Why Foreign Manufactuing Subsidiaries Prefer India
- Access to a vast market: India boasts over 1.4 billion consumers with increasing demand for quality products.
- Favorable government policies: Initiatives like “Make in India” promote manufacturing and offer tax benefits.
- Skilled and affordable workforce: India provides a large pool of technically skilled labor at competitive costs.
- Strategic location: India’s ports, trade agreements, and Free Trade Agreements (FTAs) facilitate regional export potential.
Types of Business Structures Available
| Business Form | Description |
| Wholly Owned Subsidiary (WOS) | 100% owned by a foreign company; ideal for full control and long-term commitment. |
| Joint Venture (JV) | Partnership with an Indian entity; beneficial for market knowledge and resource sharing. |
| Liaison Office | Functions as a communication channel; commercial activities are not permitted. |
| Branch Office | Can engage in export/import and consultancy but is restricted from manufacturing locally. |
For most manufacturing entities, a WOS is the preferred model due to ease of control, operations, and funding flexibility.
Step-by-Step Guide to Setting Up a Subsidiary in India
- Select the Appropriate Business Structure: Assess your business goals, operational requirements, and long-term market strategy before choosing a structure.
- Obtain Digital Signature Certificate (DSC): Required for digitally signing incorporation documents.
- Reserve the Company Name: Apply through the RUN (Reserve Unique Name) service on the MCA Portal.
- Incorporate the Company: Submit SPICe+ forms along with MOA, AOA, director documents, and office details.
- Apply for PAN, TAN & Bank Account: Register on the Income Tax Portal and open a bank account.
- Register Under GST: Mandatory if turnover exceeds the threshold or interstate supply occurs.
- Acquire Additional Licenses: IEC, environmental clearances, factory license, etc., depending on the sector.
- Choose the State Wisely: Select based on industry focus, incentives, and ease of doing business.
- Ensure Ongoing Compliance: Regular ROC, tax, GST, and transfer pricing filings are necessary.
Benefits of Setting Up a Subsidiary
- Complete operational control and independent policy setting.
- 100% FDI allowed in most manufacturing sectors under the automatic route.
- Asset ownership including land, machinery, and intellectual property.
- State-level tax incentives like SGST refunds and capital subsidies.
Obstacles Foreign Manufacturers May Face
- Regulatory complexity at both central and state levels.
- Time-consuming license approvals for specific industries.
- Cultural and language barriers in operations and negotiations.
- Strict adherence required to FEMA, RBI, and forex regulations.
EbizFiling: Your Legal Ally
We assist foreign manufacturers with:
- Advisory on the right business structure
- Company incorporation and document filing
- GST and PAN/TAN registrations
- RBI and FEMA compliance
- Obtaining relevant industrial licenses
- ROC annual filings and financial services
We ensure that your entry into India is strategic, compliant, and sustainable from the outset.
Conclusion
Setting up a subsidiary in India provides foreign manufacturers with a strategic advantage in South Asia. With proper guidance and up-to-date compliance, your business can capitalize on India’s growing economy. Partnering with experts like EbizFiling ensures a smooth, accurate, and timely setup process.
Suggested Read :
Holding and Subsidiary Company in India
How to start a Subsidiary Company in India?
Registering a Foreign Subsidiary
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