India's consumer market, skilled workforce, and favourable FDI policies continue to attract overseas entrepreneurs and investors. If you are an NRI living abroad or a foreign national planning to tap into the Indian economy, setting up an Indian subsidiary for NRI investors is one of the most practical routes available. A subsidiary company allows you to maintain operational control from overseas while establishing a separate legal entity in India that can enter contracts, hire employees, own property, and conduct business independently.
The process of company registration for foreign nationals follows the same fundamental framework as domestic incorporation under the Companies Act, 2013. However, there are additional regulatory layers involving the Reserve Bank of India (RBI), Foreign Exchange Management Act (FEMA), and sector-specific FDI caps. This guide walks you through every stage, from choosing the right structure to obtaining your Certificate of Incorporation and meeting post-registration compliance.
What is an Indian Subsidiary Company
An Indian subsidiary is a company incorporated in India where more than 50% of the total share capital is held by a foreign company, NRI, or foreign national. Despite being owned by an overseas entity or individual, the subsidiary is treated as an Indian company for all legal and regulatory purposes. It files taxes in India, follows Indian accounting standards, and complies with the Companies Act, 2013.
The subsidiary operates as a separate legal entity with its own PAN, GST registration, bank accounts, and statutory obligations. This distinction is important. The parent entity's liability is limited to its investment in the subsidiary. Creditors of the subsidiary cannot pursue the parent company's overseas assets, making this structure particularly attractive for risk-conscious investors entering a new market.
For most NRIs and foreign investors, a private limited company is the preferred vehicle for setting up a subsidiary in India. It offers limited liability, restricts public share subscription, and has a simpler compliance framework compared to a public company. You can learn more about the incorporation process through our private limited company registration guide.
Why NRIs and Foreign Nationals Choose to Set Up in India
India's appeal for overseas entrepreneurs goes beyond just market size. The regulatory environment has become significantly more welcoming over the past decade. Most sectors now allow 100% FDI under the automatic route, meaning you don't need prior government approval to invest. Sectors like IT, e-commerce, infrastructure, and manufacturing are fully open to foreign participation.
The cost of setting up and running a business in India remains considerably lower than in most Western economies. Skilled professionals, affordable office space, and a mature digital infrastructure make it feasible to build operational teams quickly. Additionally, India's network of Double Taxation Avoidance Agreements (DTAAs) with over 90 countries ensures that your income isn't taxed twice, making the financial proposition more attractive.
NRIs, in particular, enjoy certain advantages. They can invest in India on a repatriation or non-repatriation basis through their NRE or NRO accounts. The familiarity with Indian culture, language, and business practices gives NRI entrepreneurs a distinct edge over other foreign investors when navigating local markets.
FDI Regulations and Routes for Foreign Investment in India
Before you begin the registration process, understanding the FDI framework is essential. India permits foreign investment through two routes.
| Parameter | Automatic Route | Government Approval Route |
| Approval Required | No prior approval. Only post-investment reporting to RBI | Prior approval from the concerned Ministry or Department |
| Sectors Covered | Most sectors including IT, manufacturing, consulting, e-commerce (marketplace model), infrastructure | Defence (above 74%), telecom, media, pharmaceuticals (brownfield), multi-brand retail |
| Investment Cap | Up to 100% in most sectors | Sector-specific caps apply (e.g., 26% in digital media, 49% in insurance) |
| Timeline | Investment can be made immediately | Approval process may take 8 to 12 weeks |
Sectors such as gambling, lottery, real estate business (excluding construction development), and trading in Transferable Development Rights are prohibited for foreign investment. It is advisable to verify the latest FDI policy circular issued by the Department for Promotion of Industry and Internal Trade (DPIIT) before committing capital.
Step-by-Step Process: Company Registration for Foreign Nationals and NRIs
The incorporation process for an Indian subsidiary for NRI investors mirrors the standard company registration procedure, with a few additional requirements related to foreign shareholding and FEMA compliance.
Step 1: Obtain Digital Signature Certificate (DSC)
Every proposed director and shareholder must obtain a Class 3 Digital Signature Certificate from a government-recognized certifying authority. For foreign nationals residing outside India, the DSC can be obtained using a valid passport as identity proof. The attestation requirements differ based on the country of residence, and some jurisdictions require apostille or notarization of documents.
Step 2: Apply for Director Identification Number (DIN)
DIN is a unique identification number assigned to individuals who wish to serve as company directors. For NRIs and foreign nationals, the DIN application is typically processed through the SPICe+ incorporation form itself. A valid passport copy is mandatory for identification purposes.
Step 3: Reserve the Company Name
The proposed company name must be unique and comply with MCA naming guidelines. You can submit two name choices through the RUN (Reserve Unique Name) service or as part of the SPICe+ form. The name should include the suffix 'Private Limited' and must not resemble any existing company or trademark.
Step 4: Prepare Incorporation Documents
The Memorandum of Association (MOA) defines the company's objectives, while the Articles of Association (AOA) lays down the internal governance rules. For foreign-owned subsidiaries, the MOA should clearly reflect the nature of foreign investment and the sectors in which the company intends to operate. Both documents must be signed using the DSC of the subscribers.
