Why Is Setting Up a Subsidiary in India a Smart Move — and How Do You Begin?
Are you exploring ways to expand your business internationally? If so, setting up a subsidiary in India might be exactly what your company needs to tap into one of the most vibrant economies in the world. With a growing consumer market, a digital-first population, and strong government support for foreign investments, India is a compelling destination for global businesses.
But where do you start? What are the real benefits? And how do you stay compliant? Let’s walk through it in a simple, step-by-step guide.
What Makes India Attractive to Global Businesses?
India stands out for many reasons — and it’s not just about size. Yes, the country has over 1.4 billion people, but here’s what really makes it ideal for setting up a subsidiary:
Youthful, Skilled Talent: Millions of graduates enter the workforce each year, especially in tech, finance, and science.
Business-Friendly Reforms: India has improved ease-of-doing-business rankings through digitalization and simplified procedures.
Booming Digital Economy: Startups, e-commerce, fintech, and AI industries are growing fast.
Affordable Operations: Labor, infrastructure, and support services come at a fraction of the cost compared to Western markets.
All of this makes India a low-risk, high-reward destination for setting up your next international branch.
What Is a Subsidiary and Why Choose This Model?
A subsidiary is a company incorporated in India but owned fully or partly by a foreign parent. It functions as a separate legal entity and is allowed to operate just like a domestic business.
Here’s why this model is preferred:
It provides full operational control under Indian law.
The parent company has limited liability.
You can hire local talent, open offices, issue invoices, and participate in government tenders.
It helps build trust with local clients and vendors.
A liaison or branch office, in comparison, has restrictions and less autonomy.
What Steps Are Involved in Setting Up a Subsidiary in India?
The process may sound technical, but it’s quite structured once you know the sequence:
Choose the Entity Type Most foreign firms go for a Private Limited Company structure.
Reserve a Business Name Use the MCA (Ministry of Corporate Affairs) online portal to apply for name approval.
Appoint Directors and Get Required IDs Obtain Director Identification Numbers (DIN) and Digital Signature Certificates (DSC).
Incorporation Filing Submit your MoA, AoA, and Form SPICe+ with the Registrar of Companies (ROC).
Apply for PAN, TAN, and GST These are essential for taxation and regulatory filings.
Open a Business Bank Account You’ll need this to operate locally and pay vendors/employees.
File with RBI (If Applicable) Particularly important if foreign capital is introduced.
What About Compliance and Taxation?
Once your subsidiary is set up, staying compliant is crucial. Here are some important things to remember:
Corporate Tax: Indian subsidiaries are taxed on income generated in India. Tax rates range from 15% to 25%.
GST: Mandatory if your business deals with goods or services.
Annual Filing: Financial statements, board meetings, and ROC filings must be done regularly.
Transfer Pricing: If your Indian subsidiary transacts with the foreign parent, you must meet specific reporting guidelines.
Is It Difficult to Set Up a Subsidiary in India?
Not really — especially with the right support. Many global companies work with local consultants, legal advisors, and chartered accountants who handle documentation, registration, and compliance from start to finish. Once you’re set up, operating in India is straightforward and full of potential.
Conclusion:
With digital growth, policy reforms, and global investor confidence, there’s never been a better time for setting up a subsidiary in India. If you’re serious about expanding your business in Asia, India offers both stability and scalability. A well-structured Indian subsidiary could be the bridge between where your company is now — and where it’s meant to go.
