Many founders and foreign investors ask whether an Indian subsidiary company startup registration in India can be done under DPIIT’s Startup India scheme? The clear answer is No. According to DPIIT guidelines, subsidiary and holding companies are not eligible for startup recognition. DPIIT mandates that startups must be independent entities with majority Indian ownership, innovation-driven operations, and not formed as subsidiaries.
This blog explains why subsidiaries are disqualified, what the official eligibility criteria are, and the alternatives available for compliance.
The Startup India Guidelines issued by DPIIT clearly state that holding/subsidiary companies will not be permitted for recognition. The intent is to prevent large or foreign-owned groups from bypassing eligibility conditions.
Equity Control: If a parent (domestic or foreign) holds more than 50%, the Indian company becomes a subsidiary and is ineligible.
Group Turnover Check: DPIIT considers combined turnover of group entities, not just the subsidiary.
Reconstruction Restriction: Subsidiaries formed by splitting/restructuring existing businesses cannot qualify.
Derecognition Rule: If a recognized startup later turns into a subsidiary (due to acquisition), DPIIT cancels its recognition.
|
Criteria |
Subsidiary Company |
Independent Startup |
|
Parent/Group Ownership |
>50% |
≤49% |
|
Indian Promoter Shareholding |
<51% |
≥51% |
|
DPIIT Recognition |
Not Allowed |
Allowed |
|
Derecognition Risk |
Permanent ineligible |
Only if later becomes a subsidiary |
An Indian subsidiary company cannot register as a startup in India. DPIIT recognition is restricted to independent, Indian-promoter-owned, innovative companies. Subsidiary or holding status automatically disqualifies an entity. Businesses should either restructure their ownership or create a new independent entity if they want to access Startup India benefits.
DPIIT Recognition for Indian Subsidiaries
How to Register Foreign Company under Startup India?
Foreign Owned LLP Registration under Startup in India
Startup India Benefits for Foreign Companies
Legal Framework for Setting Up an Indian Subsidiary
No. As per DPIIT guidelines, subsidiaries are not eligible for Startup India recognition, even if they are innovative or registered in India. The scheme is designed only for independent entities where majority control lies with Indian promoters.
If a recognized startup is later acquired or becomes a subsidiary of another company, DPIIT cancels its recognition. This is to ensure the benefits are not extended to group entities or companies that restructure to bypass the rules.
Subsidiaries are excluded because DPIIT wants to promote genuinely new and independent businesses. Allowing subsidiaries could lead to large groups or foreign parents misusing the scheme for tax and compliance benefits.
Yes. If an application comes from a subsidiary, DPIIT may consider the combined turnover of the parent and group companies. However, since subsidiaries are ineligible upfront, such applications are usually rejected.
Yes. If the parent company reduces its stake below 50% and Indian promoters hold at least 51%, the company may qualify. This restructuring ensures that the entity functions independently and meets DPIIT’s ownership criteria.
No. Wholly-owned subsidiaries are fully controlled by a parent company and therefore disqualified. Recognition is only possible for independent startups with significant Indian ownership.
No. DPIIT specifically excludes entities created by splitting, rebranding, or reconstructing an existing business. Recognition is reserved for genuinely new and innovative ventures, not spin-offs.
No. Benefits like tax exemptions, self-certification, and funding access are available only to recognized startups. Subsidiaries may explore other government schemes or FDI-linked incentives, but Startup India benefits are not extended.
The required documents include the Certificate of Incorporation, PAN, shareholding structure showing at least 51% Indian ownership, financial statements, and a write-up on innovation. These help DPIIT confirm independence and originality.
Subsidiaries can either restructure their shareholding to reduce parent control or incorporate a new independent entity with majority Indian ownership. Otherwise, they must operate without Startup India benefits but can still access other compliance and funding opportunities.
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