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Foreign companies aiming to establish a strong presence in India often choose the wholly owned subsidiary in India model. It allows complete foreign ownership while offering a legally recognized structure under Indian laws. Whether you're in IT, manufacturing, or consultancy, setting up a subsidiary can unlock the full potential of India’s rapidly expanding economy.
This post guides you through the essentials of forming a wholly owned subsidiary and why it’s a smart investment decision.
What is a Wholly Owned Subsidiary?
A wholly owned subsidiary is an Indian company whose entire share capital is held by a foreign entity. It is incorporated under the Indian Companies Act, 2013, and functions as an independent private limited or public limited company. This structure provides the parent company full control over the subsidiary’s operations while complying with Indian legal requirements.
Why Choose a Wholly Owned Subsidiary in India?
Foreign investors prefer this model for the following advantages:
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Complete Control – No local partnership is required; you own 100% of the company.
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Legal Separation – Limited liability and separate legal status protect the parent company.
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Local Recognition – An Indian subsidiary helps establish a credible brand presence.
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Flexibility – You can operate in any permitted sector and hire local talent.
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Profit Repatriation – Send profits back to the parent company following tax compliance.
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Tax Relief – Eligible for tax incentives, depreciation benefits, and DTAA provisions.
Steps to Set Up a Wholly Owned Subsidiary in India
Follow this simplified procedure for company incorporation:
1. Apply for Digital Signature Certificate (DSC)
Required for authorized signatories.
2. Reserve the Company Name
Use the MCA’s RUN portal to submit your preferred company name.
3. Draft and File Incorporation Documents
Includes MOA, AOA, identity/address proofs, and board resolution from the foreign parent.
4. Submit SPICe+ Form
The integrated company registration form under the Ministry of Corporate Affairs.
5. Get PAN, TAN, and CIN
These are issued after approval of the incorporation application.
6. Open an Indian Bank Account
Transfer the paid-up capital from the foreign parent company to this account.
Compliance Obligations After Registration
Your wholly owned subsidiary must comply with ongoing regulatory filings:
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Annual filings with Registrar of Companies (RoC)
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Income Tax Returns
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Goods & Services Tax (GST) filings
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Audit by a Chartered Accountant
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FEMA compliance for FDI-related transactions
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Maintenance of statutory registers
Sectors with 100% Automatic FDI Route
India allows full foreign ownership in many sectors without prior approval, such as:
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Software and IT
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Renewable Energy
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Food Processing
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B2B E-commerce
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Education and Training
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Industrial Manufacturing
Note: Some sectors like defense, telecom, and print media require government approval.
Benefits of Investing in India
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🌍 Strategic Market Access to Asia and Middle East
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👨💼 Cost-Effective and Skilled Workforce
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🏗️ Robust Infrastructure Development
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📈 Government Support and Incentives
India’s startup ecosystem, digital infrastructure, and foreign investment reforms make it a lucrative destination for international businesses.
Frequently Asked Questions (FAQs)
Q. Can a foreign company own 100% of shares in an Indian entity?
Yes, in most sectors under the automatic route.
Q. Is a local partner mandatory for setting up a company in India?
No, a wholly owned subsidiary can be completely foreign-owned.
Q. How long does it take to incorporate a subsidiary?
It generally takes around 10 to 15 business days.
Q. Can profits be sent back to the foreign parent company?
Yes, after complying with tax and FEMA regulations.
Conclusion
Forming a wholly owned subsidiary in India is an ideal way for global companies to establish a secure and independent business in one of the world's most promising markets. With transparent legal procedures, favorable FDI policies, and a growing consumer base, India offers everything a foreign business needs to thrive.
If you're planning to expand in India, consult with experienced professionals for a seamless setup and long-term compliance.
