Set Up a Wholly Owned Subsidiary in India from Australia

How to Register a Wholly Owned Subsidiary in India from Australia

A Wholly Owned Subsidiary (WOS) is the preferred market-entry structure for Australian companies that want full operational and strategic control over their Indian business. Unlike a joint venture or branch office, a WOS allows the Australian parent to hold 100% of the equity shares in the Indian entity, making it a separate legal entity with its own PAN, GST registration, and compliance obligations.

Australia's cumulative FDI in India exceeded US$1.45 billion between April 2000 and March 2024. The India-Australia Economic Cooperation and Trade Agreement (ECTA), operational since December 2022, has accelerated bilateral investment. A WOS in India is structured as a Private Limited Company under the Companies Act, 2013, where the Australian parent company (or its nominees) holds all the shares. This structure is ideal for IT services, manufacturing, professional services, and any operation requiring full brand and IP control.

For a comparison of entity types available to Australian investors, see Branch Office vs Subsidiary and WOS vs LLP for Foreign Investors.

FDI Route and Regulatory Requirements

Australian companies can establish a WOS in India through the Automatic Route in most sectors. Under this route, no prior approval from the RBI or the central government is required. The parent company simply incorporates the subsidiary and files the requisite post-incorporation RBI forms.

Key regulatory considerations for Australian WOS investors:

• 100% FDI permitted: In sectors like IT/ITES, manufacturing, infrastructure, e-commerce (marketplace model), food processing, healthcare, and renewable energy
• FDI caps apply: Insurance (100% with conditions), multi-brand retail (51%), defence (74% automatic, 100% with approval), banking (74%), print media (26%)
• Press Note 3 exemption: Australia is not a neighbouring country, so the additional security screening under Press Note 3 (2020) does not apply
• Parent company board resolution: The Australian parent's board must pass a resolution authorising the establishment of the Indian subsidiary and appointing directors

The WOS is registered as a Private Limited Company with the Registrar of Companies (ROC) and must comply with both the Companies Act, 2013 and FEMA regulations. For more on the regulatory framework, see our FDI Advisory service page and Automatic Route vs Government Approval.

DTAA Benefits for Australian Investors

The India-Australia Double Taxation Avoidance Agreement, in force since 30 December 1991, provides significant tax efficiencies for WOS structures. When the Indian subsidiary repatriates profits, royalties, or interest to the Australian parent, the DTAA limits source-country withholding taxes:

• Dividends: Maximum 15% withholding in India (Article 10). The Australian parent can claim a foreign tax credit for this amount against its Australian tax liability
• Interest on intercompany loans: Capped at 15%, reduced to 10% when paid to a recognised financial institution (Article 11)
• Royalties and technical service fees: 10-15% depending on the nature of the payment (Article 12)
• Capital gains on share transfer: Specific provisions apply based on the nature of assets held by the subsidiary

For a WOS structure, the DTAA is particularly valuable because all profit repatriation flows through dividend or intercompany payment channels. Proper structuring of management fees, royalties, and intercompany pricing can optimise the overall effective tax rate across both jurisdictions. See our India-Australia Capital Gains Tax guide for detailed scenarios.

Document Requirements and Authentication

Both Australia and India are parties to the Hague Convention on Apostille. Australian corporate documents require apostilling by the Department of Foreign Affairs and Trade (DFAT) before submission to Indian authorities. This is significantly simpler than embassy attestation. Compare the two processes in our Apostille vs Embassy Attestation guide.

Documents from the Australian Parent Company

• Board resolution authorising incorporation of the Indian WOS, appointment of directors, and authorised capital (apostilled)
• Certificate of Incorporation of the Australian parent (apostilled)
• Memorandum and Articles of Association of the parent company (apostilled)
• Latest audited financial statements of the parent (apostilled)
• Passport copies of all proposed directors (notarised and apostilled)
• Proof of address of directors (notarised and apostilled, not older than 2 months)
• Power of Attorney for the authorised representative in India (apostilled)
• Shareholder details and beneficial ownership declaration

Documents Prepared in India

• Digital Signature Certificates (DSC) for all directors
• Director Identification Numbers (DIN)
• Memorandum of Association (MoA) of the Indian subsidiary
• Articles of Association (AoA) of the Indian subsidiary
• Registered office proof (lease agreement + landlord NOC + utility bill)

Step-by-Step Registration Process

Setting up a WOS follows the same incorporation process as a Private Limited Company via the SPICe+ portal, with additional FDI-related filings:

Step 1: Australian Parent Passes Board Resolution

The parent company's board resolves to incorporate the Indian subsidiary, specifying the authorised capital, proposed directors, and business objects. This resolution is apostilled through DFAT.

Step 2: Obtain DSCs and DINs

Apply for Digital Signature Certificates for all proposed directors. The DINs are obtained through the SPICe+ form itself. At least one director must be an Indian resident (present in India for at least 182 days in the financial year).

Step 3: Name Reservation and SPICe+ Filing

Reserve the company name through the RUN service or SPICe+ Part A. File SPICe+ Part B with the MoA (INC-33), AoA (INC-34), and all supporting documents. The ROC issues the Certificate of Incorporation along with PAN and TAN.

Step 4: Open Bank Account and Receive Capital

Open a current account with an Authorised Dealer (AD) bank. The Australian parent remits the share subscription amount. The bank issues the Foreign Inward Remittance Certificate (FIRC), which is essential for RBI reporting.

Step 5: Allot Shares and File FC-GPR

The Indian subsidiary's board allots shares to the Australian parent. Within 30 days of allotment, file Form FC-GPR on the RBI's FIRMS/SMF portal. Required supporting documents include the FIRC, KYC of the foreign investor, valuation certificate (from a SEBI-registered merchant banker or CA), and the company secretary's compliance certificate.

