Indian Subsidiary Registration

The usual route is a private limited company incorporated in India, wholly or majority owned by the foreign parent. It is a separate Indian legal person, which limits the parent’s exposure and gives it a vehicle that can contract, hire and hold licences locally.

Most sectors permit 100% foreign direct investment under the automatic route, which means no prior government approval — only reporting after the event. A limited set of sectors remains restricted or requires approval, and that has to be checked before anything else.

The alternatives — a liaison office, branch office or project office — require Reserve Bank or authorised dealer approval, are limited in what they may do, and are generally slower to establish. For a company intending to trade in India, the subsidiary is almost always the right answer.

The resident director is not negotiable

Section 149(3) requires at least one director who stayed in India for 182 days or more during the financial year. Foreign parents frequently appoint two overseas directors and intend to sort this out later. The company is in breach from incorporation, and it cannot be cured retrospectively. Identify the resident director before you file.

FC-GPR has a thirty-day clock

Every issue of shares to a non-resident must be reported to the Reserve Bank in Form FC-GPR through your authorised dealer bank within thirty days of allotment. Late filing attracts a late submission fee, and unreported foreign investment complicates every subsequent round and any eventual exit.

Transfer pricing applies from day one

Every transaction with the parent — management fees, software licences, cost recharges, loans — must be at arm’s length, supported by documentation and reported in an accountant’s report in Form 3CEB. Subsidiaries operating on a cost-plus recharge without a documented basis are the standard transfer pricing adjustment case in India.

The FLA return

Companies with foreign investment file an annual Foreign Liabilities and Assets return with the Reserve Bank by 15 July, covering the previous financial year. It is separate from everything filed with the MCA and the income-tax department, nothing prompts it, and it is probably the single most commonly missed obligation among foreign-owned Indian companies.

Apostille first, then plan the timeline

Documents executed abroad need apostille where the home country is party to the Hague Convention, or consularisation where it is not. This takes weeks and is outside anyone’s control. Almost every delayed India setup is delayed here, so begin legalisation before you finalise anything else.

FDI policy is published by DPIIT, with reporting administered by the Reserve Bank of India.

The annual cycle is heavier than a purely domestic company: statutory audit, ROC filings, income-tax return, transfer pricing documentation and Form 3CEB, and the FLA return. Budget for it, because each has its own deadline and its own professional.

Keep the intercompany agreements in place and in writing before the transactions happen. A management fee charged for three years without an agreement is very difficult to defend, and the adjustment lands on the Indian company.

Plan repatriation early. Dividends, royalties and fees each have their own withholding treatment and treaty position, and how the subsidiary is capitalised at the outset materially affects what can be taken out later.