Step 5: File SPICe+ and Incorporation Forms
SPICe+ (INC-32) is the integrated incorporation form that covers name reservation, DIN allotment, company registration, PAN and TAN application, and EPFO/ESIC registration in a single filing. Supporting forms include SPICe MOA (INC-33), SPICe AOA (INC-34), AGILE-PRO-S for GST and professional tax registration, and INC-9 (declaration by subscribers).
Step 6: Receive Certificate of Incorporation
Once the ROC verifies all documents and approves the application, the Certificate of Incorporation is issued along with the company's PAN and TAN. This typically takes 7 to 15 working days. The company is now a legally recognized entity and can open bank accounts, sign contracts, and begin operations.
Step 7: Post-Incorporation Compliance
After incorporation, the company must file FC-GPR (Foreign Currency Gross Provisional Return) with the RBI within 30 days of share allotment. This form reports the details of foreign investment received. The company must also obtain GST registration if it supplies goods or services, and set up statutory registers, appoint an auditor within 30 days, and hold its first board meeting within the prescribed timeline.
Documents Required for NRI and Foreign National Company Registration
The documentation requirements for foreign-owned companies are slightly more extensive than for domestic incorporations. Here is a consolidated list.
| Document | Details |
| Passport (notarized and apostilled) | Mandatory for all foreign directors and shareholders as primary identity proof |
| Address proof from country of residence | Utility bill, bank statement, or driving licence not older than two months, notarized and apostilled |
| Passport-size photograph | Required for DIN application |
| PAN Card (for NRIs holding Indian PAN) | Indian PAN is mandatory for directors. Foreign nationals without PAN can apply during incorporation |
| Proof of registered office in India | Rent agreement or sale deed along with NOC from the property owner and a utility bill |
| MOA and AOA | Drafted to reflect foreign shareholding pattern and company objectives |
| Board resolution of parent company (if applicable) | Authorizing the establishment of the Indian subsidiary and nominating directors |
| FDI declaration and FC-GPR form | Post-incorporation filing with the RBI confirming foreign capital inflow |
For NRIs who have both an Indian passport and an overseas residence, the passport serves as identity proof while the overseas address proof satisfies the residency requirement. Documents issued outside India must be notarized by a local notary and apostilled (for Hague Convention countries) or attested by the Indian Embassy or Consulate.
Tax Obligations and Annual Compliance for Indian Subsidiaries
An Indian subsidiary is taxed as a domestic company. For companies with a turnover up to Rs. 400 crore, the corporate tax rate is 25.17% (inclusive of surcharge and cess). New manufacturing companies incorporated after October 2019 can opt for a reduced rate of 17.16% under Section 115BAB, provided they don't claim certain exemptions and deductions.
Dividend distribution to foreign shareholders is subject to withholding tax. The rate depends on the DTAA between India and the shareholder's country of residence. For example, the India-US DTAA caps dividend withholding at 15% in most cases, while the India-Singapore treaty may offer a lower rate depending on the conditions met.
Annual compliance includes filing income tax returns, GST returns (if applicable), annual returns with the ROC (Form MGT-7 and AOC-4), maintaining statutory registers, conducting board meetings, and holding the Annual General Meeting within six months of the financial year-end. Transfer pricing documentation is required if the subsidiary engages in transactions with its parent or other related entities abroad. For companies planning to expand their Indian operations into a larger structure, foreign company registration options such as branch offices and liaison offices are also available.
Common Challenges NRIs and Foreign Investors Face
The most frequent hurdle is document attestation. Getting overseas documents notarized, apostilled, and shipped to India takes time. Starting this process early prevents delays in the incorporation timeline. Some NRIs also face difficulty obtaining an Indian PAN, especially if they don't have an existing Indian address. However, PAN can now be applied for during the SPICe+ filing itself.
Opening an Indian bank account for the newly incorporated subsidiary can be time-consuming. Banks have stringent KYC requirements for foreign-promoted companies, and directors may need to visit India or provide video-verified identification. Planning a short trip to India during the incorporation phase often speeds up both bank account opening and initial statutory meetings.
FEMA compliance is another area where overseas investors occasionally stumble. Every foreign investment must be reported to the RBI through the correct forms and within the prescribed timelines. Failing to file FC-GPR within 30 days of share allotment can attract compounding penalties. Engaging a qualified professional from the outset helps you navigate these regulatory requirements without missteps.
Conclusion
Setting up an Indian subsidiary for NRI investors and foreign nationals is a well-structured process under the Companies Act, 2013, and FDI regulations administered by the RBI. From selecting the right business structure and obtaining DSC to filing SPICe+ and completing FEMA reporting, each step requires careful planning and accurate documentation. India's open FDI policies, competitive operating costs, and extensive DTAA network make it an attractive destination for overseas entrepreneurs looking to build a lasting presence.
Whether you are an NRI returning to explore the Indian market or a foreign investor making your first foray, professional guidance ensures a smooth registration experience. Patron Accounting offers complete support for company registration for foreign nationals, from document preparation to post-incorporation compliance, helping you start operations without unnecessary delays.
