India is among the top ten largest economies in the world, and it might get into the top three by 2025 if it keeps on progressing with the same speed. This is the reason a lot of people are thinking of starting a foreign business in India. But the main challenge in front of foreign investors is how to open up a subsidiary in India.
Before we get into the procedure, you must know what a subsidiary company is? A subsidiary company which is also known as a daughter company is owned and controlled by the parent company (partially or completely). For example, Amazon owns many subsidiary companies under it.
A company can be registered as private limited or public limited company. To register a subsidiary company, one director has to be an Indian, two would be better, similarly, there should be two shareholders. Registry process can be a bit complex, but there are many consulting companies who can help you with this.
Documents Required for Registration
- Indian National
- PAN card
- Address proof
- Photo ID proof
- Foreign National
- Passport
- Address proof certified by the Indian Consulate
- Photo ID proof approved by the Indian Consulate
Step 1
Once all the documents are ready, the first thing you need to do is to apply for Digital Signature Certificate (DSC) of all directors in India and then to apply for Director Identification No. (DIN). Then get company name approval for the proposed company. Finally, you need to apply for incorporation in which MOS, AOA are drafted, and statutory forms are filled for PAN and TAN of the company.
Step 2
After incorporation, you need to open a current account in a bank and apply for auditor addition on MCA website within 30 days of incorporation of the company.
Step 3
The third step of setting up a subsidiary in India includes RBI compliance for FDI received in India. You can start your business after completing the second step as RBI compliance can be done parallel with the business. When one or more Directors are foreigners, any contribution to capital would be considered as FDI, thus, RBI compliance needs to be done. As it is a long and complex process, it would be better if you hand over this task to a consulting firm who can help you set up your business in India.
Before commencing your business, there are few more mandatory registration that needs to be done, such as:
- GST registration
- IEC registration is important for Import or export businesses
- Shop and Establishment Registration
- ESI, PF registration in case no. of employees exceed 10 or 20.
If you complete all the above steps as explained, then you won’t face any difficulty in incorporating your company in India.
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