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An Indian Subsidiary is an entity whose interests are controlled by another company, known as the parent or holding company, which is incorporated outside India. Under the Companies Act, 2013, an Indian Subsidiary is treated as a separate legal entity from its foreign parent company.
It is one of the most preferred entry strategies for foreign investors because it allows for full management control and participation in the Indian market while enjoying the same privileges as any other Indian company. The process involves coordinating between the Ministry of Corporate Affairs (MCA) and the Reserve Bank of India (RBI).
In most sectors, foreign entities can own 100% of the equity in an Indian subsidiary under the automatic route, without requiring prior government approval.
The liability of the parent company is limited to the extent of its shareholding in the Indian subsidiary, protecting the global assets from Indian operational risks.
Establishing a subsidiary allows global brands to have a permanent presence in one of the world's fastest-growing economies with a dedicated local management team.
India has signed the Double Taxation Avoidance Agreement (DTAA) with over 80 countries, providing significant tax relief on dividends and repatriated profits.
