Indian Subsidiary of a Foreign Company

Indian Subsidiary of a Foreign Company: Complete FEMA-Compliant Setup Guide

When an overseas company wants a fully-owned legal presence in India - not just an NRI-led entity - the process demands tighter FEMA compliance, parent-company documentation, and ongoing cross-border reporting. This guide covers what a wholly-owned Indian subsidiary of a foreign company is, eligibility, documents, the incorporation and FEMA process, real costs, and how KanoonPe manages it - with flat pricing and a filed-on-time-or-refund promise.

Quick summary

• What it is: A Private Limited Company incorporated in India where an overseas parent company holds up to 100% of the shares, operated as a wholly-owned subsidiary (WOS).
• Governed by: Companies Act, 2013; FEMA, 1999 and RBI's FDI policy; Income Tax Act, 1961 (transfer pricing).
• Best for: Overseas companies establishing a full-fledged Indian operating entity under their corporate group.
• Minimum: 2 directors (one resident in India), 2 shareholders (parent company + nominee, or 100% held by the parent with a nominee shareholder).
• KanoonPe price: Flat, all-inclusive quote on a free callback · Timeline: typically 20–30 working days.

Quick facts

What is an Indian Subsidiary of a Foreign Company?

An Indian Subsidiary of a Foreign Company - often called a wholly-owned subsidiary (WOS) - is a Private Limited Company incorporated in India under the Companies Act, 2013, where an overseas parent company holds all or a controlling share of the equity. Unlike a branch or liaison office, it is a fully independent Indian legal entity, capable of undertaking any lawful commercial activity permitted by its MOA, hiring locally, and entering contracts in its own name.

Foreign investment into the subsidiary is governed by FEMA, 1999 and the RBI's FDI policy. Most sectors allow 100% FDI under the automatic route, requiring only post-facto reporting; a smaller set of sectors requires prior government approval or is subject to sectoral caps. Because the investor is a corporate entity abroad (not an individual NRI), incorporation requires notarised/apostilled parent-company documents - certificate of incorporation, board resolution, and charter documents - along with standard director KYC.

Once operational, the subsidiary is subject to Indian corporate tax, transfer pricing regulations on transactions with the foreign parent (Form 3CEB, and Master File/CbCR where thresholds apply), and annual FEMA reporting through the Foreign Liabilities and Assets (FLA) return.

Who should set up an Indian Subsidiary of a Foreign Company?

This structure fits you if you:

• Are an overseas company expanding operations, sales, or R&D into India as part of your corporate group.
• Need full commercial capability in India - hiring, invoicing, contracting - not just a representative presence.
• Want a subsidiary that can be wholly owned by the parent, keeping global governance and IP consolidated at the parent level.
• Plan to run intercompany transactions (services, royalties, cost-sharing) requiring formal transfer pricing documentation.

If you only need to explore the market or coordinate with Indian vendors without commercial activity, a Liaison Office may be more appropriate initially.

Benefits of a wholly-owned Indian subsidiary

1. Full ownership and control - Up to 100% shareholding by the foreign parent in most sectors under the automatic route.
2. Independent legal entity - Limited liability, separate from the parent, with full contracting and litigation capacity in India.
3. Complete commercial operations - Unlike a branch or liaison office, no RBI activity restrictions once incorporated.
4. Simplified group structuring - The subsidiary can be consolidated into the parent's financial statements per applicable accounting standards.
5. Local hiring and IP structuring flexibility - Employ staff directly and structure local IP/licensing arrangements with the parent.
6. Profit repatriation - Dividends can be remitted to the parent, subject to FEMA and withholding tax rules.

Documents required

For the Indian resident director

• PAN card, Aadhaar/Voter ID, address proof, photograph

For the overseas parent company

• Certificate of incorporation of the parent (notarised/apostilled)
• Board resolution authorising the Indian subsidiary and nominating signatories
• Memorandum/charter documents of the parent entity
• Latest audited financials of the parent (may be required for sector-specific approvals)

For foreign national directors/nominee shareholders

• Passport (notarised/apostilled), overseas address proof, photograph

Registered office proof (India)

• Rent/lease agreement + NOC, or ownership documents; latest utility bill

Ready to get started? Talk to a verified expert → - get a transparent, all-inclusive quote for your wholly-owned Indian subsidiary within one business hour.

Setup process (step by step)

1. Obtain DSC for the resident director and authorised foreign signatories.
2. Apply for name reservation (SPICe+ Part A), checking availability against MCA and trademark databases.
3. Apply for DIN for proposed directors through SPICe+.
4. Notarise and apostille parent-company documents - certificate of incorporation, board resolution, and charter documents - per the parent's home country's Hague Convention status.
5. Draft MOA and AOA and file SPICe+ Part B (INC-32) with PAN, TAN, and AGILE-PRO.
6. Receive the Certificate of Incorporation with CIN, PAN, and TAN.
7. Open a current bank account and bring in the parent's investment through normal banking channels.
8. File Form FC-GPR with the RBI within 30 days of share allotment, reporting the foreign investment.
9. Set up transfer pricing documentation for ongoing transactions with the parent.

How much does it cost to set up an Indian subsidiary of a foreign company?

KanoonPe offers a flat, all-inclusive quote - professional fees, DSC, standard filings, FC-GPR support, and initial transfer pricing guidance bundled into one transparent number. Government fees, stamp duty, and overseas apostille costs that vary are billed at actuals and shown upfront.

Setup timeline

Every KanoonPe order ships with a written SLA - filed on time or you get a refund.

Post-registration compliance

• File FC-GPR with the RBI within 30 days of share allotment.
• File the Annual FLA Return every year - see FLA Return Filing.
• Maintain transfer pricing documentation and file Form 3CEB for related-party transactions with the parent.
• File annual ROC returns (AOC-4, MGT-7) and conduct statutory audit - see ROC Annual Compliance.
• Register for GST if turnover crosses the threshold or you sell inter-state.
• Maintain ongoing FEMA/FDI compliance - see FDI / FEMA Compliance.

Indian Subsidiary vs Branch Office vs Liaison Office (for a foreign parent)

Why choose KanoonPe

• Transparent flat pricing - one all-inclusive number; government and apostille costs at actuals, shown upfront.
• Filed-on-time or refund - every order ships with a written SLA.
• One accountable case owner - a single named manager owns your subsidiary setup end to end.
• Live status tracking - track document apostille, filings, and FC-GPR status in real time.

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