Step 6: Post-Incorporation Registrations

Apply for GST registration, Shops and Establishment registration, Professional Tax registration (state-specific), and any industry-specific licenses or permits.

Timeline and Costs

The total timeline for establishing a WOS in India from Australia is 6-10 weeks:

Cost Breakdown

• Government fees (ROC/MCA): INR 5,000-15,000 (based on authorised capital; WOS typically have higher authorised capital)
• Stamp duty: INR 5,000-20,000 (varies by state)
• DSC: INR 1,500-2,500 per director
• Professional fees (CS/CA/legal): INR 25,000-75,000
• Valuation report for FC-GPR: INR 15,000-30,000
• Apostille charges in Australia: AUD 85-130 per document
• Total estimated cost: INR 75,000-1,50,000 plus apostille costs

Post-Registration Compliance

A WOS in India has more extensive compliance obligations than a branch or liaison office because it is a full legal entity:

• Annual ROC filings: AOC-4 (financial statements) and MGT-7 (annual return)
• Income tax return: Filed annually; corporate tax at 22% (effective ~25.17%) or 15% for new manufacturing companies (effective ~17.16%)
• GST returns: Monthly GSTR-1 and GSTR-3B if GST-registered
• RBI/FEMA compliance: Annual Performance Report (APR), FC-GPR for each equity issuance, and FEMA reporting through FIRMS/SMF
• Transfer pricing documentation: Mandatory for all international transactions between the WOS and the Australian parent exceeding INR 1 crore
• Board meetings: Minimum four per year, at least one per quarter
• Statutory audit: Annual audit by a practising Chartered Accountant

Beacon Filing provides comprehensive annual compliance, FEMA/RBI compliance, and corporate tax filing services for WOS entities.

Common Challenges for Australian Companies

Valuation Requirements for FC-GPR

The RBI requires a valuation report from a SEBI-registered merchant banker or a practising Chartered Accountant for every FC-GPR filing. For a newly incorporated WOS, the valuation is typically at face value, but subsequent share issuances require a full DCF or NAV-based valuation. Delays in obtaining the valuation report are a common bottleneck.

Resident Director Requirement

At least one director must be an Indian resident. For WOS structures, companies typically appoint a senior Indian employee or a professional nominee director. This individual has fiduciary duties under Indian law and should be carefully selected.

Intercompany Transfer Pricing

The Australian parent and Indian WOS will inevitably have intercompany transactions (management fees, IP licenses, shared services). All such transactions must be at arm's length pricing with contemporaneous documentation. The Indian tax authorities actively scrutinise WOS transfer pricing arrangements, especially for IT services and management fee charges.

Capital Structuring

The ratio of equity to intercompany debt (thin capitalisation) affects tax efficiency. While India does not have formal thin capitalisation rules for most sectors, excessive intercompany debt can trigger transfer pricing adjustments. Structure the initial capitalisation carefully with professional advice.

Permanent Establishment Risk

If the Australian parent's employees or directors exercise decision-making authority in India beyond their WOS board roles, the parent may create a Permanent Establishment (PE) in India, triggering separate tax obligations. Maintain clear operational boundaries between the parent and the WOS.

For comprehensive guidance, explore our Foreign Subsidiary Registration service and the Australia country guide.

Sector-Specific Licences

Beyond basic incorporation, Australian WOS entities in regulated sectors must obtain additional approvals. Financial services companies require RBI registration. Healthcare and pharmaceutical businesses need CDSCO or state drug licence approvals. Food processing ventures must register with FSSAI. IT companies handling government contracts may need security clearances. These sector-specific licences can add 4-16 weeks to the overall operational readiness timeline and should be planned for in parallel with the incorporation process.

Frequently Asked Questions

What is the difference between a WOS and a Private Limited Company in India?

A WOS is legally structured as a Private Limited Company. The term "Wholly Owned Subsidiary" refers to the ownership structure where a single foreign parent company holds 100% of the shares. The incorporation process, compliance obligations, and legal framework are identical to any other Pvt Ltd company under the Companies Act, 2013.

Can the Australian parent hold 100% shares in the Indian WOS?

Yes, in sectors where 100% FDI is permitted under the automatic route. The parent company (or its nominees) can hold all shares. There is no requirement for an Indian shareholder in a WOS, although at least one director must be an Indian resident.

What is FC-GPR and when must it be filed?

FC-GPR (Foreign Currency Gross Provisional Return) is a mandatory RBI form filed through the FIRMS portal within 30 days of allotting shares to a foreign investor. It confirms the FDI transaction details including the amount invested, number of shares allotted, and valuation. Late filing attracts penalties calculated as INR 7,500 plus 0.025% of the amount involved per day of delay.

Does the Australian parent need to maintain minimum capital in the Indian WOS?

India does not prescribe a minimum paid-up capital for Private Limited Companies. However, the authorised capital should be sufficient for the WOS's operational needs and planned activities. The RBI requires the share price to comply with FEMA pricing guidelines based on fair market valuation.

Can the WOS repatriate 100% of profits to Australia?

Yes. After paying Indian corporate tax and the applicable dividend distribution tax (withholding capped at 15% under the India-Australia DTAA), the WOS can repatriate all profits to the Australian parent through dividends. The repatriation is processed through an Authorised Dealer bank with no RBI approval required for current account transactions.

How is the WOS taxed differently from a branch office in India?

A WOS (Pvt Ltd) pays corporate tax at 22% (effective ~25.17%) on its net profits. A branch office of a foreign company pays tax at 35% (effective ~38.22%) on its India-attributable income. This significant tax rate difference is a key reason most Australian companies prefer the WOS structure. See our Branch Office vs Subsidiary comparison.