Foreign Subsidiary Company Registration in India

How does a foreign company register a subsidiary in India?

A foreign company registers an Indian subsidiary by incorporating a private limited company through SPICe+, the MCA's single web form, and then funding it through the banking system and reporting the investment to the RBI. The Companies Act, 2013 and the Companies (Incorporation) Rules, 2014 govern the company. The Foreign Exchange Management Act, 1999, the FEMA (Non-debt Instruments) Rules, 2019 and the RBI's Master Directions govern the money. You need both halves done in the right order.

In outline, the sequence is:

1. Confirm the entry route. Is your activity open to 100% foreign ownership under the automatic route? Does any land-border-country ownership bring in the Government route?
2. Fix the structure. Two shareholders, two directors (one resident in India), a registered office, the authorised and paid-up capital.
3. Legalise documents abroad. Notarise, then apostille or attest, the parent's incorporation certificate and board resolution and the foreign directors' IDs.
4. Get DSCs, then file SPICe+. Part A reserves the name. Part B incorporates the company with MoA, AoA, AGILE-PRO-S and INC-9, and allots DIN, PAN and TAN.
5. Open the bank account. Then the parent remits the capital.
6. Issue shares and file FC-GPR. Shares within 60 days of receiving the money; FC-GPR within 30 days of issuing them.
7. File INC-20A. Then register for GST and other laws, and start business.

The rest of this page takes each step in turn, with the rules that trip up foreign applicants most often. For the Companies Act mechanics of the form itself, see our SPICe+ guide for foreign companies.

Can a foreign company own 100% of an Indian company?

Yes. In sectors where 100% foreign investment is permitted under the automatic route, the foreign parent can own the whole subsidiary without any approval from the RBI or the Government. The DPIIT's Consolidated FDI Policy defines the automatic route as the entry route under which investment "does not require the prior approval of the Reserve Bank of India or the Central Government". Most software, IT-enabled services, consulting, e-commerce marketplace and manufacturing businesses fall here. See our FDI policy guide for sector caps.

When you need Government approval instead

• Capped or Government-route sectors. Examples include multi-brand retail, some media and some defence activities. The application goes through the Foreign Investment Facilitation Portal. DPIIT's Standard Operating Procedure dated 4 May 2026 sets a cumulative 12-week timetable for a standard proposal.
• Land-border countries (Press Note 3). An entity or citizen of a country that shares a land border with India "shall invest only under the Government route" (rule 6(a), NDI Rules), whatever the sector or stake. Since Press Note 2 of 2026 and the FEMA amendment in force from 2 May 2026 (S.O. 2174(E)), a parent incorporated elsewhere is caught only if land-border citizens or entities hold more than the PML Rule 9(3) threshold in it (more than 10% for a company), control it, or have ultimate effective control of the Indian company. Smaller, non-controlling land-border holdings must be reported to DPIIT before the remittance. More on Press Note 3 and Chinese investors.
• Prohibited sectors. No foreign investment at all in lottery, gambling and betting, chit funds, Nidhi companies, trading in TDRs, real estate business or farm houses, manufacturing of cigars, cheroots, cigarillos and cigarettes of tobacco or tobacco substitutes, atomic energy and railway operations other than permitted activities (full list).

Getting the route wrong is expensive. Shares issued without a required approval are a FEMA contravention that needs compounding, not a late fee. We check the route before any money moves.

How many shareholders and directors does a foreign subsidiary need?

A private company needs at least two shareholders (section 3(1)(b)) and at least two directors (section 149(1)(a)), and one director must satisfy the Indian residence test. The Act does not require any director or shareholder to be an Indian citizen.

The resident director: 182 days in the financial year

Section 149(3) reads: "Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days during the financial year." The count runs over India's financial year, April to March, not the calendar year. A proviso eases the first year: "in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated." A company incorporated in October, for example, needs a director whose stay in India from incorporation to 31 March is proportionate to 182 days over a full year.

