Setting Up a Subsidiary in India: A 2026 Walkthrough
India remains one of the most attractive destinations for foreign investment, but translating a strategic plan into an operating entity involves navigating three regulators in parallel — the Ministry of Corporate Affairs (MCA), the Reserve Bank of India (RBI), and the Income Tax Department. Most foreign parents opt for a wholly-owned subsidiary structured as a private limited company because it offers limited liability, full operational control, and access to the automatic FDI route in most sectors.
Step 1: Pre-incorporation
Identify two directors (at least one must be a resident Indian under Section 149 of the Companies Act), obtain Digital Signature Certificates (DSCs) and Director Identification Numbers (DINs), and reserve a name through the RUN/SPICe+ portal. Foreign documents — board resolutions, parent incorporation certificates, address proofs — must be apostilled or consularised depending on the home jurisdiction.
Step 2: Incorporation
SPICe+ is a single integrated form that handles incorporation, PAN, TAN, GST, EPFO, ESIC, and bank account opening. Once approved, the Certificate of Incorporation is issued, typically within 7–10 working days from filing.
Step 3: Post-incorporation FEMA compliance
Once share capital is remitted by the foreign parent, an FC-GPR must be filed with the RBI within 30 days of share allotment. Non-compliance carries compounding penalties. Annually, the Foreign Liabilities and Assets (FLA) return must be filed by 15 July, and any subsequent capital infusion or transfer of shares triggers a fresh FC-GPR or FC-TRS filing.
Step 4: Operationalisation
GST registration is mandatory before commencing taxable supplies. Payroll compliance (PF, ESI, professional tax) kicks in from the first employee. A statutory auditor must be appointed within 30 days of incorporation, and transfer pricing documentation becomes relevant if any related-party transactions exceed the prescribed thresholds.
The most common pitfall we see is treating these steps as sequential when many run in parallel — leading to delays in payroll, vendor payments, or first invoicing. Planning the timeline backwards from your operational go-live date usually saves four to six weeks.