Foreign Subsidiary Company Registration in India

As the name suggests, Foreign subsidiaries are those companies that are of foreign origins and wanted to establish an office in India. For getting started their business operations in India, the foreign subsidiaries have to get themselves registered as Foreign Subsidiary. Groom Tax helps you in getting your company registered as a Foreign Subsidiary in India.

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  • There should be a minimum of 2 Directors and two shareholders in the Indian subsidiary.
  • At least one of the directors shall be an Indian Resident and Indian Citizen.
  • There should be a local Indian office address for the registered office address.


Limited Liability:  The Liability of shareholders is limited to the unpaid subscribed share capital only. Shareholder not liable to pay losses and liability of company by personal assets.

Separate Legal Entity:  Company is a separate legal person in the eyes of law and different from its directors and shareholders. Company can operate, contract and own assets and liabilities by its own name like any individual person.

Easy Funding:  If you want to raise funds then company is the only options in which you can get funds against issue of equity shares.

Eligible for FDI:  You can get the investment from foreign countries also easily in the company under automatic approval route.

Eligible for startup India Recognition:  Company can be recognized as startup and get the benefit of income tax exemption u/s 80-IAC and angel tax exemption u/s 56(2)(viib) of the income tax act.

No Eligibility Criteria:  There is no requirement of previous profit track record and minimum net worth for foreign company.

No restriction on activities:  There is no restriction on nature of business activities but in case of project office and liaison office only limited activities are allowed.

Tax Benefits:  There are different rates of taxes on companies ranging from 15% to 30% depends on nature of business and turnover of the company which are as follows:

Section Type of Company Tax Rates
115BAB* Manufacturing Company incorporated after 1st Oct, 2019 17.16% (Tax + SC + EC)
115BAA* Other Companies 25.17% (Tax + SC + EC)
If Turnover less than 400 crore 26% (Tax + EC)
If Turnover more than 400 crore 31.2% (Tax + EC)

* Note: Under section 115BAB and 115BAA, companies could not claim certain deduction, exemption and brought forward losses.

List of Documents Required

Company Details
  • Two Proposed Names
  • The objective of the proposed company
Proof of Registered Office
  • Latest Utility bill i.e., electricity bill, landline bill or water bill, etc.
  • For rented place, NOC required in the name of the proposed company
Subscribers & Director’s Documents
  • PAN Card of all the Subscribers/Directors
  • Photograph of all the Subscribers/Directors
  • Aadhar Card of the Subscribers/Directors
  • Mobile No. and Email ID of all the Subscribers/Directors
  • DL/Voter ID/ passport, anyone documents of all the Subscribers/Directors. ID proof of foreign national shall be duly notarized / apostilled / consularised, as applicable
  • Bank statement/ Electricity Bill in the name of the Subscribers/Directors, anyone documents of all the subscribers/directors (should be in English language or translated by authorized translator in English)
  • The Signature and address of the subscriber Memorandum of Association (MOA) and Articles of Association (AOA) shall be duly notarized / apostilled / consularised, as applicable
Other Information
  • Copy of certificate of incorporation of holding company duly notarized / apostilled / consularised, as applicable
  • Name of nominee shareholder on behalf of foreign company
  • Share capital and voting share of directors
  • Whether director or partner in any existing Co/LLP
  • Place of birth, Occupation and Educational qualification of director
  • Present residential address and duration of stay
  • Specimen Signature of one signatory


  • 1

    Apply for a name approval for your company using Spice+ Part-A.

  • 2

    Apply for DSC of subscribers and directors

  • 3

    Online preparation of Spice+ PartB, eMOA, eAOA & AGILEPRO.

  • 4

    Online filing of Spice+ Part B, eMOA, eAOA, AGILEPRO and INC-9

  • 5

    Get a certificate of incorporation, PAN & TAN of your company.