In practice, foreign parents fill this seat in one of three ways: an India-based employee or expatriate who lives in India, a trusted local associate, or a professional resident director. Whoever it is signs statutory filings and carries a director's legal duties, so choose carefully. Our resident director guide covers the trade-offs. Do not confuse this with the LLP rule: a designated partner of an LLP needs 120 days, not 182.

Two shareholders for a "wholly owned" subsidiary

A company cannot be its own second shareholder, so a wholly owned subsidiary is almost always set up in one of two ways:

• Parent plus group company. For example, the parent takes 99,999 shares and a sister or intermediate holding company takes one. This is the cleanest option because both holders are in the group.
• Parent plus nominee. An individual, often a director of the parent, holds one share as nominee. Under section 89 of the Companies Act the nominee declares to the company that the beneficial interest belongs to the parent, the parent makes its own declaration, and the company files a return with the Registrar within 30 days of receiving the declarations. A missed return costs ₹1,000 a day, up to ₹5 lakh for the company.

Either way, both subscribers' documents go through the same legalisation process. The subsidiary is still a subsidiary of the parent under section 2(87), because the Act's "company" includes any body corporate.

Why your subsidiary is never a "small company"

Indian law gives small companies lighter rules. The current limits are paid-up capital up to ₹10 crore and turnover up to ₹100 crore. But the proviso to section 2(85) says the definition does not apply to "a holding company or a subsidiary company". A foreign-owned subsidiary therefore follows the full rules from day one, including four board meetings a year with no more than 120 days between them (section 173(1)). It also cannot use the small-company exemption from compulsory dematerialisation: under rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a private company that is not a small company at the end of a financial year must, within 18 months of that year's close, issue its securities only in dematerialised form and facilitate dematerialisation of all its securities. For a subsidiary that means within 18 months of the end of its first financial year, so plan for an ISIN and demat accounts for the parent and any nominee.

Which documents does a foreign parent need, and how must they be legalised?

The parent's certificate of incorporation and board resolution, and each foreign director's and individual subscriber's passport and address proof, must be legalised in the country where they are signed. The level of legalisation depends on that country. Rule 13(5) of the Companies (Incorporation) Rules, 2014 sets out three cases for a foreign national subscriber residing outside India:

Two practical notes. First, Rule 13(5)(a) is a floor for individuals. The MCA's own list of reasons it rejects foreign-subsidiary applications starts with "The documents are not Apostilled/Notarized/attested by Consulate". The parent company's papers also have to satisfy the bank. So where a Commonwealth country is also a Hague party, as the UK and Singapore are, we normally apostille anyway. Second, India joined the Apostille Convention in 2005, and the Ministry of External Affairs states that "no further attestation or legalization of a document apostilled by a member country, should be required for using such apostilled document in India". You do not need an Indian embassy stamp on top of an apostille.

The board resolution: the most common rejection

The MCA's SPICe+ FAQ lists four grounds on which a foreign-subsidiary incorporation "may be rejected":

• unlegalised documents;
• no PAN undertaking for a person without PAN;
• no business visa (or OCI) with arrival stamps where a foreign individual signs in India;
• a parent board resolution that "does not contain the details of the shares subscribed and the Authorized Representative".

We draft the resolution for you so it names the Indian company, the number and value of shares subscribed, the authorised representative who will sign the MoA and AoA, and the directors being nominated. Under Rule 13(4), the person the resolution authorises cannot also be a subscriber.

Because a body-corporate subscriber based outside India cannot use the electronic e-MoA and e-AoA, the MoA and AoA are printed, signed by the authorised representative before a witness, legalised, and attached to SPICe+ Part B. For the full list, including what the bank will ask for, see documents for the subsidiary's bank account and our apostille and document authentication service.

Country notes: US, UK, Singapore, UAE, Japan and Germany

The legalisation chain is where country differences matter most. The table below is what we tell founders in each country before they print anything.

