Foreign entrepreneurs seeking to enter the Indian market often face a critical decision: Should they form a Wholly Owned Subsidiary or enter a Joint Venture with an Indian partner? Choosing the correct structure impacts legal compliance, ownership, taxation, and operational control. This article compares both models to help you identify the most suitable option for your business goals.
A Wholly Owned Subsidiary (WOS) is a company incorporated in India that is 100% owned by a foreign parent company. It is considered a domestic Indian company under the Companies Act, 2013, and follows standard tax and compliance regulations applicable to Indian companies.
The information is Sourced from: Ministry of Corporate Affairs
A Joint Venture (JV) is a partnership between a foreign company and an Indian company. The two parties contribute equity and share responsibilities, management control, and profits, usually through a jointly incorporated entity.
Source: FDI Policy – DPIIT, Government of India
| Feature | Wholly Owned Subsidiary | Joint Venture |
|---|---|---|
| Ownership | 100% Foreign Company | Shared between foreign and Indian parties |
| Control | Full control by foreign entity | Joint control |
| Market Access | Slower, independent setup | Faster with local support |
| Risk | Entirely borne by foreign investor | Shared between both parties |
| Brand Autonomy | Retained | May require brand alignment |
| Legal Complexity | Standard incorporation | Requires a comprehensive JV Agreement |
| Business Goal | Ideal Choice |
|---|---|
| Long-term investment | Wholly Owned Subsidiary |
| Quick market entry | Joint Venture |
| Full brand and financial control | Wholly Owned Subsidiary |
| Need for local expertise | Joint Venture |
| Sector under automatic FDI route | Wholly Owned Subsidiary |
| Sector with FDI restrictions | Joint Venture |
Holding and Subsidiary Company in India
How to start a Subsidiary Company in India?
Foreign Subsidiary Company Compliance in India
Branch Office vs Indian Subsidiary
Shareholding rights of a subsidiary company
Yes, under the automatic route in most sectors.
Around 10–15 business days, subject to documentation.
No minimum capital requirement unless sector-specific norms apply.
Yes, after payment of applicable Indian taxes and RBI reporting.
No, sectors like defense, multi-brand retail, and telecom have restrictions.
A contract that defines ownership, roles, liabilities, and dispute mechanisms between partners.
Yes, through share acquisition and restructuring.
At least one director must be an Indian resident for company registration.
As domestic companies under the Income Tax Act, 1961.
Not under the automatic route, but reporting under FEMA is mandatory.
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