Wholly owned subsidiary in India for a foreign parent

Can a foreign company own 100% of an Indian company?

Yes, in most sectors. Under the Consolidated FDI Policy 2020, any sector not listed as capped or restricted allows foreign investment up to 100% through the automatic route, so you do not need prior government approval. Once the money arrives, the Indian company reports the investment to RBI.

Some activities are closed to foreign investment: lottery, gambling and betting, chit funds, Nidhi companies, trading in Transferable Development Rights, real estate business (with exceptions such as townships and REITs), tobacco manufacture, and activities reserved for the state. Other sectors, such as multi-brand retail, parts of media and defence, carry caps or need approval. Check the sector table published by DPIIT before you commit. Our guide on whether a foreign company can own 100% of an Indian company covers the route in more detail.

Press Note 3 of 2020 required government approval where the investor, or its beneficial owner, is an entity of or a citizen of a country sharing a land border with India. Press Note 2 of 2026, approved by the Cabinet in March 2026 and made operative through the FEMA NDI Amendment Rules 2026, relaxed this. Investors with non-controlling beneficial ownership from such a country of up to 10% can use the automatic route, with reporting to DPIIT. Proposals in specified manufacturing sectors (capital goods, electronic components, polysilicon and ingot-wafer manufacturing) get a 60-day approval timeline, with majority shareholding and control staying with resident Indian citizens. Sectoral caps and other restrictions remain. A holding company in Singapore, the US, the UK, Europe or the UAE is not itself caught, but its owners can be.

What does the structure need?

Documents for the foreign parent and its directors must be legalised for use in India. If the country is a party to the Hague Apostille Convention, the documents are notarised by a notary public and then apostilled. For any other country, they are notarised and then attested by the Indian consulate or embassy. See the director, shareholder and capital guide for detail.

Which FEMA filings apply after incorporation?

Foreign investment in an Indian company is reported to RBI. Once the company is incorporated, the reporting responsibility sits with the Indian subsidiary, not with the foreign parent. The parent supplies the funds and its KYC documents, and the company, usually through its authorised dealer bank, files the reports. The sequence matters.

1. For the first capital injection, the subscriber shares are already committed in the Memorandum of Association at incorporation, so the 60-day allotment rule does not apply; the company issues share certificates for these shares at the first board meeting instead. A later, fresh allotment of shares must be made within 60 days of receiving the money, or it must be refunded.
2. The company files Form FC-GPR within 30 days of allotment. Supporting papers include the board resolution, FIRC, remitter KYC, a valuation certificate where one is required, and Company Secretary and auditor certificates.
3. The company files the annual FLA return on RBI’s FLAIR portal by 15 July each year, even in a year with no transactions.

Shares issued to a non-resident must be priced at or above fair value, and a valuation certificate must not be more than 90 days old at the date of investment. A valuation certificate is not required for the subscriber shares issued on incorporation. This is a general statement: whether it applies to your case depends on the facts, so have a Chartered Accountant or Company Secretary confirm it before you file. A late submission fee applies to delayed filings. Read our guide to FEMA filings for a foreign-owned Indian subsidiary for the full checklist.

What follows incorporation?

The company files a commencement declaration (INC-20A) within 180 days of incorporation, holds its first board meeting within 30 days, and appoints its first auditor within 30 days. Each director completes DIN KYC by 30 June once every three financial years, as we understand the rule in force from 31 March 2026. Annual accounts, returns and tax filings follow, and dealings with the parent fall under transfer pricing rules, reported on Form 48 under the Income-tax Act, 2025.

Who does this route suit?

A wholly owned subsidiary suits you if you will sign contracts, invoice Indian customers, hold a bank account and lease premises, hire a team or build a global capability centre. You keep full ownership and control from day one. It does not suit a company that only wants to explore the market for a few months, where a liaison office or an Employer of Record may cost less effort.

Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.

General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.