Introduction

Establishing an Indian subsidiary is a strategic move for foreign companies seeking to expand their presence in the Indian market. In this guide, we will navigate through the process of Indian subsidiary registration, explore its advantages and disadvantages, discuss the need for registration, outline required documentation, and address frequently asked questions to assist foreign businesses in setting up a successful subsidiary in India.

Indian Subsidiary Registration Process

1. Need for Registration:

Registering an Indian subsidiary provides a foreign company with a legal entity in India, allowing it to conduct business, enter contracts, and comply with local regulations. It offers a structured way to navigate the complexities of the Indian market.

2. Advantages of Indian Subsidiary:

a. Limited Liability:

The liability of the parent company is limited to its investment in the subsidiary.

b. Local Market Presence:

Establishing a physical presence enhances credibility and customer trust.

c. Operational Independence:

The subsidiary operates independently, making local decision-making more efficient.

d. Tax Benefits:

Can avail tax benefits under Indian tax laws.

3. Disadvantages of Indian Subsidiary:

a. Initial Setup Costs:

Establishing a subsidiary involves initial setup costs and ongoing compliance expenses.

b. Complexity in Management:

Operating in a foreign jurisdiction may present management challenges.

c. Compliance Requirements:

Must adhere to local regulations, which may be different from the parent company's home country.

d. Repatriation of Profits:

Restrictions may apply to repatriating profits back to the parent company.

Q1: Can a foreign company own 100% of the shares in an Indian subsidiary?

In many sectors, foreign companies are allowed to own 100% of the shares, subject to specific conditions.

Q2: What is the minimum capital requirement for an Indian subsidiary?

There is no specific minimum capital requirement for an Indian subsidiary.

Q3: Is it mandatory to have a local director for an Indian subsidiary?

No, it is not mandatory to have a local director, but it is advisable for efficient local management.