Founders in Canada and Australia (Canada, Australia) fall under the Commonwealth limb of Rule 13(5) for individual subscribers. Country-specific guidance on structure and tax is on our country pages, and in guides such as which Indian state suits a US company, UK CFC reporting for an Indian subsidiary, a Japanese manufacturer's first year and Dubai free zone vs India Pvt Ltd.

How does SPICe+ work for a foreign subsidiary?

SPICe+ (Form INC-32) is a two-part web form. Part A reserves the name; Part B incorporates the company and, with its linked forms, obtains the DIN, PAN, TAN and several registrations in one filing.

Part A: name reservation

If you file Part A on its own, you may propose up to two names; if Parts A and B are filed together, only one name can be entered. The Central Registration Centre approves one and reserves it "for 20 days from the date of approval". Under Rule 9A the reservation can be extended to 40 days for ₹1,000, or to 60 days for a further ₹2,000 (or ₹3,000 in one step). A separately filed Part A costs ₹1,000. If your documents are ready, filing Parts A and B together saves that fee and a round trip. The name must not be identical or too similar to an existing company, LLP or trademark. Use the MCA name search before choosing.

Part B and the linked forms

The Central Registration Centre can return the form for correction, with 15 days to resubmit (Rule 9). The MCA's SPICe+ FAQ allows two resubmissions. Once it approves, the certificate of incorporation is issued with the CIN, and the PAN and TAN are allotted. On DIN and KYC for foreign directors, see DIN allotment for foreign directors. Directors now file DIR-3 KYC once every three financial years, by 30 June, not annually.

What are the government fees to register a foreign subsidiary?

For a company with authorised capital up to ₹15 lakh, the MCA charges no incorporation filing fee. You pay the state stamp duty on the MoA and AoA, ₹66 for PAN and ₹65 for TAN, and ₹1,000 only if you reserve the name separately first. The MCA's SPICe+ FAQ puts it this way: "Companies getting incorporated through SPICe+ with an Authorized Capital up to INR 15,00,000 would continue to enjoy 'Zero Filing Fee' concession. Such companies will be levied with only stamp duty fees as may be applicable on state-to-state basis."

Some websites print a fee table (for example "₹2,000 for ₹1–5 lakh capital") next to the zero-fee statement. Both cannot be true, and for companies up to ₹15 lakh the zero-fee concession is the operative rule. Above ₹15 lakh of authorised capital, the MCA filing fee rises with the capital under the Companies (Registration Offices and Fees) Rules, 2014, and SPICe+ calculates it when you file. The step is not small: the fee table in those Rules, as substituted in 2018, charges a company that is not an OPC or small company ₹36,000 plus ₹300 for every ₹10,000 of capital above ₹10 lakh (up to ₹50 lakh). Stamp duty depends on the state of the registered office and the capital. Estimate yours with our stamp duty calculator.

Other costs sit outside the MCA fee: notarisation and apostille or consular fees abroad, DSCs, and professional fees. The authorised capital is only a ceiling. Raising it later means paying the stamp duty and fee difference and filing again, so set it at the capital you expect to issue in the first two or three years, weighed against the fee step above ₹15 lakh.

How long does it really take?

Plan on about 3 to 6 weeks from starting to the certificate of incorporation, and about 2 to 3 months until the subsidiary is fully operational. Fully operational means the bank account is open, the capital is in, the shares are issued, FC-GPR is filed and GST is in place if you need it. The MCA publishes no service standard for SPICe+ approval, so any fixed "7-day" promise refers only to the Registrar's processing of a perfect file.

The ranges overlap because we run phases in parallel. We prepare the SPICe+ file while the apostilles are in progress and start bank KYC the day the certificate issues. The fastest cases are parents whose documents are already legalised and whose resident director already holds a DIN.

What must happen after incorporation?

The certificate of incorporation starts several statutory clocks at once. Most first-year penalties come from missing one of them.

