A wholly-owned Indian subsidiary isn't a “foreign company” under Indian law — and that one distinction decides which forms, which approvals, and which restrictions actually apply.
Foreign companies exploring India almost always start with the same question, phrased the same wrong way: “should we register as a foreign company, or set up a subsidiary?” These aren't two options on the same menu — they're two different legal categories — and which one applies decides everything downstream: which forms get filed, which approval comes first, and even whether an Indian director is required.
The fork that decides everything
Under Section 2(42) of the Companies Act, 2013, a “foreign company” is one that has a place of business in India without being incorporated here — a branch office, liaison office, or project office of the overseas entity itself. A wholly-owned subsidiary is the opposite: a separately incorporated Indian company, registered under the same Companies Act as any Indian promoter's company, that happens to be 100% owned by a foreign parent. Legally, it isn't a foreign company at all, even though the ownership is entirely foreign.
That distinction isn't academic. A subsidiary follows the ordinary incorporation route — the one every Indian company uses — with its own PAN, its own board, and, for most business purposes, full flexibility on activity. A branch, liaison, or project office follows a different part of the Companies Act instead (Sections 379–393), files a different set of forms, and comes with real restrictions on what it can actually do.
Branch, liaison, or project office — the quick comparison
- Liaison office: can represent the parent, promote trade, or act as a communication channel — nothing revenue-generating. Approval typically runs for three years and needs renewal.
- Project office: scoped to one specific project, for as long as that project runs.
- Branch office: broader — export/import, consulting, R&D, technical support — but retail trading and manufacturing are both off the table, and it isn't a separate legal entity, so every contract and every employee is legally the foreign company's, not the branch's own.
If the plan involves a shared-services centre, a full operating business, or anything touching manufacturing or retail, a subsidiary is usually the only workable structure — the branch-office restrictions rule the others out on their own.
The paperwork, if the foreign-company route applies
Setting up a branch, liaison, or project office starts with RBI approval under FEMA — that comes first, before anything is filed with the Ministry of Corporate Affairs. Once approved, Form FC-1 is due within 30 days of actually establishing a place of business in India, supported by the parent's charter documents, a board resolution or power of attorney, and identity/address proof for whoever has been authorised to represent the company here. A change of address, a new project, or any material change afterward goes through Form FC-2, not a fresh FC-1. Annual filings follow: Form FC-3 for accounts and Form FC-4 for the annual return, both built around the parent's own financials, since the branch has none of its own.
Where notarization gets complicated
Every one of those charter documents and authorisations has to be certified before India will accept it, and exactly how depends on where the parent company is incorporated. Countries that are party to the Hague Apostille Convention — the UK and Singapore among them — get a single-step apostille. Countries outside it need consularization instead: notarization, then authentication by the Indian embassy or consulate in that country, a slower and more involved process. Some Commonwealth-adjacent arrangements simplify this further for specific jurisdictions — exactly the kind of detail worth confirming for the actual country involved before assuming either shortcut applies.
A naming pitfall worth knowing before you file
An overseas parent's own name isn't automatically available for its Indian entity. Rule 8A of the Companies (Incorporation) Rules, 2014 requires the proposed name to be genuinely distinguishable from anything already on India's company register — and adding “India” to an existing name doesn't, on its own, satisfy that test. It's worth running a name check before committing to a corporate identity, letterhead, or domain built around a name a Registrar might still reject.
This sits one level upstream of the entity-choice question we walk through in Choosing your GCC's entity — that piece covers which structure fits a shared-services centre specifically; this one covers the registration mechanics once a structure is chosen.
Common questions
Is a wholly-owned Indian subsidiary considered a “foreign company” under Indian law?
No. Once incorporated in India, it's an Indian company regardless of who owns the shares — it doesn't fall under the Section 379–393 “foreign company” provisions at all, and doesn't file FC-1 through FC-4.
Does a subsidiary need an Indian resident director?
Yes — at least one director has to meet a minimum-days-in-India residency test for the preceding financial year. That's a residency test, not a citizenship one: a foreign national who meets the day-count qualifies just as well as an Indian citizen does.
Do directors from every country face the same approval process?
No. Directors from certain neighbouring, land-border-sharing countries go through an additional security-clearance step before their DIN is issued — a step that doesn't apply to directors from most other jurisdictions.
This article is general information, not tax or legal advice for your situation. Speak with a qualified adviser before acting.