By Naraway
In this article
April 2025 set a record: 23,776 new companies registered in India in a single month. September 2025 came close at 23,113, more than double a year earlier. In the first half of FY26, registrations ran 38.4% ahead of the year before, the fastest pace in at least five years.
On paper, a wholly owned subsidiary of a foreign company is one more private limited company in that count. In practice it carries obligations a locally owned company never sees, because its shareholder sits abroad.
The Minimum Structure
Two shareholders
A private company needs at least two members. The parent holds almost all shares; a nominee, often another group company or an executive, holds one.
Two directors
At least one must have stayed in India for 182 days or more in the financial year. Residence, not citizenship, is the test.
One integrated filing
SPICe+ handles name, incorporation, PAN and TAN, and can add EPFO, ESIC and GST registration.
Domestic tax status
Taxed as an Indian company: 22% base rate if opted under section 115BAA, against 35% for branches.
The First 180 Days
| Deadline | Filing |
|---|---|
| 30 days from incorporation | Appoint the first statutory auditor (section 139(6)) |
| On receipt of funds | Share subscription money arrives through banking channels; shares must be issued within 60 days |
| 30 days from share allotment | Form FC-GPR to RBI through the bank |
| 180 days from incorporation | Commencement-of-business declaration, Form INC-20A (section 10A) |
| 15 July each year | FLA return to RBI on foreign liabilities and assets |
Sources: Companies Act 2013; RBI, FEMA 395/2019-RB.
The foreign-investment filings are where subsidiaries are most often caught. Of 4,494 FEMA settlement orders RBI published between March 2020 and September 2026, 1,539 cite a late or missing FC-GPR.
Where Incorporation Slows Down
Practitioners put a standard SPICe+ incorporation at roughly 7 to 15 working days, with name rejections and document mismatches the usual causes of delay. For a foreign parent, documents signed abroad need notarisation and apostille or consular legalisation, which adds time outside the MCA portal altogether.
Where the Subsidiary Sits in India's Corporate Count
India had about 2.01 million active companies in December 2025, up from about 1.8 million a year earlier. The 101 foreign companies that registered a branch or liaison office in FY26 are counted separately; subsidiaries appear in the general count, as Indian companies.
Part of Naraway's research series India Market Entry in 2026.
In short
A wholly owned subsidiary in India is a private limited company whose shares are held entirely by a foreign parent, usually with a nominee holding one share so there are two shareholders. It needs at least two directors, one of whom has stayed in India for at least 182 days in the financial year, and is incorporated through MCA's SPICe+ form, which also issues PAN and TAN. After incorporation, it must appoint an auditor within 30 days, report the foreign share issue on Form FC-GPR within 30 days of allotment, and file a commencement-of-business declaration within 180 days.
- Minimum two shareholders and two directors; one director resident 182 days in the financial year.
- SPICe+ incorporates the company and issues PAN and TAN in one filing.
- First auditor within 30 days of incorporation.
- Form FC-GPR within 30 days of issuing shares to the parent.
- Commencement-of-business declaration within 180 days.
Sources
- Companies Act, 2013: sections 3, 10A, 139(6) and 149(3), Ministry of Corporate Affairs
- Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, Reserve Bank of India
- Registration of new firms surges 108%, Financial Express (via Magzter)
- Company registrations in India rise 108% in September, Board Stewardship
- Why registering a company in India still gets delayed and what's changing in 2026, Onmanorama
Frequently Asked Questions
Can a foreign company own 100% of an Indian company?
Yes, in sectors where 100% FDI is allowed on the automatic route, which covers most sectors. A second shareholder, often a nominee of the parent, holds a nominal stake to meet the two-member minimum for a private company.
Does a wholly owned subsidiary need an Indian director?
It needs at least one director who has stayed in India for at least 182 days in the financial year, under section 149(3) of the Companies Act. Nationality is not the test; residence is.
What is SPICe+?
The Ministry of Corporate Affairs' integrated web form for incorporating a company, which also allots PAN and TAN and can register for EPFO, ESIC and GST.
How is a wholly owned subsidiary taxed in India?
As a domestic company. It can opt for the 22% concessional base rate under section 115BAA, plus surcharge and cess, in place of the higher rate for foreign companies and branches.
What compliance follows incorporation?
Appointing the first auditor within 30 days, filing Form FC-GPR within 30 days of the share issue, the commencement-of-business declaration within 180 days, then annual accounts, returns and RBI's FLA return by 15 July.
