RBI Late Submission Fee framework or other regularisation/compounding requirements depending on the nature of the issue.
For businesses handling foreign investment, ELT Law Partners LLP also provides FDI compliance and FEMA support covering FC-GPR, FC-TRS, FLA returns and related documentation. ELT Law Firm – FDI Compliance Services
File FLA Return Annually
Every year, the subsidiary must consider the requirement to file the Foreign Liabilities and Assets (FLA) return through the RBI’s reporting system.
The return provides information regarding foreign liabilities, assets and foreign investment as applicable.
Step 4 — Setting Up a Subsidiary in India: PAN and TAN
PAN and TAN are generally issued through the incorporation process.
If they are not received through the integrated process, the company may need to apply through the relevant tax authority process.
PAN
PAN is required for tax filings, banking, GST registration, and various regulatory submissions.
TAN
TAN is required where the company is required to deduct and deposit tax at source.
TDS obligations can begin from the first payment that attracts withholding tax, such as salary, professional fees, rent or contractor payments.
Step 5 — Setting Up a Subsidiary in India: GST Registration
GST registration requirements depend on the nature of the business, turnover, place of supply and other applicable conditions.
The official GST portal provides the registration process and application requirements. For eligible businesses, the registration process involves providing details such as:
- Company PAN
- Certificate of Incorporation
- Registered office details
- Bank account information
- Authorised signatory information
- Business and supply details
Once registered, the subsidiary must follow the applicable GST return and payment requirements.
Businesses should verify the applicable threshold and filing frequency rather than relying on a fixed threshold for every situation.
Step 6 — Setting Up a Subsidiary in India: Employment and Labour Compliance
As soon as the subsidiary begins hiring, applicable employment and labour compliance obligations begin.
These requirements can involve central and state authorities.
Employment Contracts
Employees should receive written employment contracts covering matters such as:
- Designation
- CTC
- Place of work
- Working hours
- Leave
- Notice period
- Termination conditions
- Confidentiality
- Intellectual property rights
Provident Fund (EPF)
EPF requirements apply based on the applicable employee and establishment conditions. Where applicable, registration and contributions must be completed within the prescribed framework.
Employee State Insurance (ESIC)
ESIC requirements depend on the applicable establishment, employee coverage, and wage conditions.
Professional Tax
Professional tax is administered by states. Rates, slabs, and filing requirements differ between states.
Shops and Establishments Registration
Requirements vary by state and generally apply to commercial establishments according to the applicable state law.
POSH Compliance
Employers must comply with applicable requirements under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
This can include establishing an Internal Complaints Committee where applicable, adopting a policy, conducting awareness programmes and completing required reporting.
Expatriate Employees
Foreign nationals working in India may require an appropriate Employment Visa and other immigration compliance depending on their circumstances.
Step 7 — Setting Up a Subsidiary in India: Annual Compliance Calendar
Setting up a Subsidiary in India is not a one-time exercise. Once incorporated and operational, the company must maintain an ongoing compliance calendar.
| Filing / Compliance | Due Date | Authority |
| GSTR-1 | Applicable monthly/quarterly due date | GST Portal |
| GSTR-3B | Applicable due date | GST Portal |
| TDS Deposit | Generally 7th of the following month | Income Tax |
| TDS Returns | Quarterly | Income Tax |
| Advance Tax | Prescribed instalments | Income Tax |
| EPF ECR | Monthly | EPFO |
| ESIC | Monthly | ESIC |
| FLA Annual Return | 15 July | RBI |
| Income Tax Return | Applicable statutory due date | Income Tax |
| Form 3CEB | Where applicable | Income Tax |
| MGT-7 | Within prescribed period after AGM | MCA |
| AOC-4 | Within prescribed period after AGM | MCA |
| Board Meetings | Statutory frequency | Internal/MCA |
| AGM | Within statutory period | Internal/MCA |
| GSTR-9 | Where applicable | GST Portal |
| POSH Annual Report | Applicable statutory deadline | District Officer |
The exact filing dates, applicability, and penalties should always be checked against the current rules because they can vary according to company status, turnover, tax regime, state, and other circumstances.
What Happens If Annual Compliance Is Missed?
Missing annual filings can result in financial consequences and other regulatory issues. Persistent defaults can also affect corporate records, due diligence, fundraising, M&A transactions, and director compliance.
A live compliance calendar should therefore be prepared from the beginning, with a responsible person assigned to each filing.
