a. Introduction
A Foreign Subsidiary Company is an Indian company incorporated under the Companies Act, 2013, where a foreign company holds more than 50% of the total share capital. It operates as an Indian legal entity but is controlled by a foreign parent company.

This model is ideal for international companies seeking to establish a long-term business presence in India while maintaining full ownership, operational flexibility, and access to
local benefits.

Foreign Subsidiaries can be set up as either:
• Wholly Owned Subsidiary (WOS): 100% shares held by a foreign entity (in sectors where 100% FDI is permitted).
• Joint Venture: Partial ownership shared with Indian partners.

b. Why You Should Register
• To establish a local presence and operate as an Indian company
• To access India’s large consumer base and skilled workforce
• To enjoy limited liability and separate legal identity
• To operate under automatic FDI route (no RBI pre-approval needed in many sectors)
• To repatriate profits legally as per RBI and FEMA guidelines
• To gain credibility with Indian clients, suppliers, and banks

c. Compliance and Taxation
• Governed by the Companies Act, 2013, and regulated by the Ministry of Corporate Affairs (MCA).
• Must comply with Foreign Exchange Management Act (FEMA) and RBI’s FDI Policy.
• Annual Filings:
o AOC-4 & MGT-7A – Annual Financial Statements & Returns
o Form FC-GPR – Reporting of foreign investment to RBI
o Form FLA – Annual return on foreign liabilities and assets
• Taxation:
o Corporate tax rate – 25% (for turnover up to ₹400 crore), plus surcharge and cess
o Transfer pricing regulations apply for international transactions
o GST registration required if turnover exceeds the prescribed limit