Set up your Indian subsidiary - fast and compliant

Yes. Under India's FDI policy, most sectors allow 100% foreign ownership under the automatic route. No prior government approval is required. Sectors with restrictions (like retail multi-brand, print media, defence) have lower FDI caps or require government approval.

FEMA (Foreign Exchange Management Act, 1999) governs all foreign exchange transactions in India. For a foreign company's Indian subsidiary, FEMA compliance includes: FC-GP (reporting share issuance to foreign parent), FC-TRS (reporting share transfers), and ensuring all capital transactions are through banking channels.

No prior RBI approval is needed to set up an Indian subsidiary under the automatic route. However, post-facto FEMA reporting to RBI is mandatory. The subsidiary must file FC-GP when shares are issued to the foreign parent and FC-TRS for any subsequent share transfers.

There is no statutory minimum capital requirement under the Companies Act, 2013. However, in practice, foreign parent companies typically infuse a minimum of ₹10-50 lakh as initial capital depending on the business plan and operational requirements.

Yes, foreign nationals can be directors of an Indian company. However, at least one director must be a resident of India (stayed in India for 182+ days in the previous financial year). Foreign directors need a Class 3 DSC and additional KYC documents.

An Indian subsidiary is taxed as a domestic company: 25% on total income (if turnover is below ₹400 crore) or 30% (if above). Additional surcharge and cess apply. Dividends repatriated to the foreign parent are subject to dividend distribution tax (DDT) or withholding tax as applicable under the Income Tax Act and applicable DTAA.

The complete process takes approximately 20-30 working days: board resolution (3-5 days), name approval (1-2 days), DIN/DSC (1-2 days), SPICe+ filing and incorporation (2-5 days), FEMA registration (3-5 days), and bank account setup (5-7 days). Apostille of foreign documents adds 5-10 days if required.

A subsidiary is a separate Indian legal entity with limited liability. A branch office is an extension of the foreign company with no separate legal identity. Subsidiaries are preferred for long-term operations, fundraising, and liability protection. Branch offices have restrictions on activities and require prior RBI approval.

Yes, dividends can be repatriated to the foreign parent freely after paying applicable Indian taxes (dividend distribution tax or withholding tax). There is no cap on profit repatriation. However, the subsidiary must comply with FEMA reporting requirements and maintain proper accounting records.

Ongoing compliance includes: (1) Annual ROC filings - AOC-4, MGT-7, ADT-1, DIR-3 KYC; (2) FEMA reporting - FC-GP, FC-TRS for capital transactions; (3) Income tax returns annually; (4) GST returns if registered; (5) TDS compliance; (6) Transfer pricing documentation (Form 3CEB if cross-border transactions exceed ₹10 crore).

The automatic route means FDI is permitted without prior government approval - the company simply complies with FEMA reporting. The approval route (government route) requires prior approval from the relevant ministry (e.g., DPIIT, Ministry of Defence). Sectors like telecom, defence, civil aviation, and insurance above certain caps require the approval route.

Yes. The Indian subsidiary must have its accounts audited by a Chartered Accountant in India every financial year. The audited financials are filed with the ROC (AOC-4). The foreign parent may consolidate the subsidiary's accounts in its global financial statements per IFRS/GAAP.

Yes, an Indian subsidiary can issue ESOPs to employees of the foreign parent company or its group companies. However, this requires FEMA compliance (shares issued under the ESOP scheme need to be reported under FC-GP) and the scheme must be approved by the board and shareholders.

FEMA violations can attract penalties of up to three times the amount involved in the contravention. In severe cases, the RBI can initiate adjudication proceedings. Additionally, future FEMA filings may be scrutinised more closely. We recommend maintaining strict FEMA compliance from day one.

Yes. We offer an end-to-end India entry package: company incorporation, FEMA registration, RBI reporting, bank account setup, GST registration, and first-year annual compliance. Our CA team handles all Indian regulatory requirements while you focus on your business.