Set Up a Wholly Owned Subsidiary in India from the UK

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

A Wholly Owned Subsidiary (WOS) is the preferred India-entry structure for established British companies that want complete control over their Indian operations. The UK is India's sixth-largest source of FDI, with cumulative inflows of USD 35.8 billion since April 2000, and many of Britain's largest companies -- including Unilever, Vodafone, BP, HSBC, and Rolls-Royce -- operate in India through wholly owned subsidiaries.

The landmark India-UK Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, has further strengthened the bilateral investment corridor. With duty-free access to 99% of Indian exports to the UK and reduced tariffs on UK exports to India, the business case for establishing a WOS in India has never been stronger. Bilateral trade has already reached USD 56 billion, with a target to double by 2030.

A WOS in India is legally structured as a Private Limited Company under the Companies Act 2013, where the UK parent company holds 100% of the equity (technically 99.99% directly and 0.01% through an authorized nominee, as a Pvt Ltd requires at least two shareholders). This provides the subsidiary with a separate legal identity from the UK parent, limiting liability while enabling full commercial operations across India.

FDI Route and Regulatory Requirements

Setting up a WOS from the UK falls under the automatic FDI route for most sectors. No prior government or RBI approval is needed. The UK parent incorporates the subsidiary, remits capital, allots shares, and reports the investment to the RBI through prescribed forms.

100% FDI under the automatic route is permitted in sectors including IT and software services, manufacturing, financial services (NBFC), e-commerce (marketplace model), consulting, healthcare, pharmaceuticals, renewable energy, food processing, and infrastructure. Sectors with caps include insurance (100% with conditions), defense (74% automatic, 100% government route), and multi-brand retail (51% government route).

Since the UK does not share a land border with India, Press Note 3 (2020) restrictions do not apply. This is a significant advantage compared to investors from countries like China, Pakistan, or Bangladesh, which require prior government approval regardless of sector.

The India-UK CETA includes investment protection provisions that provide UK companies with enhanced legal certainty for their Indian investments, including fair and equitable treatment standards, protection against expropriation, and access to investor-state dispute settlement mechanisms. For FDI structuring advice, specialized firms can help optimize the entry strategy.

DTAA Benefits for UK Investors

The India-UK DTAA, originally signed in 1993 and comprehensively revised in 2013, provides reduced withholding tax rates that are particularly valuable in a WOS structure where all profit flows from the Indian subsidiary to the UK parent:

• Dividends: 15% withholding tax (versus the 20% domestic rate). Since the UK parent owns 100% of the WOS, it qualifies for this reduced treaty rate on all dividend payments.
• Interest: 10% for bank loans; 15% for other interest (versus the 20% domestic rate). This applies to intercompany loans from the UK parent to the Indian WOS.
• Royalties: 15% under the treaty (versus the 20% domestic rate). Relevant for IP licensing arrangements between the UK parent and Indian subsidiary.
• Fees for Technical Services: 15% under the treaty.

The UK operates a territorial tax system, meaning most foreign-source dividends received by UK companies are exempt from UK Corporation Tax under the participation exemption. This means dividends repatriated from the Indian WOS are generally not subject to additional UK tax, making the effective tax on repatriation just the Indian withholding tax of 15%. This is one of the most tax-efficient repatriation corridors available.

UK companies must obtain a Tax Residency Certificate (TRC) from HMRC and provide Form 10F to the Indian subsidiary to claim treaty benefits. Transfer pricing documentation is mandatory for all intercompany transactions.

Document Requirements and Authentication

Both the UK and India are members of the Hague Apostille Convention. UK documents are apostilled by the Foreign, Commonwealth and Development Office (FCDO), which is significantly faster than the embassy attestation process required for non-Hague Convention countries.

