How to Start a Subsidiary Company in India

Are you a company looking to expand your business operations in India? If yes, then setting up a subsidiary company is the best route. Whether you are an Indian company or a foreign company, you can expand by registering a subsidiary in India under the Companies Act, 2013—one of the easiest ways to establish a presence in the country.

However, many people are not fully aware of what a subsidiary company is or how to set up one in India. There is often considerable confusion about the role and position of a subsidiary company. Simply put, a subsidiary company is a company that is either wholly owned or partially owned by another company (the holding company). In this blog, we will cover all the key aspects of subsidiary companies in India.

Table of Contents

What is a subsidiary company in India?

A Subsidiary Company is any registered body whose interests are held and controlled by another company (called the holding company).

This control can be in two main ways:

  1. Control of the Board: “Control of the Board” refers to the holding company’s right to appoint or remove the directors. When the holding company decides who will be on the Board of Directors (either appointing or eliminating most of them), then the company is called its subsidiary.
  2.  Control of Voting Power: If the holding company owns or controls more than 50% of the voting rights (either directly or through its other subsidiaries), it is considered a subsidiary.

What is a wholly owned subsidiary?

When one company is 100% owned by another company, it is referred to as a Wholly Owned Subsidiary of the Company that made a 100% investment in it.

This structure gives the parent company complete control over the subsidiary company in terms of operations, strategic direction, and financial decisions. The parent company can easily establish a wholly owned subsidiary to expand into new markets, diversify its business, or manage risks by creating distinct legal entities for different activities.

The establishment of subsidiary companies, primarily wholly owned subsidiaries, is a highly effective and preferred way of expanding business into foreign countries. In fact, most multinational corporations choose to set up their subsidiaries in India as it is relatively easy to establish here and opens the door to numerous new opportunities.  

Basic Requirements to Set Up a Subsidiary Company in India

  1. Indian Resident Director – Local director can be appointed without any equity participation in the subsidiary company, and  
  2. Principal Place of Business in India – A rented or Leased Premises will be sufficient for this purpose.  

To set up one of these companies, you only need a minimum of two directors. The requirement for a company secretary was waived some years ago. The only restriction is that the sole director cannot then act as the company secretary. When you register as a director, you will be required to enter both your residential address and a service address. Only the service address will appear in the public records.

How to Set Up a Subsidiary Company in India?

If you wish to set up a subsidiary company in India, here are the essential points to follow:  

1. Preparation for Incorporation

  • Gather Important Documents: Collect documents for the parent company and directors, including identity and address proofs.
  • Draft MOA and AOA: Prepare the Memorandum of Association and Articles of Association, which outline the company’s objectives and internal rules
  • Obtaining DIN and DSC: Apply for Director Identification Numbers (DINs) and Digital Signature Certificates (DSCs) for all proposed directors

2. Incorporate a Company

  • Name Reservation: Apply to reserve a unique name on the MCA portal as per the guidelines of the Companies Act 2013
  • File SPICe+ Form: To incorporate a company in India, you must file the SPICe+ form, which is a comprehensive online form on the MCA portal. It is a web-based form that offers 11 services and replaces the older PDF-based SPICe+ form. It also links with other forms, such as AGILE-PRO (for GST, ESIC, and EPF registration), as well as the e-MoA and e-AoA forms.

3. Obtain CoI and other Registrations

  • Receiving Certificate of Incorporation: The Registrar issues a Certificate of Incorporation (which is an essential certificate, as this certificate is the proof that your company now legally exists in India).
  • Obtain PAN and TAN: Apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) for the subsidiary.

4. Post-Incorporation Steps

Certain documents may not be required at the time of submitting the registration form. Still, there are some compliance-related documents that you need to provide after registration or during the compliance process.

  • Obtain a bank account for your company
  • Apply for GST (Goods and Service Tax)
  • Register with the Employees’ Provident Fund (EPFO) and the Employees’ State Insurance Corporation (ESIC) if applicable
  • File for Commencement of Business: Submit Form INC-20A to declare the commencement of business operations
  • Advance Foreign Remittance Reporting (AFRR): To be submitted to the Reserve Bank of India (RBI) within one month of receipt of FDI Remittance in India
  • Allotment of Shares to the Holding Company within 180 days of receipt of FDI
  • Submission of FC-GPR Form with RBI within 30 Days of Allotment of Shares
  • Other ROC compliance which may be needed on a further basis

For a video explanation of this article, click here.

Documents & Information Required for Registration of Subsidiary

Here is the list of detailed documents that you need to maintain for registration:

1. Requirements for DIN Application of the Foreign Directors

a. Verification letter on Form DIR-4. Duly attested by the consulate of the India Embassy in the home country of the director or Apostils (worksheet for procurement of DIR-4 is attached).

2. Details of at least two Directors / Promoters of the Company for obtaining DIN (Director’s Identification Number)

  • – Complete name
  • – Complete Address
  • – Father’s name
  • – Date of birth
  • – Passport photograph of every proposed director.
  • – Nationality
  • – Occupation
  • – Educational qualification
  • – Place of birth
  • – Two copies of the PAN card as proof of identity (mandatory requirement for Indian nationals).
  • – Two copies of Aadhar card/voter ID/driving license/passport (one of these is mandatory for Indian nationals)
  • – Two copies of a passport as proof of identity (mandatory requirement for foreign nationals)
  • – Copy of electricity Bill / mobile Bill/bank statement as proof of address

Conclusion

Setting up your subsidiary company in India is one of the most effective ways for both domestic and foreign businesses to expand their operations and tap into the country’s vast opportunities. At the same time, the process involves several steps, ranging from documentation and incorporation to post-registration compliance, which can become simpler when planned carefully and executed with proper guidance.

If you plan to establish your presence in India, consulting experienced professionals can help you navigate compliance requirements, obligations, and strategic planning with ease. With the right approach, registering a subsidiary company in India can be a smooth and rewarding step toward building a strong business foundation in one of the world’s fastest-growing economies.

At Mercurius, we assist businesses at every stage of the subsidiary setup process in India—from incorporation and compliance to advisory support—ensuring a hassle-free and seamless experience.

For further guidance, please contact us.

For a video explanation of this article, click here.