Set Up a Wholly Owned Subsidiary in India from the Philippines

How to Register a Wholly Owned Subsidiary in India from the Philippines

A Wholly Owned Subsidiary (WOS) is a company incorporated under India's Companies Act 2013 where the entire shareholding is held by the Philippine parent company. Unlike a Branch Office or Liaison Office, a WOS is a separate Indian legal entity with its own directors, bank accounts, and compliance obligations. It can engage in any lawful business activity permitted under Indian law, including manufacturing, trading, and services.

The Philippines and India share a growing economic relationship, with bilateral trade running into billions of US dollars a year. Philippine conglomerates and mid-market companies are increasingly looking at India for IT services, business process outsourcing, and manufacturing. A WOS provides the most comprehensive market entry structure, offering full operational control, limited liability protection for the parent company, and the ability to raise capital in India. For comparisons with other entity types, see Subsidiary vs Branch Office and Private Limited vs LLP.

FDI Route and Regulatory Requirements

Philippine investors benefit from the automatic route for foreign direct investment in India. Since the Philippines does not share a land border with India, Press Note 3 (2020) restrictions do not apply. Philippine companies do not need prior government approval and can invest directly through an Authorised Dealer (AD) bank, provided the sector allows 100% FDI under the automatic route.

Sector-Specific Considerations

Most sectors in India permit 100% FDI under the automatic route, including manufacturing, IT/ITES, e-commerce (marketplace model), pharmaceuticals (greenfield), and most services. Sectors with FDI caps or government approval requirements include:

• Single-brand retail: 100% FDI allowed, but above 51% requires 30% local sourcing
• Multi-brand retail: Capped at 51%, government approval route
• Insurance: 100% FDI under the automatic route (raised from 74% by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, operationalised via the FEM (Non-Debt Instruments) (Second Amendment) Rules, 2026 notified 2 May 2026; at least one of the chairperson/MD/CEO must be a resident Indian citizen, and LIC remains capped at 20%)
• Defence: Up to 74% under automatic route, above 74% via government approval
• Telecom: 100% FDI under the automatic route (raised from a 49% automatic sub-cap in October 2021), subject to the sector's security conditions and Department of Telecommunications licensing

Philippine companies should verify the specific sector cap before initiating the incorporation process. For a detailed breakdown, see Automatic Route vs Government Approval.

Key Structural Requirements

• Minimum directors: 2 (at least 1 must be an Indian resident who has stayed in India for a minimum of 182 days in the financial year, per Section 149(3) of the Companies Act 2013)
• Minimum shareholders: 1 (the Philippine parent company can be the sole shareholder)
• Minimum authorised capital: No statutory minimum, but INR 1 lakh is the standard starting point
• Registered office: Must be in India with a valid address proof

DTAA Benefits for Philippine Investors

The Double Taxation Avoidance Agreement between India and the Philippines, in force since 21 March 1994, provides significant tax relief for Philippine companies operating through a WOS in India. Unlike a Branch Office (which constitutes a Permanent Establishment and is taxed at the higher foreign company rate of 35%), a WOS is taxed as a domestic Indian company at the lower corporate rate of 22-25.17%.

Key DTAA Rates

• Dividends (Article 11): Capped at 15% withholding tax in the source country where the beneficial owner is a company owning at least 10% of the shares of the paying company - which the Philippine parent of a wholly owned subsidiary always will - and 20% in all other cases. Since India abolished the Dividend Distribution Tax in 2020, dividends are taxable in the hands of the recipient, making this treaty relief directly applicable
• Interest (Article 12): Capped at 15%, or 10% where the interest is received by a financial institution (including an insurance company)
• Royalties (Article 13): Capped at 15%, but only where the royalty is payable by an Indian enterprise under a collaboration agreement approved by the Government of India; outside that condition the treaty sets no ceiling and Indian domestic rates apply
• Fees for technical services: The India-Philippines treaty contains no fees-for-technical-services article. Such fees fall under Article 7 (business profits), Article 15 (independent personal services) or Article 23 (other income), so India can tax them only where the Philippine company has a permanent establishment or fixed base in India
• Capital gains (Article 14): Gains on the sale of shares are taxable only in the state in which the seller is resident, unless the company's property consists principally of immovable property situated in India, in which case India may tax the gain. Indian domestic anti-avoidance rules continue to apply

The India-Philippines convention carries separate Air Transport and Shipping articles, so its numbering runs one article ahead of the usual OECD pattern: Dividends sit in Article 11, Interest in Article 12, Royalties in Article 13 and Capital Gains in Article 14.

