Set Up a Wholly Owned Subsidiary in India from Poland

How to Set Up a Wholly Owned Subsidiary in India from Poland

A Wholly Owned Subsidiary (WOS) is the preferred entity structure for Polish corporations seeking complete operational control in India. Unlike a joint venture or a branch office, a WOS allows the Polish parent company to hold 100% of the equity in the Indian entity, giving it full decision-making authority over strategy, management, and profit distribution.

Poland and India elevated their bilateral relationship to a Strategic Partnership in 2024, with bilateral trade reaching USD 5.72 billion in 2023. Polish investment in India stands at approximately USD 685 million, with Indian investments in Poland exceeding USD 3 billion. The upgrade has opened new avenues for cooperation in high-tech, agriculture, energy, and defence, making India an increasingly attractive market for Polish enterprises.

A WOS is structured as an Indian Private Limited Company where the Polish parent company holds all issued shares. It operates under the Companies Act 2013 with a separate legal identity, its own PAN and GST registration, and the ability to enter contracts, own property, and sue or be sued independently. This legal separation means the Polish parent's liability is limited to its investment in the subsidiary.

FDI Route and Regulatory Requirements

Setting up a WOS in India from Poland falls under the automatic route for most sectors. This means no prior approval from the Reserve Bank of India (RBI) or the Department for Promotion of Industry and Internal Trade (DPIIT) is required. The Polish parent simply incorporates the Indian company, transfers investment funds, allots shares, and files mandatory post-investment reports.

Key sectors where 100% FDI is permitted under the automatic route include IT and software, manufacturing, e-commerce (marketplace model), consulting, healthcare, and renewable energy. The insurance sector FDI cap was raised to 100% under the automatic route by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, operative since early 2026 (foreign investment in LIC remains capped at 20%). Defence allows 74% under the automatic route (100% via government route), and telecommunications is fully liberalized at 100%.

Since Poland is an EU member state and does not share a land border with India, a Polish investor is not caught by the Press Note 3 (2020) approval requirement — unlike investors from China, Pakistan, Bangladesh, and other bordering nations, who need Government approval at any stake size. Press Note 2 (2026 Series) of 15 March 2026 narrowed but did not remove that look-through: prior Government approval is still required where citizens or entities of a land-border country exceed the PMLA Rule 9(3) beneficial-ownership thresholds (more than 10% for a company), control the investor entity, or hold ultimate effective control over the Indian investee. The regulatory framework is governed by FEMA, the Companies Act 2013, and the Consolidated FDI Policy.

DTAA Benefits for Polish Investors

The India-Poland DTAA, signed at Warsaw on 21 June 1989 and updated by a Protocol signed on 29 January 2013, in force from 1 June 2014 and effective in India from 1 April 2015, provides reduced withholding tax rates for cross-border income:

• Dividends (Article 11): 10% under the DTAA (versus 20% domestic rate for non-treaty countries)
• Interest (Article 12): 10% under the DTAA (versus 20% domestic rate)
• Royalties (Article 13): 15% under the DTAA (versus 20% domestic rate)
• Fees for Technical Services (Article 13): 15% under the DTAA — royalties and FTS share a single article in this treaty

For a WOS, the 10% dividend withholding rate is particularly relevant since the Polish parent will likely repatriate profits as dividends. Article 24 of the treaty then relieves the residual double taxation, so the same income is not taxed twice across both jurisdictions. To claim treaty benefits, the Polish parent must provide a valid Tax Residency Certificate (TRC) and Form 10F to the Indian subsidiary. Comprehensive transfer pricing documentation is essential for all intercompany transactions between the Polish parent and the Indian WOS.

Document Requirements and Authentication

Both Poland and India are signatories to the Hague Apostille Convention. Documents from Poland are authenticated through the apostille process handled by the Polish Ministry of Foreign Affairs (Department of Consular Affairs) in Warsaw.

The Polish parent company must prepare and apostille:

• Board resolution of the Polish parent authorizing the establishment of an Indian subsidiary, specifying the authorized capital, initial investment amount, and names of proposed directors
• Certificate of incorporation or KRS (Krajowy Rejestr Sadowy) extract of the Polish parent company, certified and apostilled
• Passport copies of all proposed directors and the authorized signatory (notarized and apostilled)
• Address proof of Poland-based directors (utility bill or bank statement, not older than 2 months, notarized and apostilled)
• Memorandum and Articles of Association of the Polish parent (certified copy, apostilled)
• Power of Attorney in favour of an Indian representative authorized to execute incorporation documents

The apostille fee is PLN 60 per document, with processing taking 3-14 working days. Directors also need a Digital Signature Certificate (DSC) from an Indian Certifying Authority, obtainable remotely via video KYC.

Step-by-Step Registration Process

The WOS registration follows the same SPICe+ process as a standard Pvt Ltd, with additional RBI filings for the FDI component:

1. Obtain DSCs: All proposed directors apply for Digital Signature Certificates from an Indian Certifying Authority. Video-based KYC allows remote completion. Timeline: 1-2 business days.
2. Apply for DIN: Director Identification Numbers are obtained within the SPICe+ form for up to three directors.
3. Name reservation (SPICe+ Part A): Propose up to two company names. The approved name is reserved for 20 days. Timeline: 1-2 business days.
4. Filing SPICe+ Part B: Submit the incorporation application including company details, director information, registered office address, authorized capital, and the MoA and AoA. The MoA subscribers section should list the Polish parent company as the sole subscriber. PAN, TAN, GST, EPFO, and ESIC are processed simultaneously.
5. Certificate of Incorporation: The Registrar of Companies issues the Certificate of Incorporation along with PAN and TAN. Timeline: 5-7 business days.
6. Open Indian bank account: Open a bank account in the subsidiary's name and receive FDI funds from the Polish parent. Timeline: 1-2 weeks.
7. Allot shares and file FC-GPR: Allot shares to the Polish parent and file Form FC-GPR with the RBI through the FIRMS/SMF portal within 30 days of share allotment. A valuation certificate from a SEBI-registered merchant banker or practicing CA is required.

