Registering a foreign company's subsidiary in India: Wholly Owned Subsidiary, branch or liaison office

A foreign company can set up in India in three main ways: incorporate a Wholly Owned Subsidiary (a PVT. LTD. company in India owned by the foreign parent), open a branch office, or open a liaison office. A subsidiary is registered with the Ministry of Corporate Affairs like any Indian company and can do full business, while branch and liaison offices need approval under RBI rules and can do only limited activities.

This lesson explains how each option works, the foreign direct investment (FDI) rules that apply, the resident director requirement, the extra rule for investors from countries that share a land border with India, and the reporting to the RBI after shares are issued. Rules are as of October 2026. Foreign investment law changes often, so confirm the current position with the DPIIT FDI policy and the RBI master directions before acting.

Which entry options does a foreign company have?

Point	Wholly Owned Subsidiary (WOS)	Branch office	Liaison office
Legal status	Separate Indian company	Extension of the foreign company	Extension of the foreign company
Law and approval	Companies Act, 2013; FDI rules	FEMA; approval through an AD Category-I bank (RBI in some cases)	FEMA; approval through an AD Category-I bank (RBI in some cases)
Can it earn income in India?	Yes, any permitted business	Yes, but only permitted activities	No — only liaison and representation
Eligibility of parent	No profit track record needed	Profit in the last 5 years; net worth at least USD 100,000	Profit in the last 3 years; net worth at least USD 50,000
Liability	Limited to the subsidiary	Parent fully liable	Parent fully liable
Registration with ROC	Incorporated through SPICe+	Form FC-1 within 30 days of setting up	Form FC-1 within 30 days of setting up

Most foreign businesses that want to sell, hire and invoice in India choose a subsidiary, because it can do everything an Indian company can, and its liability stays inside India.

What is a Wholly Owned Subsidiary in India?

A Wholly Owned Subsidiary is an Indian company whose shares are entirely held by the foreign parent (and, if needed, its nominee or group entity). Usually it is a Private Limited Company incorporated under the Companies Act, 2013, through the same SPICe+ process an Indian founder uses — the pillar guide How to register a company in India covers the steps.

Minimum requirements

• Two shareholders. A PVT. LTD. needs at least two members, so the parent usually holds almost all the shares and a second group company or an individual nominee holds one or a few shares on its behalf.
• Two directors. They can be foreign nationals, but each needs a Director Identification Number (DIN), which SPICe+ can allot.
• One resident director. Under section 149(3) of the Companies Act, at least one director must stay in India for at least 182 days during the financial year. For a newly incorporated company, this applies proportionately for the first financial year.
• A registered office in India, with address proof.

Documents from the foreign parent

• Certificate of incorporation and constitutional documents of the parent.
• Board resolution of the parent approving the investment and authorising a representative to sign.
• Passport and address proof of foreign directors and the authorised representative.

Documents signed or issued abroad generally need notarisation and apostille (or consularisation where the country is not part of the Hague Convention). The lesson on NRI and foreign national directors and shareholders explains these document rules in more detail.

How do the FDI rules apply to a subsidiary?

Investment by a foreign company into the shares of an Indian company is foreign direct investment, governed by the FDI policy of the Department for Promotion of Industry and Internal Trade and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. There are two routes:

• Automatic route. No prior government approval. In most sectors, such as IT services, software, consulting and most manufacturing, 100% FDI is allowed under this route, subject to conditions.
• Government route. Prior approval from the government is needed. This applies to some sectors and to investors covered by the land-border rule below.

Some activities are prohibited for FDI altogether, and some sectors have caps below 100%. Always check the sector in the current consolidated FDI policy before choosing a structure.

What is the Press Note 3 land-border rule?

Press Note 3 (2020 Series) requires that an entity of a country sharing a land border with India — or an investment whose beneficial owner is situated in or is a citizen of such a country — can invest only under the government route. The countries are Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal and Pakistan.

In March 2026, Press Note 2 (2026 Series) amended this rule. As reported, investors whose beneficial ownership from a land-border country is non-controlling and up to 10% may now use the automatic route, with reporting, and a time-bound approval process was introduced for certain manufacturing sectors. A parent company from a land-border country setting up a wholly owned subsidiary is well above that 10% level, so it still needs government approval. Consequential changes to the FEMA rules may follow, so check the latest DPIIT press notes.

What reporting is needed after the shares are issued?

After incorporation, the parent remits the subscription money through banking channels, and the subsidiary must follow FEMA reporting:

Step	Rule of thumb
Receive share money through an AD Category-I bank, with the remitter's KYC	Money from the parent's account abroad, not cash
Allot shares at or above fair value under the pricing guidelines	Within 60 days of receiving the money, or refund it
File Form FC-GPR on the RBI's FIRMS portal through the bank	Within 30 days of allotting the shares
File the annual Foreign Liabilities and Assets (FLA) return	Every year, by 15 July

Late FC-GPR filing attracts a late submission fee calculated on the amount and the delay, and long delays need compounding. The subsidiary also has every normal Indian company compliance: ROC returns, statutory audit and income tax. See what a Company Secretary does, including FDI filings.

How do branch and liaison offices work?

A liaison office is a representative office. It can promote the parent's products, collect market information and act as a communication channel, but it cannot do any business or earn income in India; its expenses are met by money sent from abroad. Approval is normally for three years and can be extended.

A branch office can carry out specified activities such as exporting and importing goods, providing professional or consultancy services, research work, and IT services, and it can earn income. It cannot carry on manufacturing except in a Special Economic Zone, and its profits are taxed as those of a foreign company.

Both are applied for in Form FNC through an AD Category-I bank under the RBI's master direction on branch, liaison and project offices. Applicants from certain countries (including Pakistan, and in some regions China and other neighbouring countries) or in sensitive sectors such as defence and telecom need RBI or government clearance. Once set up, the office registers with the ROC in Form FC-1 within 30 days under section 380 of the Companies Act and files annual activity certificates.

Which option should a foreign company choose?

• Testing the market, no revenue in India yet: a liaison office may be enough.
• Selling services from abroad with some local presence, in a permitted activity: a branch office is possible, but the parent's liability is unlimited.
• Hiring, invoicing Indian customers, raising local funding or long-term operations: a Wholly Owned Subsidiary is the usual choice.

Comparing Indian structures generally? See Company Registration in India: every option explained.

Key takeaways

• A Wholly Owned Subsidiary is an Indian PVT. LTD. owned by the foreign parent and incorporated through SPICe+.
• It needs two shareholders, two directors and at least one director resident in India for 182 days in the financial year.
• Most sectors allow 100% FDI under the automatic route; land-border country investors still need government approval, except non-controlling stakes up to 10% after the 2026 amendment.
• Form FC-GPR is due within 30 days of allotting shares, and the FLA return by 15 July every year.
• Branch and liaison offices need approval through an AD Category-I bank and Form FC-1 filing; a liaison office cannot earn income.