To claim DTAA benefits, the Philippine parent company must obtain a Tax Residency Certificate (TRC) from the Philippine Bureau of Internal Revenue and file Form 10F in India. See the DTAA Master Guide for detailed guidance.

Document Requirements and Authentication

The Philippines acceded to the Hague Apostille Convention on 12 September 2018, and the Convention entered into force for the Philippines on 14 May 2019. India did not object to that accession, so the Convention operates between the two countries. Philippine documents destined for use in India now require an apostille from the Department of Foreign Affairs (DFA) of the Philippines, rather than the longer embassy attestation process. For more information, see Apostille vs Embassy Attestation.

Documents from the Philippine Parent Company

• Certificate of Incorporation or SEC Registration Certificate (apostilled)
• Articles of Incorporation and By-Laws (apostilled)
• Board resolution authorising the establishment of a WOS in India and nominating directors
• Audited financial statements of the parent company for the latest year (apostilled)
• Passport copies of all proposed directors (notarised and apostilled)
• Address proof of proposed directors (utility bill or bank statement, notarised and apostilled)
• Power of Attorney in favour of the authorised representative in India (apostilled)
• Parent company PAN or tax identification number

Documents Prepared in India

• Digital Signature Certificate (DSC) for all proposed directors
• Director Identification Number (DIN) application via SPICe+ for directors without existing DIN
• Proof of registered office address (rent agreement + landlord NOC + utility bill)
• Declaration by first directors and subscribers under INC-9

Step-by-Step Registration Process

Step 1: Obtain DSC and DIN

All proposed directors must obtain a Class-3 Digital Signature Certificate (DSC) from a licensed Certifying Authority. Foreign directors can apply for DSC by submitting a notarised and apostilled passport copy. Up to 3 directors can obtain DIN through the SPICe+ form itself. Timeline: 3-5 days.

Step 2: Name Reservation via SPICe+ Part A

Reserve the company name through SPICe+ Part A on the MCA portal. Two name options can be submitted per application. The name must not be identical or too similar to an existing company or trademark. The reserved name is valid for 20 days. Timeline: 1-3 days.

Step 3: File SPICe+ Part B for Incorporation

Complete the SPICe+ Part B form with company details, director information, share capital structure, registered office address, and the Memorandum and Articles of Association (eMoA and eAoA). The form integrates applications for PAN, TAN, GST registration, EPFO, ESIC, and bank account opening. Timeline: 5-7 days.

Step 4: Receive Certificate of Incorporation

Upon approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation along with PAN and TAN. The company receives its Corporate Identity Number (CIN) and is legally incorporated. Timeline: 1-2 days after SPICe+ approval.

Step 5: Open Bank Account and Receive FDI

Open a current account with an AD Category-I bank in India. The Philippine parent company remits the investment amount to this account. The separate Advance Reporting Form was discontinued when the RBI moved foreign-investment reporting to the FIRMS/Single Master Form portal in 2018: register the company on FIRMS (Entity Master) and report the inflow in the FC-GPR at Step 6.

Step 6: Allot Shares and File FC-GPR

Allot shares to the Philippine parent company within 60 days of receiving the investment. File Form FC-GPR through the FIRMS portal within 30 days of share allotment. Obtain a valuation certificate from a SEBI-registered merchant banker or a practising Chartered Accountant confirming shares were issued at fair market value. See our guide on FDI Advisory Services.

Step 7: File INC-20A (Commencement of Business)

File INC-20A within 180 days of incorporation, declaring that every subscriber has paid the value of shares and that the registered office is verified. The company cannot commence business until this declaration is filed.

Timeline and Costs

The end-to-end timeline for establishing a WOS in India from the Philippines is approximately 4-8 weeks:

Cost Breakdown

• Government fees (MCA): INR 1,000-7,500 (based on authorised capital)
• Stamp duty: INR 5,000-15,000 (varies by state of registration)
• DSC fees: INR 1,500-3,000 per director
• Professional fees (CS/CA): INR 30,000-1,00,000
• Apostille charges in the Philippines: PHP 100-200 per document (DFA fees)
• Total estimated cost: INR 50,000-1,50,000 plus apostille and notarisation costs

Post-Registration Compliance

A WOS incorporated in India must comply with the following ongoing obligations:

• Annual return (Form MGT-7): Filed within 60 days of the Annual General Meeting
• Financial statements (Form AOC-4): Filed within 30 days of the AGM
• Income tax return: Filed annually by 31 October (companies subject to statutory audit) or 30 November (companies with a transfer pricing report under Form 3CEB)
• GST returns: Monthly GSTR-1 and GSTR-3B filings if GST-registered
• Transfer pricing: Mandatory transfer pricing documentation and certification (Form 3CEB) for all international transactions with the Philippine parent or affiliates
• Board meetings: Minimum 4 per year, with at least 1 per quarter
• Statutory audit: Annual audit by a practising Chartered Accountant in India
• RBI annual return (FLA return): Filed annually by 15 July for companies with FDI

Beacon Filing provides comprehensive annual compliance, corporate tax filing, and FEMA/RBI compliance services for wholly owned subsidiaries.