Timeline and Costs

The typical timeline for establishing a WOS in India from Poland is 4-8 weeks:

Estimated costs:

• Government fees (MCA): INR 1,000-15,000 depending on authorized capital
• DSC: INR 1,500-2,500 per director
• Stamp duty: Varies by state (higher authorized capital means higher stamp duty)
• Professional fees: INR 25,000-75,000 for a CA/CS firm (WOS filings are more complex than standard Pvt Ltd)
• Apostille fees in Poland: PLN 60 per document
• Valuation certificate: INR 10,000-25,000

Post-Registration Compliance

A WOS in India has the same compliance obligations as any Pvt Ltd, plus additional RBI requirements due to foreign ownership:

• Board meetings: Minimum 4 per year, at least one every 120 days
• AGM: Within 6 months of the financial year-end (by September 30)
• ROC filings: AOC-4 and MGT-7 within prescribed timelines
• DIR-3 KYC: Annual KYC for all directors by September 30
• Income tax return: Due by November 30 if transfer pricing audit applies (October 31 otherwise)
• Transfer pricing report: Form 3CEB is mandatory for any international transaction with the Polish parent regardless of value — the INR 1 crore figure applies only to the Rule 10D documentation-maintenance relief
• FLA return: Annual Foreign Liabilities and Assets return to RBI by July 15
• GST returns: Monthly or quarterly filings if GST-registered

For a comprehensive calendar, refer to our Compliance Calendar and Annual Compliance guide.

Common Challenges for Polish Companies

Polish companies setting up a WOS in India should be prepared for these common hurdles:

• Resident director requirement: At least one director must have stayed in India for 182+ days during the financial year. Polish companies typically appoint a nominee resident director from a professional services firm until a local hire is made.
• Valuation requirements: The share price for FDI must be at or above fair market value as determined by a SEBI-registered merchant banker or CA. This adds cost and time but is a non-negotiable RBI requirement.
• Bank account opening KYC: Indian banks require extensive KYC documentation for foreign-owned entities. Some banks may request certified English translations of Polish corporate documents (KRS extracts, board resolutions).
• Transfer pricing compliance: All transactions between the Polish parent and Indian WOS must be at arm's length. Maintaining contemporaneous documentation from day one prevents costly disputes with Indian tax authorities.
• Repatriation planning: While dividends, royalties, and management fees can be remitted to Poland, each has different withholding tax implications under the DTAA. Structuring the repatriation mix optimally requires professional tax advice from advisors familiar with both Polish and Indian tax systems.

Frequently Asked Questions

Can a Polish company hold 100% of an Indian subsidiary?

Yes. Under India's FDI policy, 100% foreign ownership is permitted in most sectors under the automatic route. The Polish parent company can be the sole shareholder of the Indian Pvt Ltd, making it a Wholly Owned Subsidiary. No Indian partner or co-investor is required.

What is the difference between a WOS and a regular Pvt Ltd with foreign investment?

The legal structure is identical. A WOS is simply a Pvt Ltd where the foreign parent holds 100% of the shares. The term WOS indicates complete foreign ownership. If the Polish company holds less than 100%, it is a subsidiary (majority-owned) or an associate company, but the registration process is the same.

Is a valuation certificate mandatory for setting up a WOS?

Yes. When filing Form FC-GPR with the RBI, a valuation certificate from a SEBI-registered merchant banker or a practicing Chartered Accountant is mandatory. The share issuance price must be at or above the fair market value determined through accepted valuation methods such as DCF or NAV.

Can the Polish parent repatriate profits freely from the Indian WOS?

Yes. India allows free repatriation of dividends, after-tax profits, and capital on winding up through authorized dealer banks. Dividends are subject to 10% withholding tax under the India-Poland DTAA. The WOS must ensure all tax obligations are cleared before remitting funds.

How does transfer pricing apply to a Polish-owned WOS?

All transactions between the Polish parent and the Indian WOS (services, royalties, management fees, goods) must be conducted at arm's length prices. Form 3CEB must be filed for any international transaction with the Polish parent regardless of value (the INR 1 crore figure applies only to the Rule 10D documentation-maintenance relief); the WOS must obtain a transfer pricing report from a practicing CA and file Form 3CEB.

Does a WOS need to file with both MCA and RBI?

Yes. As a company under the Companies Act 2013, the WOS files regular returns with the MCA (ROC). As a recipient of foreign direct investment, it must also file FC-GPR (at the time of share allotment), FLA return (annually), and any other FEMA-prescribed returns with the RBI.

Can the WOS structure be converted to a joint venture later?

Yes. The Polish parent can transfer or sell a portion of its shares to an Indian partner, converting the WOS into a joint venture. Such transfers require compliance with FEMA pricing guidelines and reporting to the RBI through Form FC-TRS within the prescribed timeline.