Setup Foreign Subsidiary in India | Dikshant Malhotra & Associates

Dikshant Malhotra & Associates

Setup Foreign Subsidiary in India

India’s growing economy offers immense opportunities for foreign businesses looking to expand. Setting up a foreign subsidiary in India allows companies to tap into the local market while benefiting from India's strategic position in global trade. However, navigating the legal, regulatory, and compliance landscape can be complex. At Dikshant Malhotra & Associates, we specialize in helping foreign businesses establish subsidiaries in India efficiently and in full compliance with Indian regulations.Benefits of Setting Up a Foreign Subsidiary in India:

1. Access to a Growing Market: India is one of the fastest-growing economies with a large consumer base, offering huge potential for foreign businesses

2. Limited Liability: A subsidiary protects the parent company’s assets from local liabilities.

3. Control & Ownership: Foreign companies can maintain full ownership of their Indian subsidiaries in sectors where 100% Foreign Direct Investment (FDI) is allowed.

4. Tax Efficiency: Proper structuring of the subsidiary can lead to tax benefits and lower operational costs.

5. Local Presence: Operating as a local entity helps build trust with customers, suppliers, and regulatory bodies.

Process of Setting Up a Foreign Subsidiary in India:

1. Choosing the Legal Structure: Decide on the type of entity to be incorporated, such as a Private Limited Company, Wholly Owned Subsidiary, or Joint Venture.

2. Approval from Regulatory Bodies: Obtain necessary approvals from regulatory bodies like the Foreign Investment Promotion Board (FIPB) or the Reserve Bank of India (RBI).

3. Name Reservation: File the required form with the Registrar of Companies (RoC) to reserve a unique name for the subsidiary.

4. Filing for Incorporation: Prepare and file essential documents such as Memorandum of Association (MoA), Articles of Association (AoA), Digital Signatures (DSC), and Director Identification Numbers (DIN).

5. Compliance with FEMA: Ensure compliance with the Foreign Exchange Management Act (FEMA) for investments and repatriation.

6. Post-Incorporation Compliance: Register for GST, PAN, and TAN; set up local bank accounts; and obtain any sector-specific licenses if required.

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Frequently Asked Questions

What are the main advantages of setting up a foreign subsidiary in India?

Can a foreign company own 100% of its subsidiary in India?

What are the key compliance requirements for a foreign subsidiary in India?

:How long does it take to establish a foreign subsidiary in India?

Is it necessary to appoint an Indian resident director for the subsidiary?

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