Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
Usually yes — a foreign company or individual can set up an Indian wholly owned subsidiary, most often a private limited company, under the automatic FDI route in most sectors. Incorporation is filed with the Ministry of Corporate Affairs through the SPICe+ form, needs at least two directors including one resident in India, and is followed by RBI reporting of the share issue. Some sectors and investors need prior government approval.
Key takeaways
- Foreign businesses usually choose a private limited company (wholly owned subsidiary); LLPs and branch, liaison or project offices are narrower alternatives.
- Foreign direct investment enters under the automatic route or the government approval route; investors from countries sharing a land border with India need prior government approval.
- A private limited company needs at least two directors and two shareholders, and at least one director who stayed in India for at least 182 days in the financial year.
- Documents signed by foreign subscribers and directors must be notarized and apostilled (or consularized) in their home country.
- NYBACS does not offer incorporation or entity services in India; this guide is informational, and Indian Chartered Accountants or Company Secretaries handle Indian filings.
India at a glance
| Common entity for foreign owners | Private limited company (wholly owned subsidiary); LLP, branch, liaison or project office in specific cases |
|---|---|
| Company registry | Ministry of Corporate Affairs (Registrar of Companies), via SPICe+ on the MCA portal |
| Foreign ownership | Automatic or government-approval FDI route by sector; prior approval for investors from land-border countries |
| Local director / resident requirement | At least two directors for a private company; at least one stayed in India 182+ days in the financial year |
| Registered office | Address in India, with proof and owner's no-objection |
| Key tax registrations | PAN and TAN issued with incorporation; GST, EPFO and ESIC where applicable |
| Recurring compliance | Statutory audit, AOC-4 and MGT-7/7A, director KYC, FLA return to RBI, income tax and GST returns |
| NYBACS scope | Informational only — NYBACS does not offer incorporation or entity services in India |
Indicative only. Rules, filings, fees, ownership restrictions and timelines vary and change — confirm the current position before acting.
Important: NYBACS does not form Indian entities
NYBACS intentionally does not provide incorporation, company secretarial or entity-management services in India. We keep that boundary so we can work neutrally alongside Indian Chartered Accountants (CAs) and Company Secretaries (CSs), who are the right professionals to form and maintain an Indian company.
This guide explains how the process generally works so you can plan and ask the right questions. Where NYBACS does help is on the cross-border side — for example, structuring a group that has Indian operations, or helping an Indian company set up a subsidiary in the US, UAE, Singapore or another destination.
Entity options for a foreign business in India
| Option | What it is | Typical fit |
|---|---|---|
| Private limited company | Indian company under the Companies Act 2013, often a wholly owned subsidiary | Operating businesses, tech and engineering teams, domestic sales |
| Limited liability partnership (LLP) | Body corporate with partners; foreign investment allowed only in sectors with 100% automatic-route FDI and no performance conditions | Professional services, simpler structures |
| Branch office | Extension of the foreign parent, set up under RBI rules through an authorized dealer bank | Specific permitted activities such as export/import or consultancy |
| Liaison office | Representative presence; cannot earn income in India | Market research, promotion, coordination |
| Project office | Temporary office to execute a specific contract in India | Construction and project contracts |
For most foreign businesses, a private limited company is the most flexible route because it can trade, hire, contract and repatriate profits as dividends, subject to Indian tax.
How incorporation of a private limited company generally works
- Check the FDI route for the sector — automatic route, government route or prohibited — and whether any investor is from a country sharing a land border with India, which requires prior government approval.
- Obtain Digital Signature Certificates (DSCs) for the proposed directors and subscribers.
- Reserve the name through SPICe+ Part A (or the separate RUN service) on the MCA portal.
- File SPICe+ Part B with the electronic memorandum and articles (e-MoA and e-AoA). This allots Director Identification Numbers to new directors and generates PAN and TAN for the company; GST, EPFO and ESIC registrations and a bank account can be requested through the linked AGILE-PRO-S form.
- Receive the Certificate of Incorporation with the Corporate Identity Number (CIN).
- Bring in share capital from abroad through banking channels and report the allotment to the RBI in Form FC-GPR through the FIRMS portal within 30 days of allotment.
Foreign subscribers' and directors' identity and address documents, and the subscription documents they sign, must be notarized and apostilled in Hague Convention countries, or consularized elsewhere.
