A wholly-owned subsidiary (WOS) – an Indian private limited company 100% held by the foreign parent – is the default vehicle for foreign companies entering India, and the standard structure for the cost-centre / GCC model. It gives limited liability, a clean FDI route (100% automatic in most sectors), the ability to hire, contract and invoice locally, and a defined tax perimeter. This guide covers the full journey: eligibility, documents, incorporation steps, capitalisation with RBI reporting, and the operating model that keeps a captive compliant.
Is a WOS the right vehicle?
Usually yes – when you want a permanent presence, employees on your own payroll, and 100% control. Consider the alternatives when the mission is narrower: a liaison/branch/project office for representation or a single contract, an LLP for a lighter two-partner structure, or a JV where an Indian partner brings the market. The full trade-off table lives in our entity comparison.
Prerequisites and structure
| Requirement | Detail |
|---|---|
| Shareholders | Minimum 2 for a private company – typically the foreign parent (say 9,999 shares) + a nominee (1 share held for the parent, disclosed via Form BEN/MGT rules) |
| Directors | Minimum 2; at least one resident in India (182+ days – s.149(3) Companies Act). Foreign nationals can be directors; each needs a DIN and DSC |
| Capital | No minimum under company law. Practical: capitalise for 12–18 months of operating cost (thin capital means repeated remittances and filings) |
| Registered office | Indian address from day one (co-working/virtual office with NOC + utility bill works initially) |
| Sector check | Confirm 100% automatic-route FDI for your activity (most services/manufacturing/IT qualify); approval-route or capped sectors need pre-clearance planning |
Documents: the apostille layer
Every foreign document must be notarised and apostilled (Hague Convention countries – USA, UK, Singapore, UAE, most of Europe) or consularised at the Indian embassy (non-Hague):
- Parent company: certificate of incorporation, charter/bylaws, board resolution authorising the Indian subsidiary and the authorised signatory, and the signatory’s ID;
- Foreign directors/subscribers: passport + address proof (utility bill/bank statement, under 2 months old), photo; documents in another language need certified English translation;
- Indian resident director: PAN, Aadhaar, address proof – no apostille needed.
The incorporation sequence (SPICe+)
| Step | What happens | Typical time |
|---|---|---|
| 1. Name reservation | SPICe+ Part A (2 names; parent-brand names need parent NOC/board consent) | 2–4 days |
| 2. DSC for signatories | Digital signatures for subscribers/directors (video KYC; foreign nationals eligible) | 1–3 days |
| 3. SPICe+ Part B + linked forms | Incorporation + MOA/SOA (use our MOA objects builder and NIC finder) + AGILE-PRO (GST optional, EPFO/ESIC, bank) + INC-9 declarations + DIN allotment for up to 3 directors | 3–7 days after filing |
| 4. Birth documents | Certificate of incorporation + PAN + TAN issued together | with COI |
| 5. Bank account + capital in | Open the current account; parent remits subscription money with purpose code; bank issues FIRC/KYC to RBI | 1–2 weeks (bank KYC on foreign parent is the slow part) |
| 6. Allot + report | Allot shares within 60 days of receiving money; file FC-GPR within 30 days of allotment on the FIRMS portal (entity master first); valuation certificate needed (FMV floor for fresh issues to non-residents) | days, if papers ready |
| 7. Commence business | INC-20A within 180 days of incorporation (after capital receipt) | – |
The cost-centre operating model (GCC playbook)
- Intercompany agreement first: a master services agreement with the parent – scope, cost pool definition, markup (see the 15.5% safe harbour), invoicing cadence, IP ownership (typically parent-owned, India as service provider with insignificant risk).
- Invoicing: monthly cost-plus invoices in foreign currency; realise within FEMA timelines; GST as export of services under LUT = zero-rated (registration + LUT filing at start).
- Software exporters: SoftEx filing applies (STPI or non-STP registration) – dedicated guide coming in this series.
- People: payroll with TDS, PF/ESI; expat secondments need PE-risk and social-security planning.
- Books and statements: Schedule III financial statements, statutory audit from year one regardless of size, transfer-pricing certification for related-party transactions. (Our free Balance Sheet App builds the full Schedule III set from your trial balance.)
Annual compliance snapshot
| Bucket | Core items |
|---|---|
| MCA | AOC-4, MGT-7, DIR-3 KYC, auditor appointment (ADT-1), board meetings/minutes |
| Income tax | Corporate return; TP accountant’s report where related-party transactions exist; advance tax; TDS returns |
| FEMA/RBI | FLA return every 15 July; FC-GPR/FC-TRS on capital events; ECB returns if borrowed |
| GST | Monthly/quarterly returns, LUT renewal annually, annual return |
| Exports | SoftEx per invoice/monthly; EDPMS realisation tracking |
Setting up your India subsidiary?
Incorporation, FDI reporting, transfer pricing and the first-year compliance calendar – handled end to end by our partner team.
Talk to My Cloud AccountantFrequently asked questions
Can the subsidiary be 100% foreign-owned with no Indian shareholder?
Yes – beneficially 100%. The second statutory shareholder is a nominee holding one share for the parent. An Indian resident director is required, but directors need not hold shares.
Is there a minimum investment for FDI?
No minimum under FEMA or company law. Fund realistically: each remittance-and-allotment cycle repeats the FC-GPR process.
How long does the whole setup take?
Documents abroad 2–4 weeks, incorporation 1–2 weeks, bank + capital + FC-GPR another 2–3 weeks: plan 6–8 weeks door to door.
Do we need RBI approval to set up?
Not in 100% automatic-route sectors – you report (FC-GPR) after allotment. Approval applies in capped/approval-route sectors and for land-border-country investors above the 10% threshold.
Subsidiary or branch office for a services business?
Subsidiary, in most cases: cleaner tax (25.17%-style domestic rates vs 35% foreign-company rate on a branch), no RBI activity restrictions, easier hiring and banking. The comparison page covers the exceptions.
Reflects the Companies Act 2013, FEMA (NDI) Rules 2019 as amended (2026), and Income-tax Act 2025 positions. Last reviewed: July 2026.