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How a Foreign Company Sets Up an Indian Subsidiary

Steps for a foreign company to incorporate a wholly owned subsidiary in India: FDI route, resident director, incorporation, capital remittance and FC-GPR reporting.

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Short answer

A foreign company usually incorporates a private limited company in India owned by the parent and one nominee shareholder. It needs at least two directors with one resident in India, a registered office address and an FDI-permitted business. After incorporation the parent remits capital, the company allots shares and reports the investment to RBI in Form FC-GPR within 30 days of allotment.

  1. 1FDI route

    Confirm the sector allows the automatic route.

  2. 2Structure

    Two shareholders, two directors, one resident.

  3. 3Documents

    Apostille the parent's papers, get DSCs.

  4. 4Incorporate

    SPICe+ with MoA and AoA.

  5. 5Capital

    Remit funds, allot shares within 60 days.

  6. 6Report

    FC-GPR within 30 days of allotment.

182 daysMinimum stay in India for the resident directorCompanies Act 2013
30 daysTo file FC-GPR after allotmentRBI Master Direction on Foreign Investment
15 JulyAnnual FLA return deadlineRBI Master Direction on Foreign Investment

Step 1: Confirm the FDI route

Most sectors allow 100 percent foreign investment under the automatic route with no prior government approval. Some sectors carry caps or need approval, and investors from countries sharing a land border with India need government approval in all sectors.

Check the sector against the current consolidated FDI policy before you start.

Step 2: Structure the company

  • Shareholders: the parent company plus a second shareholder, often a nominee, since a private company needs at least two.
  • Directors: at least two, with at least one who stays in India for 182 days or more in the financial year (Companies Act 2013 s.149(3)).
  • Registered office: an address in India with proof such as a lease or utility bill and a no-objection letter.
  • Name: approved through the MCA name reservation.

Step 3: Documents from abroad

Foreign documents such as the parent's certificate of incorporation, board resolution and the identity and address proof of foreign directors must be notarised and apostilled (or consularised where the country is not part of the Apostille Convention).

Each director needs a Digital Signature Certificate and a Director Identification Number, which is allotted through the incorporation form.

Step 4: Incorporation

The company files SPICe+ with its MoA and AoA. On approval it receives the certificate of incorporation with its PAN and TAN.

Then open a bank account in the company's name to receive share capital from the parent.

Step 5: Bring in capital and report it

  • The parent remits the share capital through banking channels and the bank issues a FIRC and KYC.
  • The company allots shares within 60 days of receiving the money.
  • Form FC-GPR is filed on the RBI FIRMS portal within 30 days of allotment with a valuation certificate.
  • An annual Foreign Liabilities and Assets (FLA) return is due to RBI by 15 July every year.

Ongoing compliance

A subsidiary follows the same annual Companies Act cycle as any private company: audit, AGM, AOC-4 and MGT-7. It also handles transfer pricing documentation for transactions with the parent and Indian income tax, GST and TDS.

A subsidiary of a foreign company is not a small company even if it is under the size limits, because holding and subsidiary companies are excluded.

Related services

Indian Subsidiary RegistrationFDI Reporting (FC-GPR)Resident Director and Registered OfficeSubsidiary Annual Compliance

Sources

General information only and not legal or tax advice. Laws and limits change; confirm your case with a qualified professional.

Common questions

Can a foreign company own 100 percent of an Indian subsidiary?

Yes in most sectors under the automatic route. A second shareholder is still needed for a private company, so a nominee usually holds one share for the parent.

Does an Indian subsidiary need a resident director?

Yes. At least one director must stay in India for 182 days or more during the financial year.

What is the deadline for FC-GPR?

Within 30 days of allotting shares to the foreign investor. Shares must be allotted within 60 days of receiving the remittance.

How long does it take to set up a subsidiary in India?

Commonly three to six weeks once apostilled documents are in hand. Overseas document legalisation is often the longest step.