Although foreign entrepreneurs can easily invest in the country, those who are interested in how to form a company in India should consider several aspects before starting their business here. This is because, in certain circumstances, foreign investors (and foreign shareholders) must obtain approval for their investment projects from local institutions.
Depending on the investment sector that is of interest for foreign businesspeople, prior approval may be needed from the Reserve Bank of India (RBI) or the Foreign Investment Promotion Board. Our team of experts
, practised in any matter relating to the procedure ofcompany registration in India
, can offer guidance on the business areas that need government approval.
Approval requires to be taken from the RBI
for the registration of the subsidiaries
appointing foreign directors. So, any newly formed business receiving Foreign Direct Investment (FDI) must obtain the approval from the RBI.
A subsidiary company
is legally obliged to submit the FCGPR Reporting Form with the RBI
when obtaining funds from a foreign parent company
. The procedure must be finished within 30 days since the local subsidiary received the funds. Another requirement is the issuance of shares; a process that must be completed within 90 days after the subsidiary
received the funds. FDI LIMITS
100% FDI is permitted in numerous business enterprises/sectors without any prior approval. FDI is not permitted in Proprietorships or Partnerships; LLPs requires prior Government approval. The following areas require prior Government Approval for investment by a subsidiary company:
- Asset Reconstruction Companies
- Atomic minerals
- Courier Services
- Defence and strategic industries
- Development of Integrated Township
- Establishment and operation of Satellite
- Investing in companies in Infrastructure
- Petroleum sector (except for private sector oil refining), Natural gas / LNG pipelines.
- Postal Services
- Print Media
- Tea Sector
In the following sectors, FDI not permitted:
Advantages of opening an Indian subsidiary
- Animal Husbandry
- Atomic Energy
- Atomic Minerals
- Basic Agriculture or plantations activities or Agriculture (excluding Floriculture, Horticulture
- Cultivation of Vegetables, Mushrooms etc. under controlled conditions and services related to agro and allied sectors) and
- Gambling and Betting
- Plantations (other than Tea plantations).
- Postal Service
- Seeds Development
There is a lot of interest from foreign companies to commence their operations in India and access to one of the strongest-growing and most significant markets and take advantage of some of the best human capital assets in the world. Cities in India like Ahmedabad, Bangalore, Pune, Hyderabad, are becoming popular IT hubs to start an IT company in India.
A foreign national or an entity registered in a foreign country can invest in India and incorporate a Company in India by the acquisition of shares of the company, depending on the FDI Policy of India. Once operations commenced, funds can be repatriated easy and quickly. Following are the advantages of incorporating a subsidiary in India Independent legal structure:
the subsidiary is a separate structure from its parent company,
and it is regulated according to Indian law Transfer of shares:
shares held by a shareholder can be readily transferred to another party by signing a form of transfer of shares and share certificates Acquire property in India:
the subsidiary is an independent structure; it is permitted to buy properties in India Incorporation with foreign direct investments
: as previously mentioned, FDI is generally allowed for Indian subsidiaries, and applies to most commercial activities that are available in India. Annual Compliances of Indian Subsidiary Company
Indian subsidiaries are required to comply with the Income Tax Act, the Companies Act, FEMA guidelines and transfer guidelines on prices. From time to time, they had to file income tax with the Income Tax Department, the annual return to the Registrar of Companies and other required documents with the Reserve Bank of India or Securities and Exchange Board of India (SEBI). They should also comply with additional regulations such as TDS regulations, GST rules and ESI regulations etc. The requirement is based on the type of industry, the number of employees and turnover. Why choose our services?
We know that sometimes fulfilling legal requirements/documentation might be technical and challenging. We can help you to incorporate foreign companies in India with the local institutions. And can answer any question relating to the main characteristics of each one of the two business forms relating to Subsidiary Company registration.