Step-by-Step Guide to Forming an Indian Subsidiary in Delhi

forming an Indian subsidiary in Delhi allows foreign companies to operate with a legal presence in India, access local markets, and gain credibility with stakeholders. Understanding the step-by-step process is essential to ensure compliance and smooth operations.

Step 1: Decide the Business Structure

The first decision is selecting the right legal structure for your subsidiary. Most foreign companies opt for:

• Private Limited Company – Common for SMEs and startups; limits liability to shares.

• Public Limited Company – Suitable for larger organizations planning to raise public capital.

• Limited Liability Partnership (LLP) – Combines partnership flexibility with limited liability.

Choosing the right structure impacts compliance, taxation, and operational flexibility.

Step 2: Obtain Digital Signatures and DIN

Key registrations include obtaining Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for appointed directors. These are mandatory for filing documents with the Ministry of Corporate Affairs (MCA).

• DSC – Ensures secure digital filing and document authentication.

• DIN – Unique identification for directors, required under Indian law.

Completing these registrations is a prerequisite for company incorporation.

Step 3: Register with the MCA

Registration with the MCA is the core step to legally form a subsidiary. It involves submitting:

• Incorporation forms with company name approval

• Memorandum of Association (MOA) and Articles of Association (AOA)

• Details of directors, shareholders, and capital structure

The MCA verifies documents, and upon approval, issues a Certificate of Incorporation (COI), officially recognizing the company as a legal entity.

Step 4: Open a Bank Account and Complete Tax Registrations

Once incorporated, the subsidiary needs a local bank account for operations and registrations for taxes such as GST and Income Tax.

Benefits include:

• Smooth handling of business transactions in India

• Compliance with statutory obligations

• Ability to hire employees and conduct local operations

Step 5: Engage Local Professionals

While it’s possible to complete the process independently, hiring local experts for legal, accounting, and compliance support streamlines the procedure.

Advantages:

• Avoids procedural delays

• Ensures proper documentation and filings

• Reduces risk of non-compliance

Conclusion

Forming an Indian subsidiary in Delhi involves careful planning, legal filings, and statutory compliance. Following a structured approach—from selecting the business structure to completing registrations—ensures smooth incorporation and operational readiness. Partnering with local professionals further reduces risk and accelerates market entry.

FAQs

Q1: What is the first step in forming a subsidiary in Delhi?
Choosing the appropriate business structure and appointing directors.

Q2: Are Digital Signatures mandatory for incorporation?
Yes, DSCs are required for digital filing and authentication.

Q3: What documents are submitted to the MCA?
Company name approval, MOA, AOA, and details of directors and shareholders.

Q4: Is opening a bank account necessary for a subsidiary?
Yes, for handling local transactions and statutory compliance.

Q5: Do I need local experts to form a subsidiary?
While optional, local experts streamline registration and ensure compliance.

Essential Legal Requirements for Forming an Indian Subsidiary in Delhi

Forming an Indian subsidiary in Delhi requires more than just business intent—it involves adherence to several legal, regulatory, and procedural frameworks. Whether you're a multinational corporation or a startup planning to enter the Indian market, it is crucial to understand the legal landscape for a smooth setup process.

In this blog, we walk you through the major legal requirements and compliance steps involved in establishing a wholly-owned subsidiary in Delhi.

Understanding the Indian Subsidiary Structure

An Indian subsidiary is a company incorporated under the Companies Act, 2013, where a foreign entity holds a majority or 100% of the share capital. It is treated as a domestic company for tax purposes and enjoys all rights and obligations under Indian law.

Key Legal Requirements

Digital Signature Certificate (DSC)

The directors of the proposed company must obtain a Digital Signature Certificate, which is essential for signing online documents filed with the Ministry of Corporate Affairs (MCA).

Director Identification Number (DIN)

At least one director must have a Director Identification Number. DIN can be applied during the incorporation process via the SPICe+ form.

Indian Resident Director

Indian law mandates that one of the directors must be a resident in India—someone who has stayed in India for at least 120 days during the financial year.

Unique Company Name Approval

You must apply for and receive approval for a unique business name through the RUN (Reserve Unique Name) service offered by MCA.

Incorporation through SPICe+ Form

The SPICe+ form is a government-approved single-window application that allows for:

• Company incorporation

• PAN and TAN allotment

• GST registration

• EPFO and ESIC registration

• Professional Tax registration (if applicable in Delhi)

This streamlined process ensures that most statutory registrations are handled at once, reducing time and effort.

Shareholding Structure

Foreign companies can own 100% of the equity in the Indian subsidiary in most sectors under the automatic route. However, for sectors like defence, media, and insurance, prior approval from the government is required.

Additionally:

• Minimum two shareholders are required for a Private Limited Company

• Shareholders can be individuals or corporate entities

Registered Office Requirement

To incorporate in Delhi, the company must have a registered office address within city limits. This can be:

• A commercial office space

• A virtual office (for initial setup)

• A shared coworking space

Ensure the space has valid documentation like rent agreement and utility bills.

