Registering a Foreign Subsidiary in India: FDI Route and Compliance Timeline

A foreign parent setting up an Indian wholly-owned subsidiary typically underestimates one thing: incorporation itself is the fast part. The compliance sequencing after incorporation - FDI reporting, banking, tax registrations is where most delays actually happen, and where a wrong assumption about the timeline causes real cost.

1. Automatic Route Covers Most Cases, But Verify Early

Most sectors permit 100% FDI under the automatic route for a wholly-owned subsidiary, meaning no prior RBI/government approval is needed for the investment itself. Sector-specific caps and conditions still apply, and investment routed through, or by an entity based in, a country sharing a land border with India requires government approval under Press Note 3 regardless of sector - this single check changes the entire timeline and should be confirmed before incorporation, not after.

2. Incorporation Sequence: SPICe+ Part A/B, Then the Bank Account Problem

Name reservation and incorporation via SPICe+ typically move faster than what follows: opening a corporate bank account for a company with 100% foreign shareholding involves enhanced KYC on the foreign parent and its ultimate beneficial owners, and banks routinely take longer on this than on incorporation itself. Foreign parents who assume the bank account will be ready the day incorporation is approved are usually wrong by several weeks.

3. Capital Infusion and Form FC-GPR

Once the foreign parent remits share capital, the subsidiary has 30 days from the date of share allotment (not from the date funds were received) to file Form FC-GPR with the RBI via the AD bank. Getting the KYC and Foreign Inward Remittance Certificate paperwork lined up before the remittance lands, rather than after, is what keeps this deadline manageable.

4. Tax Registrations Run in Parallel, Not After

PAN, TAN, GST registration (if the subsidiary will supply goods/services), and Professional Tax/Shops & Establishment registration should be initiated alongside incorporation, not sequentially after the certificate of incorporation is received. Businesses that wait to start these until incorporation is "done" lose weeks they didn't need to.

5. Transfer Pricing From Day One if There's Any Intercompany Transaction

A wholly-owned Indian subsidiary providing services to, or receiving services/goods from, its foreign parent is an associated-enterprise transaction under Section 92 from the first transaction - Form 3CEB and transfer pricing documentation obligations apply from year one, not once the subsidiary reaches some revenue threshold. Building this into the intercompany agreement at setup avoids reconstructing pricing rationale retroactively.

Practical Takeaway

A realistic Indian subsidiary setup timeline, done properly, runs 6-10 weeks from name reservation to a functioning bank account and completed FC-GPR filing - not the 2-3 weeks incorporation alone might suggest. Planning the banking and FDI reporting steps in parallel with incorporation, rather than after, is what actually determines the timeline.

The author is a Partner at Agrawal Khandelwal & Associates LLP, Chartered Accountants in Nashik and Sillod, Maharashtra, advising foreign parents on Indian subsidiary incorporation and FDI compliance.