How to Set Up an Indian Subsidiary as a Foreign Company
FDI eligibility, SPICe+ incorporation, resident director rules, and post-setup FEMA filings.
Most foreign companies can set up a 100%-owned Indian subsidiary through the Automatic FDI Route with no prior RBI or government approval, subject to sector rules. Incorporation usually completes in about 10–15 working days through MCA's SPICe+ once documents are ready. After share capital is received and allotted, Form FC-GPR filing with RBI is mandatory within 30 days.
Key Highlights covered
- Confirm your sector's FDI cap and Automatic vs Government Route first.
- A private limited WOS generally needs at least 2 shareholders and 2 directors, including one resident director.
- Foreign corporate documents usually need notarization and apostille/legalization.
- SPICe+ covers incorporation plus PAN, TAN, and EPFO/ESIC in one flow.
- Do not miss FC-GPR within 30 days of allotting shares to the foreign parent.
What a wholly owned subsidiary actually is
A wholly owned subsidiary (WOS) is an India-incorporated company owned 100% by a foreign parent. It is a separate legal entity with local operating control — it can hire, invoice, and contract in India. FDI, FEMA, and Companies Act rules are sector-dependent and change with notification, so treat this as a general guide and complete a sector-specific FDI check before you commit to a structure.
Choosing the right entry structure
A Liaison Office is a representative presence only and cannot invoice or earn revenue in India. A Branch Office can conduct limited permitted activities under more RBI oversight. A Project Office suits a specific contract. A Wholly Owned Subsidiary is the usual choice for real commercial presence because it allows normal business activity, hiring, invoicing, and contracting as an Indian company.
Step 1 — Confirm FDI eligibility for your sector
Under the Automatic Route, most sectors allow FDI up to the permitted cap without prior government approval. The Government Route applies to sensitive sectors that need approval. Examples under current Consolidated FDI Policy practice include IT/software, many manufacturing activities, and B2B e-commerce marketplace models at up to 100% automatic; single-brand retail at 100% with conditions; multi-brand retail capped at 51% with government approval; insurance at 74% automatic with conditions evolving after Union Budget 2025; banking capped at 74%; and defence, telecom, and broadcasting with special restrictions. Always verify the current policy for your exact activity before drafting incorporation papers.
Step 2 — Structure shareholders and directors
A private limited WOS generally needs a minimum of two shareholders and two directors. At least one director must be a resident director — a person who has stayed in India for the required minimum period in the preceding calendar year. Wholly foreign teams often discover this late. If no parent nominee qualifies, a local professional director can satisfy the requirement.
Step 3 — Prepare and legalize foreign documents
The parent usually needs a board resolution authorizing the Indian subsidiary, appointing an authorized signatory, and approving the shareholding structure. Foreign corporate documents — certificate of incorporation, board resolution, and ID proofs — generally need notarization and apostille or legalization for Indian use. This step is often the real timeline bottleneck, not the Indian ROC filing itself.
Step 4 — Reserve the name and incorporate via SPICe+
Name reservation and incorporation run through MCA's SPICe+ integrated form, which also handles PAN, TAN, and EPFO/ESIC registration. Once documents are ready, the whole incorporation process typically completes in about 10–15 working days. Some ROC steps complete faster, around 5–7 working days, while bank account opening often adds another 7–10 working days. Treat these as ranges, not guarantees.
Step 5 — Open a bank account and bring in capital
Bank account opening for a foreign-owned Indian company typically takes 7–10 working days and needs the incorporation certificate, PAN, and KYC for directors and shareholders. Capital must come through normal banking channels under FDI rules.
Step 6 — Post-incorporation FEMA and ROC compliance
File Form INC-20A within 180 days of incorporation to declare commencement of business. File Form FC-GPR with RBI within 30 days of allotting shares to the foreign parent — one of the most commonly missed steps by first-time foreign promoters, with FEMA compounding and penalty exposure if delayed. File the annual Foreign Liabilities and Assets (FLA) return for any company with foreign investment. Ongoing duties then match any Indian company: AOC-4, MGT-7, income tax returns, GST where applicable, board process, and audit.
Common mistakes in India market entry
Starting incorporation before confirming sector-specific FDI eligibility. Underestimating apostille and legalization timelines. Missing the 30-day FC-GPR deadline after share allotment. Assuming a subsidiary is automatic when a Liaison or Branch Office may better fit an exploratory phase.
Frequently Asked Questions
Often yes, where the Consolidated FDI Policy allows 100% FDI under the Automatic Route for that sector. Some sectors are capped or need government approval, so confirm eligibility for your exact activity first.
Once foreign documents are legalized and ready, SPICe+ incorporation commonly completes in about 10–15 working days. Bank account opening typically adds another 7–10 working days.
Yes. A private limited company generally needs at least one director who meets the resident director stay requirement for the preceding calendar year.
FC-GPR is the FEMA filing that reports foreign share capital received by the Indian company. It must be filed with RBI within 30 days of allotting shares to the foreign parent.
A liaison office is representative only and cannot earn revenue. A branch office can do limited permitted activities under tighter RBI oversight. A subsidiary is a separate Indian company and is usually the structure for full commercial operations.
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This article is written and reviewed by practicing Chartered Accountants of DSS Corp Advisory in Chennai. Information is aligned with the latest Finance Act notifications.