Post-Incorporation Legal Compliances

Once the company is formed, the following are mandatory:

• Appointment of statutory auditor within 30 days

• Bank account opening in the company’s name

• Issuance of share certificates to shareholders

• Filing of INC-20A (declaration of commencement of business)

• Maintenance of statutory registers and board resolutions

FEMA and RBI Compliances

If the subsidiary receives foreign investment:

• Intimate RBI by filing FC-GPR form within 30 days of allotting shares

• Report FDI transactions through the Single Master Form (SMF) on the FIRMS portal

Compliance with FEMA (Foreign Exchange Management Act) is crucial to avoid penalties.

Taxation and Accounting Requirements

Indian subsidiaries must comply with:

• Corporate tax filing

• GST registration and monthly filings

• TDS deductions and payments

• Annual ROC filings

• Statutory audits

Role of Professional Advisors

Legal, tax, and compliance experts can help avoid costly mistakes and delays. With more than 60 years of experience,

• Company incorporation services

• RBI and FEMA reporting

• Tax planning and compliance

• Accounting and audit solutions

Conclusion

Setting up an Indian subsidiary in Delhi opens the door to one of the world’s largest markets—but only if done right. Ensuring compliance with all legal and procedural requirements is non-negotiable. From incorporation to post-setup compliance, experienced advisors can make your expansion smooth and risk-free.

FAQs

1. Can a foreign company have 100% ownership in an Indian subsidiary?
Yes, in most sectors, 100% FDI is allowed under the automatic route.

2. Is it mandatory to have a local office in Delhi for registration?
Yes, a registered office address within Delhi is required.

3. How long does it take to incorporate a subsidiary?
Typically, 2 to 4 weeks, depending on documentation and approvals.

4. What is FC-GPR?
It's a form used to report share allotment against foreign investment to the RBI.

Forming an Indian Subsidiary in Delhi: A Strategic Gateway to India's Business Ecosystem

Forming an Indian subsidiary in Delhi has become a popular choice for global companies looking to expand into one of the world’s fastest-growing economies. Delhi, being the capital city of India, offers unmatched access to government institutions, a vast talent pool, developed infrastructure, and a vibrant business environment. Whether you're a multinational corporation or a medium-sized enterprise, setting up a subsidiary in Delhi can open the door to numerous opportunities and long-term growth in the Indian market.

Why Choose Delhi for Your Indian Subsidiary?

Delhi isn’t just the political capital of India—it’s also an economic powerhouse. The city and its surrounding NCR (National Capital Region) are home to major industries including information technology, telecommunications, manufacturing, real estate, and financial services. The ease of connectivity to other parts of India and international markets through airports, highways, and railways makes it an ideal hub for foreign companies.

Moreover, Delhi boasts a favorable business climate with access to regulatory bodies, law firms, consultants, and a vast consumer base. With its cosmopolitan environment, English-speaking workforce, and pro-business policies, Delhi simplifies the complexities often associated with entering the Indian market.

Legal Framework for Forming a Subsidiary in India

A foreign company can form a subsidiary in India either as a Private Limited Company or Public Limited Company, with Private Limited being the most commonly chosen structure due to its simplicity and flexibility. The subsidiary is treated as a separate legal entity under Indian law, which means it can operate independently while being wholly or partially owned by the foreign parent company.

To initiate the process of forming an Indian subsidiary in Delhi, several steps must be followed:

1. Name Reservation: The first step is selecting and reserving a unique name through the Ministry of Corporate Affairs (MCA) portal.

2. Digital Signature Certificate (DSC): Directors must obtain a DSC to sign documents digitally.

3. Director Identification Number (DIN): This is mandatory for any individual intending to become a director.

4. Filing Incorporation Documents: These include the Memorandum of Association (MOA), Articles of Association (AOA), and declarations from the directors.

5. PAN, TAN, and GST Registration: These tax identifiers are necessary for financial operations in India.

6. Opening a Bank Account: Once the company is incorporated, an Indian bank account should be opened for capital infusion and transactions.

Compliance and Regulatory Considerations

After incorporation, the subsidiary is required to comply with Indian laws, including the Companies Act, 2013, Foreign Exchange Management Act (FEMA), and local labor laws. Regular filings with the MCA, income tax department, and other statutory authorities are mandatory. Partnering with a local consultancy or legal expert can help streamline this compliance process and reduce the burden on your internal teams.

Additionally, Delhi offers the advantage of proximity to regulators, which can significantly ease the resolution of any administrative issues.

Taxation and Incentives

India provides a competitive tax regime for foreign subsidiaries. While the base corporate tax rate is applicable, startups and subsidiaries engaged in specific sectors may be eligible for tax holidays and incentives under various government schemes like Make in India and Startup India. Delhi also has several Special Economic Zones (SEZs) nearby, which offer further benefits for export-oriented businesses.

The Role of a Local Partner

Having a local partner or consultant who understands the Indian legal and business landscape can be crucial when forming an Indian subsidiary in Delhi. They can assist with documentation, filing procedures, compliance, tax planning, and even recruitment. This localized expertise ensures your business sets up swiftly while avoiding common pitfalls.

Conclusion

Forming an Indian subsidiary in Delhi is more than just a legal process—it's a strategic move toward tapping into one of the most dynamic economies in the world. With its infrastructure, talent, regulatory accessibility, and market potential, Delhi provides a solid foundation for foreign companies aiming to grow in India. With proper guidance and support, your subsidiary can thrive and contribute significantly to your global expansion goals.