Setting up a Subsidiary in India

Setting up a Subsidiary in India

There can be two types of it based upon ownership namely

1. 100% ownership
• Fully owned subsidiaries (only in FDI permitted sectors as Per latest FDI policy)
2. Less than 100% ownership
• Joint Ventures

Indian subsidiaries enjoy same rights as basically Indian Companies by Setting up a Subsidiary in India. There are certain norms to the activities of proposed companies as per FDI policy of the Government. Many activities are permitted to bring 100% foreign investments whereas on some activities Government has put restrictions where Government gives permission of 100% FDI and in a few activities 100% FDI is not permitted and even Government route can not be availed. In those cases, Joint Ventures are good channel of investment, where a certain percentage is held by Indian entities. In the Joint Venture Form of working, foreign company can get a good financial resource with some ready contacts and experienced partners, however a complete privacy has to be a bit parted with.

Assistance in getting FIPB Approvals

There are two entry routes of direct investment in India (FDI):

• Automatic Route
• Government Route (Approval Route)

Depending upon the sector where proposed investment is to be brought in, the above segregation is done. In many a sectors, Government restricts 100% FDI like defense, telecom etc. For such sectors, one has to get the approval of Foreign Investment Promotion Board (FIPB)- a division of Finance Ministry. We assist you in getting the FIPB approvals, taking care of all the formalities so you can rest assured of our services.

Channels other than FDI:

A foreign company can also come and do business in India without investing directly. RBI has permitted such companies to have establishments in India for some limited purposes. Such forms are:

• Liaison office
• Project Office
• Branch Office

Different permissions and freedoms are attached with each such office. So one has to be careful while making choice of these forms of work. RBI permissions have to be sought for each such organization subject to renewals as specified from time to time. Also, the foreign companies have to register with Registrar of Companies (ROC) within 30 days of setting up a place of business in India, besides the said RBI Approval.

How to Register a Subsidiary Company in India:

A Comprehensive Step-by-Step Guide

Introduction: Expanding your business by establishing a subsidiary company in India is a strategic move that opens up new avenues and markets. Fortunately, the process of registering a subsidiary in India is straightforward, with an online approach. In this step-by-step guide, we will walk you through the essentials of subsidiary registration in India, covering key aspects like shareholders, directors, capital, timelines, and the necessary documentation.

Basics of Subsidiary Registration in India:

1. Shareholders:
   • A minimum of 2 shareholders is required, and they can be foreign companies or individuals.
2. Directors:
   • At least 2 directors are mandatory, with one being a resident Indian director residing in India. No mandatory share allocation to the Indian director is required.
3. Capital:
   • No minimum capital requirement exists for subsidiary registration.
4. Cost and Time:
   • The registration process typically takes 12-15 business days upon document submission.
5. Income Tax Rate for Subsidiary Companies:
   • Subsidiary companies are taxed at a rate of 25% on profits.
6. Bank Account Opening:
   • After registration, a bank account can be opened remotely, and internet banking credentials are provided.
7. Monthly and Annual Cost:
   • Includes government fees and professional fees for company operation in India.
8. Documents:
   • Notarized and apostilled documents required, including passports, driving licenses, certificate of incorporation, board resolution, etc.

Steps to Register a Subsidiary Company:

• Select a unique and compliant name by checking availability on the Ministry of Corporate Affairs (MCA) portal.

• Obtain Director Identification Numbers (DIN) and Digital Signature Certificates (DSC) for proposed directors.

• Prepare and file documents like MOA and AOA on the MCA portal.

• Await approval from the MCA, and upon approval, receive the Certificate of Incorporation.

• Open a bank account remotely, which takes approximately 2 weeks.

• Obtain PAN, TAN, and register for taxes like GST and corporate income tax.

Conclusion: By diligently following these steps, you can successfully register your subsidiary company in India and embark on your business journey. Keep in mind that specific requirements and procedures may vary based on your business type and location. This guide serves as a roadmap, ensuring a smooth and efficient registration process for your subsidiary in India.

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