Starting an Indian Subsidiary is the most accessible and easy mode for setting up business in India by foreign companies. The Government of India allows 100% FDI in most of the industries when set-up as a company. This also becomes a reason for foreign nationals and entities to end up their search on private company structure to establish their business.
An Indian structure is also beneficial as it is a centralized structure in place and governed by Companies Act, 2013. Withholding the majority or whole portion of stocks, all you need is one resident director and a place of business in India. However, it is simplified to set-up and run business, these companies must assess pertinent provisions of law. The Indian subsidiary of a foreign entity is also popularly known as a foreign company in India
The ultimate goal of setting a foreign branch happens to be an expansion of the business. A limited liability is an added advantage when it comes to entering in the whole new market. Where you increase the brand value across the globe, you also secure your liability with this structure.
Although being a foreign person, this structure helps the promoters to control over the operations and activities in a strategic manner. With at least one Indian resident director, the foreign entities benefit from the indirect control and supervision.
The scope of expansion is higher because it is easy to raise capital from a venture capitalist, financial institutions, angel investor, and the advantages of limited liability, the Private limited offer more transparency in the company.
Foreign Direct Investment (FDI) is 100% allowed in several business activities/industries without any prior approval. But FDI is not allowed in Proprietorship or Partnership; LLP requires prior Government approval.
- Minimum 2 directors shall be appointed, out of which one must be resident in India.
2. Minimum 2 shareholders are required for this registration. Here, an individual may become shareholder and director at the same time.
- A place of business in India must be provided as a registered office address.
- Minimum Capital of Rs. 1lac
- Parent company must hold 50% of total equity capital.