Missing INC-20A carries a penalty of ₹50,000 on the company and ₹1,000 a day on each officer in default (up to ₹1 lakh). The Registrar may also start striking the company off if it appears not to be carrying on business. Late FC-GPR is regularised with a Late Submission Fee of ₹7,500 plus 0.025% of the amount for each year of delay, capped at the amount involved, and only within three years of the due date. After that the matter goes to compounding. Our FC-GPR guide and missed-deadline scenarios cover the details.

Funding the subsidiary: the order matters

The subscriber shares are taken when the company is formed, but the parent pays for them afterwards, once the bank account exists. The RBI Master Direction says shares issued "by way of subscription to Memorandum of Association … shall be made at face value subject to entry route and sectoral caps", so no valuation report is needed for them. For any later issue to the parent, the price must be at least the fair value under an internationally accepted method, certified by a Chartered Accountant, a SEBI-registered merchant banker or a practising cost accountant (pricing methods explained). The subscription money must arrive through banking channels into the company's account. We agree the issue date with you before the money is sent, because both the 60-day allotment window and the 30-day FC-GPR window depend on it.

Registrations and ongoing compliance

After incorporation the subsidiary typically needs GST (unless taken in AGILE-PRO-S), state shops-and-establishment and professional tax registration, EPFO and ESIC once headcount crosses the thresholds, and an Import Export Code if it will export goods or import. Annually it files audited accounts and an annual return with the Registrar, an income-tax return and the FLA return. Where it deals with its parent, it prepares transfer-pricing documentation and the Form 48 (formerly Form 3CEB) accountant's report, due one month before the return due date. Our post-incorporation checklist and annual compliance service cover the full list.

Worked example: a US SaaS company sets up its Indian subsidiary

Here is how the rules above combine for a common profile: a Delaware software company opening an engineering centre in Bengaluru.

• Route: Software development is open to 100% foreign investment under the automatic route. No US-parent owner is from a land-border country, so no approval is needed.
• Cap table: Authorised capital ₹10 lakh. The Delaware parent subscribes 99,999 equity shares of ₹10; a US sister company subscribes one share. Both subscribe at face value, so no valuation report is needed for these shares.
• Board: The US CTO and the India engineering head, who has relocated to Bengaluru and will pass the proportionate 182-day test for the first financial year.
• Legalisation: The Delaware certificate of incorporation is apostilled by Delaware. The board resolution, signed and notarised in California, is apostilled by the California Secretary of State. So is the CTO's notarised passport copy.
• Government fees: The MCA filing fee is nil, because authorised capital is within ₹15 lakh. The company pays Karnataka stamp duty on the MoA and AoA, ₹66 for PAN and ₹65 for TAN. Parts A and B are filed together, so there is no ₹1,000 name fee.
• Money: The bank account opens after KYC. The parent wires the ₹10 lakh subscription money from the US. Share certificates are issued within two months of incorporation, and FC-GPR is filed within 30 days of the share issue. INC-20A follows immediately.
• Tax set-up: The subsidiary opts for section 200 (22% base). A cost-plus service agreement with the parent is signed before the first invoice, so its transfer pricing is documented from the first month.

If the same company had chosen a branch office, it would first have needed AD bank approval, five years of profits and USD 100,000 of net worth. It would then pay 35% plus surcharge and cess on Indian profits. If it only needed a handful of engineers, an employer of record may be cheaper for the first year.

Subsidiary vs branch vs liaison office vs LLP: which should you choose?

Choose a subsidiary if you will sell, hire or build in India. Choose a liaison office only to explore, a branch only for activities on the RBI's permitted list that must stay inside the parent, and an LLP only for small set-ups in fully open sectors. The decision table above sets out the differences. The points that usually decide it:

• Approval and eligibility. A branch or liaison office is approved by an AD Category-I bank under the RBI's Master Direction. Prior RBI approval is needed in listed cases, such as applicants from Pakistan, or defence, telecom, private security and broadcasting. A branch needs a profit record in each of the last five years and net worth of at least USD 100,000; a liaison office three years and USD 50,000. A subsidiary on the automatic route needs neither.
• Activity. A liaison office "is not allowed to undertake any business activity in India and cannot earn any income in India". A branch is limited to a list (export/import, consultancy, research, IT services, technical support and similar) and can manufacture only in an SEZ.
• Tax. A branch is taxed as a foreign company at 35% (36.4% to 38.22% with surcharge and cess). A subsidiary is a domestic company and can opt for 22% (25.168% effective). An LLP pays the 30% firm rate plus surcharge and cess.
• LLP limits. Foreign investment in an LLP is allowed only where 100% FDI is permitted under the automatic route and "there are no FDI linked performance conditions". An LLP is also harder to take outside equity into later.

