Expanding into new markets is a major milestone for any global business. One of the most effective ways for international companies to establish a presence in India is by setting up a company’s subsidiary in India. India offers significant growth potential, with a booming economy and a large consumer base. This guide will walk you through the process of registering your company’s subsidiary in India and explain why it’s an excellent option for businesses looking to tap into the Indian market.

What is a Subsidiary Company?

A subsidiary company in India is a separate legal entity that is fully owned or controlled by a parent company based outside India. Unlike branch offices or liaison offices, which are typically limited to specific activities, a subsidiary can conduct business operations, generate income, and own assets in India. This makes setting up a subsidiary company in India a powerful way to operate in the country’s diverse market while maintaining control over your operations.

Why Set Up a Company’s Subsidiary in India?

The decision to establish a subsidiary company in India can unlock numerous benefits for your business, including:

• Market Access: India’s vast consumer base, with over 1.4 billion people, presents enormous opportunities for growth and expansion. A subsidiary in India allows direct access to this market.
• Tax Incentives: India offers various tax benefits and incentives for foreign companies, particularly those involved in manufacturing and export activities.
• Skilled Workforce: India boasts a large pool of skilled professionals, especially in sectors like IT, engineering, and manufacturing, making it an attractive destination for businesses.
• Legal Protection: A subsidiary company offers more legal protections than branch offices or liaison offices, giving foreign businesses better control and credibility in India.

Key Requirements for Setting Up a Company’s Subsidiary in India

Before starting the process of registering a company’s subsidiary in India, you need to meet several key requirements:

• Type of Company: You must decide whether you want to set up a Private Limited Company or a Public Limited Company. Private limited companies are more common for foreign businesses due to their flexibility and ease of operation.
• Directors and Shareholders: A subsidiary company in India requires at least two directors, one of whom must be a resident of India. You also need a minimum of one shareholder, which can be the parent company or an individual.
• Registered Office: A subsidiary company must have a registered office in India. This could be either a leased or owned property.

Steps to Register Your Company’s Subsidiary in India

Registering a company’s subsidiary in India involves several steps, and each step plays a vital role in ensuring the successful establishment of your business in India. Let’s take a look at the process:

Step 1: Choose the Type of Company

The first step is to decide on the type of company you want to register. Most foreign companies opt for a Private Limited Company because it is simpler to manage and offers limited liability protection. Public limited companies, on the other hand, are more suitable for larger businesses.

Step 2: Name Reservation for Your Subsidiary

You must choose a unique name for your subsidiary company in India. The name should comply with the guidelines set by the Ministry of Corporate Affairs (MCA). You will need to apply for name reservation through the MCA’s online portal before proceeding with the incorporation process.

Step 3: Obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC)

All directors of your subsidiary company in India must obtain a Director Identification Number (DIN), which is a mandatory requirement for anyone wishing to become a director of a company in India. Additionally, you will need a Digital Signature Certificate (DSC) to sign the incorporation documents electronically.

Step 4: Draft the Memorandum and Articles of Association

The Memorandum of Association (MOA) and Articles of Association (AOA) are legal documents that outline the company’s objectives, governance structure, and operational rules. These documents are required to complete the registration process of your subsidiary company in India.

Step 5: File Incorporation Documents with MCA

Once you have your MOA and AOA ready, you will need to file them, along with other necessary documents (proof of address, director identification, etc.), with the Ministry of Corporate Affairs. The application is submitted through the SPICe+ form, which is the standard electronic form used for company incorporation in India.

Step 6: Obtain the Certificate of Incorporation

After your documents are reviewed and approved by the MCA, they will issue the Certificate of Incorporation. This certificate signifies that your subsidiary company in India is now a legally recognized entity.

Step 7: Apply for PAN and TAN

To comply with Indian tax regulations, your subsidiary company must apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN). These are necessary for tax filings and deducting tax at source.

Step 8: Open a Corporate Bank Account

Your subsidiary company in India will need to open a corporate bank account. The bank will require the Certificate of Incorporation, PAN, and proof of address of your registered office in India to set up the account.

Step 9: Register for Goods and Services Tax (GST)

If your subsidiary company plans to engage in the sale of goods or services, you will need to apply for Goods and Services Tax (GST) registration. This is required for businesses that exceed the GST threshold limit.

Legal and Regulatory Compliance After Incorporation

Once your subsidiary company in India is incorporated, you need to ensure ongoing compliance with Indian laws:

• Corporate Governance: Your subsidiary must adhere to Indian corporate governance regulations, such as holding board meetings and conducting an annual general meeting (AGM).
• Tax Filing: Your subsidiary company must file annual income tax returns and comply with all Indian tax regulations.
• Audit Requirements: Indian law mandates that your subsidiary company undergo an annual audit conducted by a certified auditor.

Challenges and Considerations

While setting up a company’s subsidiary in India is relatively straightforward, businesses must be aware of certain challenges, such as:

• Navigating India’s complex tax and legal systems
• Understanding the local market conditions and consumer behavior
• Ensuring full compliance with Indian laws and regulations

Conclusion: Trust Corpedia for Seamless Subsidiary Registration

Expanding into India and setting up a company’s subsidiary in India is an exciting venture for any international business. However, it requires careful planning and understanding of India’s legal and regulatory frameworks. That’s where Corpedia comes in. With our deep expertise in regulatory compliance and company formation, we ensure a seamless, hassle-free experience when registering your subsidiary company in India. From initial registration to ongoing compliance, we’re here to handle the complexities, so you can focus on what truly matters—growing your business.

Let Corpedia be your trusted partner in setting up your company’s subsidiary in India, helping you navigate the regulatory landscape and ensuring long-term success in this thriving market.