What a foreign parent company actually has to do — the documents to attest at home, the SPICe+ filing, the FEMA reporting that follows within 30 days, and the compliance calendar that runs every year afterwards.
A wholly owned subsidiary is the most common way a foreign company establishes a permanent operating presence in India. It gives the parent full ownership and control, a separate Indian legal entity that can contract, hire and hold assets in its own name, and — in most sectors — a path that requires no prior approval from any Indian regulator.
The mechanics are well defined. What catches foreign parents out is rarely the law itself; it is the sequencing. Documents executed in the wrong order abroad have to be re-executed abroad. A signatory appointed in one capacity cannot also sign in another. Money remitted before the right form is filed creates a reporting problem that is tedious to unwind. This page sets out the route end to end, in the order the work actually happens.
We handle these mandates from Kerala, including completed subsidiary incorporations for German holding companies, and we run the resulting entities on an ongoing retainer. Where the work spans company law and exchange control — which it always does — it is delivered alongside Jinsi & Associates, Company Secretaries (proprietress CS Jinsi Choyyarkulangara, COP 25034), so the parent deals with one point of contact rather than two separate firms.
Before incorporating, it is worth confirming that a subsidiary is what you need. Indian law offers four routes for a foreign company, and they are not interchangeable.
| Structure | Approval Route | What it can do | Typical Use Case |
|---|---|---|---|
| Wholly owned subsidiary (private limited company) |
Automatic route in most sectors — no prior approval | Full commercial activity: sell, manufacture, hire, contract, borrow, own property | Any genuine operating business in India |
| Branch office | Reserve Bank of India, through AD Category-I bank | Export/import, professional consultancy, technical support — no manufacturing on own account | Project delivery without a separate entity |
| Liaison office | Reserve Bank of India, through AD Category-I bank | Representation and market study only. Cannot earn income in India; funded by inward remittance | Testing a market before committing |
| Project office | Permitted where a secured contract meets funding rules | Execution of one specific project | EPC and infrastructure contracts |
For detailed structural differences, see our comparison on choosing between a subsidiary, branch office and liaison office.
Foreign direct investment is governed by the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, read with the Government's consolidated FDI policy. Three questions decide the route.
Most sectors permit 100% foreign ownership with no prior approval — manufacturing, most services, IT, engineering, wholesale trading, and B2B e-commerce marketplaces among them.
"Real estate business" (buying and selling land/property for profit) is prohibited under FDI rules, but construction-development projects and the operation of completed commercial assets are permitted. Get this classified correctly at the object-clause drafting stage.
Under Press Note 3 of 2020, an entity from a country sharing a land border with India — or an investment where the beneficial owner is situated in or is a citizen of such a country — requires prior government approval, whatever the sector. This is an ultimate beneficial ownership (UBO) test.
Shares issued to a non-resident cannot be priced below fair value determined under internationally accepted pricing methodology. Subscriber shares at incorporation are issued at face value. Subsequent rounds require a valuation certificate by a Chartered Accountant or SEBI-registered Merchant Banker.
Under Section 3(1)(b) of the Companies Act, 2013, a private limited company must have a minimum of two members. A "wholly owned subsidiary" is therefore structured as the foreign parent holding all shares minus one, with a single nominee share held by an individual on behalf of and in trust for the parent.
| Obligation | Form / Portal | Due Date |
|---|---|---|
| Foreign Liabilities & Assets Return (FLA) | FLAIR Portal (RBI) | 15 July annually |
| Director Annual KYC | DIR-3 KYC (MCA) | 30 September annually |
| Financial Statements Filing | Form AOC-4 (MCA) | Within 30 days of AGM |
| Annual Return Filing | Form MGT-7 (MCA) | Within 60 days of AGM |
| Transfer Pricing Accountant's Report | Form 3CEB (Income Tax) | 31 October (or as notified) |
For detailed dates, see our annual compliance calendar for foreign subsidiaries.
We will map the route for your specific sector and ownership chain — whether the automatic route is available, what your home jurisdiction requires by way of attestation, and what the entity will cost to run each year.