The Complete Setup Timeline
| Phase | Activity | Typical Duration | Authority |
| Pre-incorporation | Name, office, capital, DIN/DSC, foreign documents | 2–4 weeks | Various |
| Incorporation | SPICe+ and Certificate of Incorporation | 3–7 working days | ROC / MCA21 |
| Bank account | Account opening with AD Category-I bank | 7–14 working days | AD Bank |
| FDI receipt | Foreign parent remits subscription amount | 1–3 days after account readiness | AD Bank |
| Share allotment | Board resolution and share issue | Within applicable 60-day period | Internal / CS |
| FC-GPR filing | FIRMS registration and filing | Within applicable 30-day period | RBI / FIRMS |
| GST registration | GST application | Subject to processing | GST Portal |
| EPF / ESIC | Registration where applicable | Statutory timeline | EPFO / ESIC |
| Shops & Establishments | State registration | State-specific | State Government |
| POSH | ICC, policy and training | Before/at applicable employment stage | Internal |
| Fully operational | Registrations completed and calendar active | Around 6–10 weeks in the source workflow | — |
How ELT Law Partners LLP Can Help
Setting up a Subsidiary in India requires coordination between corporate law, FDI, FEMA, tax, and employment compliance.
ELT Law Partners LLP assists foreign companies with:
- Pre-incorporation advice
- Company structure and capital planning
- SPICe+ filing and documentation
- FIRMS registration
- FC-GPR filing
- FEMA documentation
- Valuation coordination
- GST registration
- Employment contract drafting
- POSH compliance
- Annual compliance planning
ELT Law Partners LLP also provides legal support for foreign investors entering India through FDI structures and subsidiary arrangements.
For corporate compliance and company law assistance, businesses can also explore ELT Law Firm’s Company Law Services.
Conclusion
Setting up a Subsidiary in India is a structured process with defined steps, timelines, and authorities. The process becomes easier to manage when the pre-incorporation decisions are completed first, followed by SPICe+ incorporation, bank account opening, FDI receipt, share allotment, FC-GPR reporting, GST, and employment compliance.
The important point is that incorporation is only the beginning. A subsidiary must continue meeting corporate, tax, FEMA, employment, and other applicable regulatory obligations after it starts operating.
A missed filing, incomplete documentation, or delayed registration can create avoidable compliance issues. Building an annual compliance calendar from the first day helps the company track its responsibilities and maintain proper records.
FAQs
Q1. How long does it take to set up a subsidiary in India?
From the decision to set up to becoming fully operational, the source workflow estimates approximately 6 to 10 weeks. Incorporation itself can take 3 to 7 working days once the SPICe+ filing is ready, while preparation of foreign documents and bank account opening can add additional time.
Q2. Does every Indian subsidiary need a resident director?
Yes. The Companies Act requires at least one director to satisfy the applicable resident-director requirement. A foreign national may serve as another director subject to applicable requirements.
Q3. What is SPICe+ and how does it work?
SPICe+ is an integrated MCA incorporation process that facilitates company incorporation and linked registrations/services. The MCA’s current guidance explains the applicable filing blocks and documentation.
Q4. When must FC-GPR be filed after receiving FDI?
FC-GPR is generally required within the prescribed period after the date of share allotment. The company must also complete the applicable FIRMS registration and prepare the required supporting documents.
Q5. Can a subsidiary open a bank account before receiving FDI?
Yes. The bank account is opened after incorporation, and the foreign parent can then remit the subscription amount through the appropriate banking channel.
Q6. Is GST registration mandatory from the first day of operations?
GST registration depends on the applicable statutory conditions, including turnover, nature of supplies, and other registration triggers. Businesses should check the current GST requirements for their specific circumstances. The official GST portal provides the registration procedure.
Q7. What is the minimum share capital for an Indian private limited company?
There is no minimum paid-up capital requirement under the Companies Act for a private limited company. However, the capital structure should be commercially appropriate and comply with applicable FEMA requirements where foreign investment is involved.
Q8. What annual filings does a subsidiary need to make?
Depending on the circumstances, annual and periodic obligations can include GST returns, TDS filings, income tax filings, FLA return, MGT-7, AOC-4, EPF/ESIC compliance, transfer pricing documentation, and POSH-related requirements.
Q9. Can a foreign national be a director of an Indian subsidiary?
Yes. A foreign national can be a director subject to applicable Companies Act requirements, DIN, and documentation requirements. At least one director must satisfy the resident-director requirement.
Q10. What happens if FEMA filings are missed after incorporation?
The consequences depend on the nature of the delay or violation. Certain delayed reporting may be regularised under applicable RBI mechanisms, while substantive FEMA contraventions may require compounding or other regulatory action.