Documents required from the UK parent company:

• Board resolution: Authorizing the incorporation of a subsidiary in India, specifying authorized capital, proposed directors, and the authorized signatory. Must be signed by the Company Secretary or a director and apostilled by the FCDO.
• Certificate of Incorporation from Companies House (certified and apostilled)
• Memorandum and Articles of Association of the UK parent (certified and apostilled)
• Certificate of Good Standing from Companies House (apostilled)
• Passport copies of all proposed directors (notarized by a UK solicitor or notary public and apostilled)
• Address proof of UK-based directors (recent utility bill or bank statement, notarized and apostilled)
• Power of Attorney in favor of the Indian authorized representative (notarized and apostilled)

The FCDO apostille service offers a standard turnaround of 2-5 business days at GBP 30 per document, with a premium same-day service available. Solicitors can also handle the apostille process on behalf of the company. Each proposed director will need a Digital Signature Certificate (DSC) from an Indian Certifying Authority, obtainable remotely via video KYC.

Step-by-Step Registration Process

The WOS incorporation follows the standard Pvt Ltd registration process via SPICe+, with additional corporate documentation and RBI reporting steps:

1. UK parent board resolution: The UK parent's board of directors passes a formal resolution to establish an Indian subsidiary, specifying the investment amount, proposed directors, authorized capital, and the person authorized to sign incorporation documents. This resolution is certified and apostilled. Timeline: 1-3 days.
2. Document preparation and apostille: All parent company documents are certified, notarized where required, and submitted to the FCDO for apostille. Timeline: 2-5 days (standard), 1 day (premium).
3. Obtain DSCs: All proposed directors apply for Digital Signature Certificates from an Indian Certifying Authority via video verification. Timeline: 1-2 days.
4. Name reservation (SPICe+ Part A): Apply for company name through the MCA portal. Two names can be proposed. The name is reserved for 60 days upon approval. Timeline: 1-2 days.
5. File SPICe+ Part B: Complete the incorporation application with all company details, director information, registered office address, and capital structure. Upload the MoA and AoA. This integrated form also processes PAN, TAN, GST, EPFO, and ESIC registrations.
6. Certificate of Incorporation: The ROC reviews the application and issues the Certificate of Incorporation. Timeline: 5-7 days.
7. Open Indian bank account: Open a current account in the subsidiary's name with an Authorized Dealer bank. This is where the UK parent will remit FDI capital. Timeline: 1-3 weeks.
8. Capital remittance: The UK parent remits investment capital via SWIFT transfer to the Indian subsidiary's bank account. The AD bank processes the inward remittance under FEMA.
9. Share allotment: The Indian subsidiary allots shares to the UK parent company against the received capital.
10. File FC-GPR: File Form FC-GPR through the RBI's FIRMS/SMF portal within 30 days of share allotment.

Timeline and Costs

The WOS setup from the UK typically takes 6-8 weeks from board resolution to completion of RBI reporting:

Cost breakdown:

• Government fees (MCA): INR 2,000-15,000 depending on authorized capital
• Stamp duty: Varies by state (0.15%-0.3% of authorized capital in most states)
• DSC: INR 1,500-2,500 per director
• FCDO apostille: GBP 30 per document
• Professional fees (CA/CS firm): INR 50,000-2,00,000 depending on complexity
• Valuation report (if required): INR 25,000-75,000

For a detailed comparison of entity options, see WOS vs LLP for Foreign Investors and Subsidiary vs Joint Venture.

Post-Registration Compliance

A UK-owned WOS in India has the same annual compliance obligations as any Indian Pvt Ltd, plus additional requirements for foreign-owned entities:

• Board meetings: Minimum 4 per year (at least one every 120 days)
• Annual General Meeting: Within 6 months of financial year-end (by September 30)
• ROC filings: AOC-4 (within 30 days of AGM), MGT-7 (within 60 days of AGM)
• Statutory audit: Mandatory annual audit by a Chartered Accountant, regardless of turnover (unlike in the UK where small company audit exemptions exist)
• Income tax return: Due by October 31 (if transfer pricing audit applicable) or September 30
• Transfer pricing documentation: Mandatory if intercompany transactions with the UK parent or affiliates exceed INR 1 crore. Must include local file, master file, and country-by-country report (if group turnover exceeds EUR 750 million).
• FLA return: Annual Foreign Liabilities and Assets return to RBI by July 15
• FC-GPR for subsequent investments: Any additional capital infusion requires a fresh FC-GPR filing within 30 days
• Significant Beneficial Owner (SBO) filing: BEN-2 form to be filed with the ROC
• DPT-3: Return of deposits and non-deposit transactions, due by June 30

Our Annual Compliance and Foreign Subsidiary compliance services manage all these obligations.