  • Certificate of incorporation
  • Company name approval
  • Director identification numbers (DIN)
  • Digital signature token for directors
  • Memorandum of association
  • Articles of association
  • Company PAN card
  • Company TAN number
  • ESI/PF registration

FDI Policy

Sectors under Automatic Route

S.No. Sector/Activity Relevant Para Cap
1. Agriculture 5.2.1 100%
2. Plantation Sector 5.2.2 100%
3. Mining and Exploration of metal and non-metal ores 100%
4. Mining – Coal & Lignite 100%
5. Manufacturing 5.2.5 100%
6. Broadcasting Carriage Services ( Teleports, DTH, Cable Networks, Mobile TV, HITS) 100%
7. Broadcasting Content Service - Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels 100%
8. Airports – Greenfield (a) 100%
9. Airports – Brownfield (b) 100%
10. Air Transport Service - Non-Scheduled (2) 100%
11. Air Transport Service - Helicopter Services/ Seaplane Services (3) 100%
12. Other services under Civil Aviation Sector - Ground Handling Services (1) 100%
13. Other services under Civil Aviation Sector - Maintenance and Repair organizations; flying training institutes; and technical training institutions (2) 100%
14. Construction Development 5.2.10 100%
15. Industrial Parks - new and existing 5.2.11 100%
16. Trading – Wholesale 100%
17. Trading –E-commerce activities 100%
18. Trading – SBRT 100%
19. Duty Free Shops 100%
20. Railway Infrastructure* 5.2.16 100%
21. Asset Reconstruction Companies 5.2.17 100%
22. Credit Information Companies 5.2.20 100%
23. Intermediaries or Insurance Intermediaries 100%
24. White Label ATM Operations 5.2.25 100%
25. Other Financial Services 5.2.26 100%
26. Pharmaceuticals – Greenfield 100%
27. Petroleum & Natural Gas - Exploration activities of oil and natural gas fields 100%
28. Petroleum refining by PSUs 49%
29. Infrastructure Company in the Securities Market 5.2.21 49%
30. Insurance 5.2.22 49%
31. Pension 5.2.23 49%
32. Power Exchanges 5.2.24 49%

Sectors where Government Approval is required

S.No. Sector/Activity Relevant Para Cap Govt. Approval
1. Mining and mineral separation of titanium bearing minerals and ores 100% Upto 100%
2. Food Product Retail Trading 5.2.5 100% Upto 100%
3. Defence 5.2.6 100% Beyond 49%
4. Broadcasting Content Service
a) FM Radio
b) Up linking of ‘News & Current Affairs’ TV Channels
49% Upto 49%
5. Uploading/ Streaming of News & Current Affairs through Digital Media 26% Upto 26%
6. Print Media - Publishing of newspaper and periodicals dealing with news and current affairs 26% Upto 26%
7. Print Media - Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Upto 26%
8. Publishing/printing of scientific and technical magazines/specialty journals/ periodicals 100% Upto 100%
9. Publication of facsimile edition of foreign newspapers 100% Upto 100%
10. Air Transport Service – Scheduled, and Regional Air Transport Service, 100% Beyond 49%
11. Investment by Foreign Airlines 100% Upto 49%
12. Satellites - establishment and operation 5.2.12 100% Upto 100%
13. Telecom Services 5.2.14 100% Beyond 49%
14. Private Security Agencies 5.2.13 74% Beyond 49%
15. Trading – MBRT 51% Upto 51%
16. Banking - Private Sector 5.2.18 74% Beyond 49%
17. Banking - Public Sector 5.2.19 20% Upto 20%
18. Pharmaceutical – Brownfield 100% Beyond 74%

India Entry Services

Particulars Company/LLP Branch Office Project Office Liaison Office
Eligibility No Criteria Profit track record of 5 FY and net worth of USD 100,000 or more No Criteria Profit track record of 3 FY and net worth of USD 50,000 or more
Approval ROC RBI and ROC RBI and ROC RBI and ROC
Purpose/Activities Commercial, trading, or industrial activities in India Commercial, trading, or industrial activities in India except retail trading & manufacturing To Execute a particular project in India Representing, Promotion and communication
Sources of Funds Capital and Profits Head office and internally generated funds Head office and internally generated funds 100% from head office
Tax Rate 15%-30% 40% 40% Not Applicable
Minimum No. of Director/AR 2 1 1 1
Minimum No. of Director resident in India 1 1 1 1
Timelines 7-10 Days 3-4 Months 3-4 Months 3-4 Months
Know More Know More Know More Know More


