Steps for Setting Up a Subsidiary in India

Foreign companies are increasingly looking to establish a presence in the Indian market to leverage its vast consumer base, skilled talent, and strategic location. Among the various options available, setting up a subsidiary in India is a popular and effective way for foreign entities to operate locally while maintaining control over their operations. However, the process of setting up a subsidiary involves several regulatory and compliance steps governed by Indian law. Understanding these steps is crucial for a smooth and successful incorporation of a subsidiary in the country.

Obtain Digital Signature Certificate (DSC)

The incorporation process of a subsidiary in India is entirely digital, and all documents must be signed electronically. Therefore, the first step is to obtain a Digital Signature Certificate (DSC) for all directors and authorized signatories of the proposed subsidiary. The DSC serves as a secure digital key and is mandatory for signing the incorporation forms on the Ministry of Corporate Affairs (MCA) portal. It can be obtained through government-recognized certifying authorities such as eMudhra, NSDL, or Sify. 

Obtain Director Identification Number (DIN)

A Director Identification Number (DIN) is a unique number issued by the MCA to individuals intending to serve as directors in companies in India. DIN ensures accountability and traceability of individuals in corporate governance. A minimum of two directors is mandatory, with at least one director being an Indian resident. Foreign directors must also ensure that their documents are notarized and apostilled. Each director must have an active DIN before the subsidiary can be officially registered.

Reserve Company Name via SPICe+ Part A

Before incorporation, the proposed name of the subsidiary must be reserved through SPICe+ Part A on the MCA portal. This name must be unique and compliant with naming guidelines under the Companies Act, 2013. If the subsidiary plans to use the name of its foreign parent company, a No Objection Certificate (NOC) or board resolution from the parent company is required. Once approved, the name is reserved for 20 days, during which the incorporation process must be completed. The name should not conflict with existing companies or trademarks in India.

Prepare Memorandum and Articles of Association (MOA & AOA)

The Memorandum of Association (MOA) and Articles of Association (AOA) are critical documents that form the legal foundation of a company. The MOA defines a company’s objectives and external relations, while the AOA outlines its internal rules. These documents must be drafted in compliance with Indian company law and submitted electronically through the SPICe+ Part B form.

File Online Incorporation Application (SPICe+ Part B)

Once the name is approved and MOA/AOA are ready, the incorporation application is filed using SPICe+ Part B on the MCA portal. This integrated application covers company registration, DIN allotment, PAN and TAN issuance, and automatic registration with EPFO, ESIC, and, in some cases, Professional Tax (PT). The form must include all relevant documents such as identity proof, MOA, AOA, proof of registered office, and declarations by directors and subscribers. The entire form is digitally signed using the DSCs of the authorized persons. Once submitted and approved, the company is legally incorporated.

Obtain Certificate of Incorporation (COI)

Upon successful processing of the incorporation application, the Registrar of Companies (RoC) issues a Certificate of Incorporation (COI). This certificate is conclusive proof that the subsidiary has been legally formed under Indian law. It includes the company’s Corporate Identification Number (CIN) and confirms its legal status. Along with the COI, the company also receives its PAN and TAN, which are essential for tax filings and opening a business bank account. 

Apply for GST Registration

The final step, if applicable, is to register the company under the Goods and Services Tax (GST) regime. GST registration is mandatory if the company’s annual turnover exceeds ₹40 lakh (₹20 lakh in some states) or if it is involved in inter-state trade, e-commerce, or certain service sectors. Once approved, the company is issued a GSTIN (GST Identification Number) and must comply with monthly or quarterly tax filings.

While the process of setting up a subsidiary in India might seem complex, advancements like the SPICe+ integrated form have streamlined incorporation, making it more accessible for foreign investors. By carefully following these steps and understanding the specific requirements, foreign businesses can confidently establish and grow their footprint in India’s thriving market. 

At Corporate Leaps, we help you navigate the complexities of setting up a business in the Indian markets with ease. Contact us today for more details.