Post-incorporation compliance in India
An Indian subsidiary carries a heavier recurring calendar than many founders expect:
- Commencement of business declaration (Form INC-20A) within 180 days of incorporation, once subscription money is received
- First auditor appointed by the board within 30 days, and a statutory audit every year — there is no small-company audit exemption
- Annual filings with the Registrar of Companies: financial statements (AOC-4) and annual return (MGT-7 or MGT-7A), plus annual director KYC
- Foreign Liabilities and Assets (FLA) return to the RBI each year
- Income tax returns and, where intercompany dealings exist, transfer pricing documentation
- GST registration where turnover or interstate supply rules require it, with monthly or quarterly returns
India's new Income-tax Act, 2025 applies from 1 April 2026, so older section references in guidance should be checked against the new Act.
Banking and practical realities for foreign-owned companies
Indian banks open accounts for subsidiaries routinely, but they apply full KYC to the company, its directors and its foreign shareholders, and they handle the foreign inward remittance paperwork that supports the FC-GPR filing. Delays usually come from inconsistent names or addresses across apostilled documents, missing KYC from the remitting bank abroad, or valuation reports not matching the share price.
The resident director requirement also deserves early thought: many groups appoint an Indian-based senior employee rather than a passive nominee, because the director carries real statutory responsibilities.
Is India the right destination for your business?
India makes sense when you need a local team, domestic customers or a regulated Indian presence. If your goal is a regional holding or trading hub, many groups instead use Singapore or the UAE and contract with Indian teams through a service arrangement, adding an Indian subsidiary once operations justify it.
For Indian businesses expanding outward, NYBACS supports setting up and running entities abroad — particularly US subsidiaries — while your Indian CA or CS manages the India side.
Common mistakes to avoid
- Assuming every sector is open under the automatic route without checking the current FDI policy and sector caps.
- Overlooking that a beneficial owner from a land-border country triggers prior government approval, even through an intermediate holding company.
- Sending foreign documents that are notarized but not apostilled, or with names that do not match passports exactly.
- Missing the 30-day FC-GPR reporting window after allotting shares to the foreign parent.
- Appointing a resident director without considering their statutory liability and ongoing involvement.
- Forgetting the INC-20A commencement declaration and annual FLA return.
Documents and records to prepare
- Passport and address proof of foreign directors and subscribers, notarized and apostilled or consularized
- Identity and address proof of the India-resident director
- Proof of the Indian registered office address with owner's no-objection
- For a corporate shareholder: certificate of incorporation, constitutional documents and board resolution authorizing the investment, legalized for use in India
- Proposed company names and main business objects
- Valuation and remittance documents supporting the share issue for FDI reporting
NYBACS 360° support
How NYBACS helps
- Explains, at a planning level, how an Indian entity would fit your wider group before you engage an Indian CA or CS for execution.
- Supports Indian companies setting up and running subsidiaries abroad, especially in the US, including formation, EIN, banking readiness and annual filings.
- Coordinates the foreign-side corporate records — board resolutions, ownership charts and good standing documents — that Indian advisers and banks request.
- Organizes US-side bookkeeping for intercompany transactions with Indian affiliates so both sides of the group reconcile.
Frequently Asked Questions
Can a foreign company own 100% of an Indian company?
In many sectors, yes, under the automatic route. Some sectors have caps or require government approval, a few are prohibited, and investors from land-border countries need prior approval regardless of sector.
Does an Indian private limited company need an Indian resident director?
Yes. At least one director must have stayed in India for at least 182 days in the financial year. Most foreign-owned subsidiaries also need a second director, who can live abroad.
Can NYBACS incorporate my Indian subsidiary?
No. NYBACS does not offer incorporation or entity services in India. We recommend engaging an Indian Chartered Accountant or Company Secretary, and we can coordinate the foreign-side documents they need.
Is a liaison office cheaper than a subsidiary?
It may be simpler to maintain, but it cannot earn income or trade in India. If you plan to invoice Indian customers or run delivery operations, a subsidiary or branch is usually needed.
What does NYBACS do for Indian businesses?
We support outbound expansion: forming and running US and other overseas entities, EIN and banking readiness, bookkeeping, tax filing coordination and annual compliance outside India.