For the detailed comparisons, see branch office vs subsidiary, liaison vs project vs branch office, WOS vs LLP for foreign investors and GCC vs Indian subsidiary.

How is the subsidiary taxed, and how does money go back to the parent?

The subsidiary is a domestic company. It pays 22% plus a 10% surcharge and 4% cess (25.168%) if it opts for section 200 of the Income-tax Act, 2025 (section 115BAA of the Income-tax Act, 1961). Dividends to the parent are taxed at 20% plus surcharge and cess, or the lower treaty rate.

• Corporate tax. Section 200 sets 22% for a domestic company that gives up specified deductions. The Finance Act, 2026 adds a 10% surcharge for these companies and 4% Health and Education Cess. Without the option, the Finance Act, 2026 sets 25% for a domestic company whose total turnover or gross receipts in tax year 2024-25 did not exceed ₹400 crore (a company formed later is normally treated as within this limit), and 30% otherwise. How to calculate the effective rate.
• Dividends. Under section 207(1) (Table, Sl. No. 1) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961), dividends to a foreign company are taxed at 20% plus surcharge and cess. A tax treaty can lower this if the parent provides a tax residency certificate and Form 41 (formerly Form 10F). Treaty relief at source is not automatic. See dividend repatriation and treaty dividend rates.
• Intercompany payments. Service fees, royalties and cost recharges to the parent must be at arm's length under the transfer-pricing rules and are reported in Form 48 (formerly Form 3CEB). Outward remittances need Form 145 (formerly Form 15CA), and Form 146 (formerly Form 15CB) where Part C applies. See transfer pricing.
• Loans from the parent. These fall under the ECB framework as substituted from 16 February 2026: a three-year minimum average maturity and monthly Form ECB 2 returns through the AD bank. When the parent should lend.

Common mistakes and rejection reasons

Most avoidable delays trace back to one of these.

• A board resolution without share details. The MCA lists a resolution that omits the shares subscribed and the authorised representative as a rejection ground. Use a resolution drafted for India, not a generic group template.
• The wrong legalisation for the country. Examples: a UAE document with only a notary stamp, or a US document apostilled by a different state from the one where it was notarised.
• No resident director lined up at filing. The 182-day test runs over the financial year. A director who is "moving to India soon" may not qualify, and a calendar-year count gives the wrong answer.
• The authorised signatory also signs as a subscriber. Rule 13(4) forbids the person authorised by the parent to be a subscriber at the same time.
• Money wired before the bank account and structure are settled. This starts the 60-day allotment clock early. Or money is wired from an account that is not the investor's, which brings in extra KYC documents at FC-GPR stage.
• Forgetting INC-20A. The company cannot lawfully start business or borrow without it, and late filing carries penalties and a strike-off risk.
• Authorised capital set too low. Increasing it months later costs more stamp duty and another filing.
• Treating the subsidiary as a small company. It is not one, so it needs four board meetings a year and the full reporting set.

How Beacon Filing helps

We act as your single point of contact in India for the whole set-up, and afterwards for compliance if you want us to. We run the structuring check, send your country's legalisation checklist and resolution drafts, obtain DSCs and file SPICe+, work with the bank on KYC, and handle allotment, FC-GPR and INC-20A. We can also provide the resident director, the FEMA and RBI filings, accounting, payroll and the compliance calendar. For a broader view of entity choice, start with our India entry strategy page or the registration checklist.