Common Challenges for UK Companies

UK companies establishing a WOS in India should be prepared for several common challenges:

• UK Ltd vs Indian Pvt Ltd regulatory differences: Indian company law mandates statutory audit for all companies (no small company exemption as in the UK), requires a Company Secretary for companies with paid-up capital exceeding INR 5 crore, and has more prescriptive requirements for board meetings, related party transactions, and director duties. See Indian Pvt Ltd vs UK Limited.
• Transfer pricing scrutiny: The Indian Income Tax Department actively scrutinizes intercompany transactions between WOS entities and their foreign parents. Transfer pricing documentation must follow the arm's length principle with comprehensive benchmarking. The UK parent must ensure consistency with HMRC requirements as well.
• Thin capitalization rules: India's Section 94B limits interest deductions on loans from associated enterprises to 30% of EBITDA. UK parents providing intercompany debt to the Indian WOS must carefully structure the debt-to-equity ratio.
• Permanent Establishment risk: If UK-based employees regularly exercise decision-making authority over the Indian WOS, or if the WOS is deemed a dependent agent of the UK parent, it could create a Permanent Establishment for the UK company in India, triggering Indian tax obligations on the UK parent's attributable profits.
• Dividend repatriation mechanics: While dividend repatriation is straightforward, the process requires a board resolution, TDS deduction at treaty rates, and remittance through an Authorized Dealer bank. The UK's participation exemption means most foreign-source dividends are exempt from UK Corporation Tax, but proper documentation must be maintained.

Frequently Asked Questions

Can a UK LLP be the parent company of an Indian WOS?

Yes. A UK LLP (Limited Liability Partnership) can hold shares in an Indian subsidiary. The UK LLP would need to provide its LLP agreement, certificate of registration from Companies House, and relevant partner documentation, all apostilled by the FCDO. The Indian subsidiary would still be incorporated as a Pvt Ltd.

Does the UK parent need to appoint an Indian resident as director?

Yes. The Companies Act 2013 mandates at least one director who has stayed in India for 182 days or more during the financial year. If the UK parent does not have an employee in India, it can use a nominee resident director service until it establishes a local team.

What is the minimum capital required for a UK-owned WOS in India?

There is no statutory minimum capital for a WOS. The Companies Amendment Act 2015 removed the minimum paid-up capital requirement. However, the authorized capital should reflect the subsidiary's planned operations, as tax authorities may question very low capitalization relative to the business scale. The capital must also be sufficient to meet any sector-specific requirements.

How does the India-UK CETA benefit a WOS?

The CETA primarily benefits trade in goods and services between India and the UK. For a WOS, the key benefits include reduced import duties on goods sourced from the UK, enhanced services access (particularly in financial and professional services), investment protection provisions, and improved intellectual property enforcement. The FTA does not change the FDI regulatory process itself.

Is a statutory audit mandatory for a UK-owned WOS in India?

Yes. Unlike the UK, where companies below certain thresholds are exempt from audit, India mandates a statutory audit for all companies regardless of size or turnover. The WOS must appoint a Chartered Accountant as its statutory auditor and have its financial statements audited annually.

Can the UK parent license its IP to the Indian WOS?

Yes. IP licensing between the UK parent and Indian WOS is common and can include technology licensing, trademark licensing, and management fee arrangements. However, royalty payments are subject to 15% withholding tax under the India-UK DTAA and must comply with transfer pricing arm's length requirements. The RBI permits royalty payments under the automatic route with no cap since 2009.

What are the consequences of missing compliance deadlines?

Non-compliance carries significant penalties in India. Late filing of AOC-4 and MGT-7 attracts a penalty of INR 100 per day with no maximum cap. Failure to hold AGM can result in penalties up to INR 1 lakh for the company and INR 5,000 per day for officers in default. Late or non-filing of FC-GPR requires FEMA compounding with the RBI, which can cost up to three times the amount involved.