Do we need a resident Indian to be a director in an Indian company?
Yes, Company registered in India must have at least one Indian resident individual as a director.
Can we disallow share to Indian resident Director?
Yes you can disallow. It is not mandatory to make the director as a shareholder in Indian Company.
What are the documents to be required?
Please have a look at list of documents above in "List of Documents Required" section.
How can I open a US subsidiary company in India?
The US company must complete all the necessary administrative and legal requirements, such as applying for name availability, preparing the memorandum and articles of association, and tax and labor registrations, and after registration, the subsidiary can start its business operations.
How can an Indian company receive foreign investment?
The routes under which foreign investment can be made is as under:
  • Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).
  • Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the Government.
What are the Capital instruments permitted for receiving foreign investment in an Indian company?
‘Capital Instruments’ means equity shares, debentures, preference shares and share warrants issued by the Indian company.
  • Equity shares:  Equity shares are those issued in accordance with the provisions of the Companies Act, 2013 and will include partly paid equity shares issued on or after July 8, 2014.
  • Share warrants:  Share warrants issued on or after July 8, 2014 will be considered as capital instruments.
  • Debentures:  ‘Debentures’ means fully, compulsorily and mandatorily convertible debentures.
  • Preference shares:  ‘Preference’ shares means fully, compulsorily and mandatorily convertible preference shares.
Who can invest in a convertible note and what are the instructions in this regard?
A person resident outside India (other than an individual who is a citizen of Pakistan or Bangladesh or an entity which is registered/ incorporated in Pakistan or Bangladesh), may purchase convertible notes issued by an Indian start-up company for an amount of twenty five lakh rupees or more in a single tranche. A start-up company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with the approval of the Government. The amount of consideration should be received by inward remittance through banking channels or by debit to the NRE/ FCNR (B)/ Escrow account maintained by the person concerned.
What is meant by Foreign Investment, Foreign Direct Investment and Foreign Portfolio Investment?
Foreign Investment means any investment made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP.

Foreign Direct Investment (FDI) is the investment through capital instruments by a person resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

Foreign Portfolio Investment is any investment made by a person resident outside India in capital instruments where such investment is (a) less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent of the paid up value of each series of capital instruments of a listed Indian company.

For an FPI investment, once the investment is classified as FDI (basis total holding), if the FDI holding comes back to <10%, will the holdings be classified as FPI again?
Once an FDI always an FDI.
Whether any approval is required for an entity which has received foreign investment under automatic route and subsequently the sector was brought under approval route
As long as the foreign shareholding in the entity remains the same and there is no corporate action pursuant to the sector being brought under approval route, approval is not required.
Whether cash is a permissible mode of payment for making foreign direct investment in Indian company.
Are the investments and profits earned in India repatriable?
All foreign investments are repatriable (net of applicable taxes) except in cases where the investment is made or held on non-repatriation basis.
Within how many days from the date of receipt of the consideration should the capital instrument be issued?
The capital instrument has to be issued by the Indian company within sixty days from the date of receipt of the consideration.
What is the concept of downstream investment and Indirect Foreign Investment?
Downstream investment is investment made by an Indian entity which has total foreign investment in it or an Investment Vehicle in the capital instruments or the capital, as the case may be, of another Indian entity.

If the investor company has total foreign investment in it and is not owned and not controlled by resident Indian citizens or is owned or controlled by persons resident outside India then such investment shall be “Indirect Foreign Investment” for the investee company.