Common Challenges for Philippine Companies

Appointing an Indian Resident Director

Every WOS must have at least one director who has stayed in India for a minimum of 182 days in the financial year, per Section 149(3) of the Companies Act 2013. Philippine companies entering India for the first time often struggle to identify a suitable Indian resident director. Options include appointing a senior Indian employee, engaging a professional director service, or relocating a Philippine national to India to build the required residency. Beacon Filing can assist with director appointment services.

Transfer Pricing Scrutiny

Transactions between the Indian WOS and its Philippine parent company (management fees, royalties, service charges, goods transfer pricing) are subject to Indian transfer pricing regulations. The WOS must maintain contemporaneous documentation proving all related-party transactions are conducted at arm's length. Inadequate documentation can result in significant penalties and adjustments. File Form 15CA/15CB for all outward remittances to the Philippines.

Repatriation of Profits

Dividends from the Indian WOS to the Philippine parent company are subject to withholding tax in India (capped at 15% under the DTAA for a parent company holding at least 10% of the shares, or the domestic rate if lower). Ensure compliance with FEMA regulations when remitting dividends, and obtain a Chartered Accountant's certificate confirming tax compliance. The Philippine parent must declare the dividend income and claim foreign tax credits under the India-Philippines DTAA.

Share Valuation for FC-GPR

Shares issued to the Philippine parent company must be valued at fair market value as determined by a SEBI-registered merchant banker or a practising Chartered Accountant using a prescribed valuation method (typically DCF for unlisted companies). Under-valuation can trigger RBI scrutiny and potential penalties.

Opening an Indian Bank Account Remotely

Most Indian banks require in-person or video KYC verification for foreign-owned companies. While the incorporation process can be completed remotely through the MCA portal, Philippine directors may need to visit India or complete video KYC with the bank. Some banks accept apostilled documents and a Power of Attorney for initial account opening.

Frequently Asked Questions

Can a single Philippine company be the sole shareholder of a WOS in India?

Yes. Under the Companies Act 2013, a Private Limited Company can have a single shareholder. The Philippine parent company can hold 100% of the shares, making it a Wholly Owned Subsidiary. However, a minimum of 2 directors is still required, with at least 1 being an Indian resident.

Is there a minimum capital requirement for a WOS in India?

There is no statutory minimum capital requirement for a Private Limited Company in India. The authorised capital can be set at any amount (commonly starting at INR 1 lakh). However, the actual capital invested should be sufficient for the intended business operations and will be scrutinised during FC-GPR filing.

Does a Philippine company need RBI approval to set up a WOS?

No. Since the Philippines does not share a land border with India, and most sectors permit 100% FDI under the automatic route, Philippine companies do not need prior RBI or government approval. The investment is reported post-facto through the FC-GPR filing within 30 days of share allotment.

What is the corporate tax rate for a WOS in India?

A WOS incorporated as a domestic Indian company can opt for a concessional tax rate of 22% (effective rate 25.17% including surcharge and cess) under Section 115BAA, or, for new manufacturing companies that commenced manufacturing on or before 31 March 2024, 15% (effective rate 17.16%) under Section 115BAB (this window is now closed to companies commencing manufacturing after that date). This is significantly lower than the 35% rate applicable to Branch Offices of foreign companies.

Can the WOS hire Philippine nationals in India?

Yes. Philippine nationals can work in the Indian WOS on an Employment Visa or Business Visa. The WOS must comply with Indian labour laws and can sponsor employment visas for Philippine nationals being posted to India. Typical processing time for an Employment Visa is 2-4 weeks through the Indian Embassy in Manila.

How long does the FC-GPR filing take?

The FC-GPR must be filed within 30 days of share allotment through the FIRMS (Foreign Investment Reporting and Management System) portal. The AD bank reviews and submits the filing to the RBI. Processing typically takes 2-4 weeks. Late filing attracts compounding penalties under FEMA.

Can a WOS be converted into a listed company later?

Yes. A WOS can be converted from a Private Limited Company to a Public Limited Company and subsequently list on Indian stock exchanges (BSE/NSE) through an IPO, subject to SEBI regulations and minimum listing requirements. The conversion requires a special resolution and ROC approval.