Indian Subsidiary Registration

Indian Subsidiary: 101 Guide on Set-up

India's economy is among the fastest-growing worldwide, making it a tremendously profitable market for international businesses. A subsidiary is always totally or partially owned by the parent or holding company. However, establishing a subsidiary in India can take time and effort, especially for businesses unfamiliar with the nation's legal and regulatory framework. 

Establishing a subsidiary in India has many advantages, but there are also drawbacks. You must adhere to local laws, comprehend cultural quirks, and adjust to the local business climate. Consequently, to manage the complications, a corporation can contact legal and business specialists like Lawgical Adda for assistance.  

What is a subsidiary business?

The parent firm must own at least fifty percent or more of an Indian subsidiary. A wholly-owned or completely owned subsidiary is one in which the parent business owns all its shares. The primary distinction between a foreign parent company and its subsidiary is that the former is a distinct legal entity and must adhere to the laws and regulations of the nation in which it is registered or has its headquarters.

Steps on Setting up an Indian Subsidiary

Choose the Type of Company: 

Choose the kind of subsidiary business you wish to launch. The most popular choices for international businesses are a wholly-owned subsidiary, where the parent company owns all of the subsidiary's shares, or a private limited company, where the parent company owns more than 50% of the subsidiary, and the subsidiary is located in an industry that permits 100% foreign direct investment (FDI). 

Acquire a Digital Signature Certificate (DSC): 

Since the registration process is conducted online, each proposed director of the company must have a Digital Signature Certificate (DSC). During the registration procedure, the documents are electronically signed using DSC. 

Name Approval: 

Select a distinctive name for your subsidiary business using the MCA's web portal and submit an application for approval. The name must comply with the MCA's naming requirements. 

Putting together the articles of association (AoA) and memorandum of association (MoA): 

The company's goals, policies, and procedures are outlined in the Memorandum of Association and the Articles of Association. Assemble these records in compliance with the 2013 Companies Act. 

Filing Incorporation Documents: 

After the name is accepted, you must use the MCA's online site to file the incorporation documents—which include the AoA, MoA, and other necessary forms—with the Registrar of Companies (ROC). The Ministry of Corporate Affairs portal's SPICe+ form completes the incorporation process.

Payment of Registration Fees: 

In accordance with the subsidiary company's permitted capital, pay the ROC the necessary registration fees. 

Obtain Certificate of Incorporation (COI): 

The ROC will issue a Certificate of Incorporation if all the data and papers submitted are correct. This validates the subsidiary company's registration. 

Apply for Tax Registration and Permanent Account Number (PAN): 

Following the formation of the CoI, submit an application to the Income Tax Department for a Tax Deduction and Collection Account Number (TAN) and Permanent Account Number (PAN) for the subsidiary business. 

Open Bank Account: 

Lastly, create an Indian bank account in the name of the subsidiary. 

Pro tip: Make sure that, in addition to the company registration procedure, you are in compliance with all other applicable legislation, including labor laws, regulations unique to your industry, and the registration of the Goods and Services Tax (GST).

Documents Needed for Incorporation:

1. Office Address Proof (Rent Agreement or Electricity Bill) and the most recent self-attested electricity bill if the space is rented

2. For Indian nationals: Photo identification proof (passport or driver's license), address proof (most recent electricity bill or rental agreement), and the latest self-attested electricity bill for a rented business are required.

3. For foreign nationals: a valid passport is required; additionally, you must provide address verification (such as a recent phone bill, electricity bill, bank statement, passbook, or rent agreement in the case of rented housing) and proof of residence. Document must be certified by the Indian Consulate Photo ID Proof-Government licensing documents that exhibit the applicant's full name, a high-resolution photo, and birthdate.

Why should you have an Indian Subsidiary for your Company?

Having entry to a large market

India, with more than 1.3 billion inhabitants, is one of the most populous countries in the world. By establishing a subsidiary in India, international businesses may tap into a massive and expanding market where a fast-increasing middle class drives demand for a wide range of goods and services.

Reduced expenses for manufacturing

India is well-known for inexpensive labor, which allows international businesses to significantly reduce their cost of production. Establishing a subsidiary in India can also benefit companies from tax breaks, subsidies, and other benefits offered by the Indian government to promote foreign direct investment.

Competent labour force

India boasts a highly competent and educated workforce, with a particular focus on STEM (science, technology, engineering, and mathematics) education. Foreign businesses can access this trained workforce in India by establishing a subsidiary, which can spur innovation and growth.

A favorable environment for business

India has made great strides in recent years to enhance its business environment, focusing on streamlining regulations and eliminating bureaucratic obstacles. Establishing a subsidiary in India can provide international corporations with a more appealing business climate than in many other growing markets.

Location strategy

India is a great place for businesses looking to grow in the region because of its advantageous location at the crossroads of Asia. Establishing a subsidiary in India can give foreign businesses a key position from which to penetrate other rapidly expanding markets in Southeast Asia and beyond.

The criteria used to define an Indian company are also used to determine an Indian subsidiary company. The Indian Subsidiary Company is subject to the same rules as the other form of Indian firm. The applicant firm will receive the Certificate of Incorporation as soon as possible if it follows the incorporation as mentioned above procedure and provides the required paperwork.