Do foreign subsidiaries have to pay taxes in India?
Interest from foreign subsidiaries is fully taxable in the hands of the Indian company, with credit allowed for foreign tax withheld or paid, up to the Indian tax on the interest.
Can a non-resident be a director of an Indian Company?
Yes, a non-resident can be a director of an Indian Company.
How do you close a foreign company?
The first is the approval of the RBI and the second is registration with the Registrar of Companies (RoC). The license shall be issued for a term of 3 years and shall be extended thereafter. The closure of these foreign companies in India needs the approval of RBI and a report from RoC on the state of compliance.
What is FCRN number?
FCRN is the short form of "Foreign Company Registration Number" which is an identification number for a foreign company doing business in India.
Whether the documents are required to be notarised and apostilled for incorporation of a company in case the subscriber/director is a Foreign national?
The attestation requirement depends on the country in which registered office (in case of body corporate as a subscriber) /residence of the overseas subscriber and / or director is situated. The documents are required to be attested are as follows:
  • Proof of Residence in a country which is part of the Common Wealth, by a notary public of that country;
  • Proof of Residence in a country which is party to the Hague Apostille Convention, 1961, attestation to be made by a notary public of the said country and duly apostilled in accordance with Hague Convention; or
  • Proof of Residence in a country outside the Commonwealth, and which is not party to Hague Convention, authenticated by a Diplomatic or Consular Officer empowered in this behalf under Section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) i.e. attested by Public Notary and authenticated by Indian Embassy in the country of residence.
Documents to be notarised and apostilled:
  • Proof of identity
  • CoI of the foreign body corporate, if applicable
  • MoA
  • AoA
  • Document executed outside India (Place of execution determines whether the said document is to be notarised / apostilled / consularised)
Whether extension of compulsorily convertible preference shares (CCPS) or compulsorily convertible debentures (CCDs) requires RBI approval?
Tenor of convertible instruments will be guided by the instructions framed under the Companies Act, 2013 and the rules framed thereunder. However, the investee company should ensure that the price/ conversion formula of convertible capital instruments is determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant FEMA regulations.
What is a convertible note?
A convertible note is an instrument issued by a start-up company evidencing receipt of money initially as debt, which is repayable at the option of the holder, or which is convertible into such number of equity shares of such startup company, within a period not exceeding five years from the date of issue of the convertible note, upon occurrence of specified events as per the other terms and conditions agreed to and indicated in the instrument.
What is meant by capital on a fully diluted basis?
Fully diluted basis means the total number of shares that would be outstanding if all possible sources of conversion are exercised.
Whether the foreign investment will be classified as FDI or FPI based on the schedule under which the investment is being made.
No, FDI and FPI are agnostic from the point of view of the schedule under which investment has been made. It is the percentage which defines whether it is direct or portfolio investment.
What is meant by investment on repatriation basis and investment on non-repatriation basis?
Investment on repatriation basis means an investment, the sale/ maturity proceeds of which are, net of taxes, eligible to be repatriated out of India. The expression investment on non-repatriation basis may be construed accordingly.
Can a foreigner set up a partnership/ proprietorship concern in India?
Only NRIs/ OCIs are allowed to invest in partnership/ proprietorship concerns in India on non-repatriation basis.
Can a foreign investor invest in Rights shares issued by an Indian company at a discount?
There are no restrictions under FEMA for investment in Rights shares issued at a discount by an Indian company under the provisions of the Companies Act, 2013. The offer on rights basis to the persons resident outside India shall be:
  • in case of shares of a company listed on a recognized stock exchange in India, at a price, as determined by the company; and
  • in case of shares of a company not listed on a recognized stock exchange in India, at a price, which is not less than the price at which the offer on right basis is made to resident shareholders.
Is a person resident outside India permitted to acquire capital instruments on stock exchange?
The following persons can acquire capital instruments on the stock exchanges:
  • FPIs registered with SEBI
  • NRIs
Other than (a) and (b) above, a person resident outside India, can acquire capital instruments on stock exchange, subject to the condition that the investor has already acquired and continues to hold the control of such company in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations.
What if the Capital Instruments are not issued within the stipulated time period?
If the capital instruments are not issued by the Indian company within sixty days from the date of receipt of the consideration, the amount so received has to be refunded to the person concerned by outward remittance, through banking channels or by credit to his NRE/ FCNR (B) accounts, as the case may be, within fifteen days from the date of completion of sixty days.

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