Is an Indian Subsidiary the Right Choice for Your Business Expansion?

Expanding your business into a new country is an exciting opportunity. India, with its fast-growing economy, skilled workforce, and large consumer market, is a popular choice for many foreign companies. But one important question arises – is an Indian subsidiary the right choice for your business expansion?.

In this blog, we’ll explain what an Indian subsidiary is, how it compares to other business structures, and help you decide if it’s the right path for your business in India. We’ll also touch on Liaison office registration in India, Project office registration, and Sole proprietorship registration, so you can explore all your options.

What Is an Indian Subsidiary?

An Indian subsidiary company is a company registered in India but owned and controlled by a foreign company. The parent company (foreign company) owns more than 50% of the shares in the Indian company. This gives the parent company control over business decisions, while still following Indian laws.

There are two types of subsidiaries:

1. Wholly-owned subsidiary – where 100% of shares are owned by the foreign parent company.
   
   

2. Partially-owned subsidiary – where more than 50%, but not all, of the shares are owned by the foreign parent.
   
   

Benefits of Indian Subsidiary Company Registration

Here are some major advantages of Indian subsidiary company registration:

1. Full Business Operations

An Indian subsidiary can carry out full business operations like manufacturing, trading, providing services, hiring employees, and more. It has more freedom compared to other business structures.

2. Limited Liability

Shareholders of the subsidiary have limited liability, which means their personal assets are protected in case of any business losses.

3. Easier Market Access

With an Indian subsidiary, you can tap into the Indian market, build local trust, and provide better service to customers.

4. Legal Identity

The subsidiary is treated as a separate legal entity in India. This gives it the power to own assets, enter into contracts, and file legal actions independently.

Documents Required for Indian Subsidiary Company Registration

To register a subsidiary company in India, you generally need the following:

• Identity and address proof of directors
  
  

• Passport (if foreign national)
  
  

• Proof of address for the company (rental agreement or ownership document)
  
  

• Digital Signature Certificate (DSC)
  
  

• Memorandum and Articles of Association (MoA and AoA)
  
  

Process of Indian Subsidiary Company Registration

Here’s a step-by-step guide:

1. Get DSC and DIN for proposed directors.
   
   

2. Reserve a company name through the RUN (Reserve Unique Name) service.
   
   

3. Prepare incorporation documents and file them with the Registrar of Companies (ROC).
   
   

4. Get the Certificate of Incorporation from the ROC.
   
   

5. Apply for PAN, TAN, and other registrations like GST.
   
   

Other Options for Foreign Companies in India

Before deciding on a subsidiary, it’s wise to explore other business structures. Let’s look at three common alternatives:

1. Liaison Office Registration in India

A liaison office registration acts as a communication bridge between the parent company and Indian companies or customers. It cannot earn income or do business in India.

Best for: Market research, promotional activities, or exploring business opportunities.

Limitations:

• Cannot carry on commercial or business activities
  
  

• Must be funded through the parent company
  
  

• Requires approval from the Reserve Bank of India (RBI)
  
  

2. Project Office Registration

A project office registration is opened in India to carry out a specific project for a limited time. It is allowed only if the foreign company has secured a contract from an Indian company.

Best for: Executing a specific project in India (e.g., construction or engineering projects).

Limitations:

• Limited to the scope of the project
  
  

• Cannot undertake unrelated business activities
  
  

3. Sole Proprietorship Registration

A sole proprietorship registration is a simple business structure where one person owns and runs the business. It’s easy to start but doesn’t suit foreign companies well.

Best for: Indian citizens running a small business on their own.

Limitations for foreign businesses:

• Foreigners cannot register a sole proprietorship easily
  
  

• No separate legal identity
  
  

• No limited liability protection
  
  

Indian Subsidiary vs Liaison Office vs Project Office

Is an Indian Subsidiary Right for You?

Let’s look at when an Indian subsidiary is a good choice:

✅ You want to carry out full business operations in India
✅ You want to hire staff, own assets, or open bank accounts
✅ You need limited liability protection
✅ You plan to operate long-term in India
✅ You want a separate legal identity for better compliance and branding

If your goals match the above, Indian subsidiary company registration is likely the best choice for you.

Final Thoughts

India offers multiple options for foreign companies planning to enter its market. Among them, an Indian subsidiary gives you the most control, flexibility, and independence. Other options like liaison office registration in India or project office registration, are suitable for specific needs, but come with limitations.

If you're just testing the waters, a liaison office might be enough. But if you're serious about long-term growth in India, registering an Indian subsidiary is a smart and strong step forward.

Need Help with Registration?

Whether it’s Indian subsidiary company registration, liaison office registration, project office setup, or even guidance on sole proprietorship registration, our team of legal experts can help you every step of the way. Get in touch today for a smooth, quick, and compliant business setup in India.