An Indian subsidiary refers to a company incorporated in India that is controlled and majority-owned by
another company, known as the parent or holding company, which is usually based outside of India. The
parent company typically holds more than 50% of the subsidiary’s voting stock, giving it control over the
subsidiary’s operations and strategic decisions.

Establishing an Indian subsidiary is a common strategy for foreign companies looking to enter the Indian
market or expand their business operations in the country. This approach allows the parent company to
maintain separate legal and financial identities from its subsidiary while leveraging the subsidiary’s local
presence, market knowledge, and operational capabilities.

1.Incorporation: The process of incorporating an Indian subsidiary involves registering it as a private
limited company or any other suitable legal structure under the Companies Act, 2013. This requires
fulfilling statutory requirements such as appointing directors, registering a local office address, and
complying with regulatory norms.

2.Ownership and Control: The parent company retains majority ownership and control over the
subsidiary, influencing its management and business decisions. However, the subsidiary operates
autonomously within the regulatory framework of India, adhering to local laws, tax regulations, and
corporate governance requirements.

3.Operational Independence: While aligned with the parent company’s strategic goals, an Indian
subsidiary operates independently in terms of day-to-day activities, financial management, and
compliance. It may engage in various business activities, including manufacturing, trading, services, or
research and development, tailored to meet local market demands.

4.Benefits: Establishing an Indian subsidiary offers several advantages, such as limited liability
protection, access to a vast consumer base, favorable investment climate, and potential tax incentives.
It also facilitates easier repatriation of profits and compliance with local laws, enabling seamless
integration into the Indian market while minimizing risks associated with cross-border operations.
Overall, an Indian subsidiary serves as a strategic vehicle for foreign companies to establish a foothold in
India, capitalize on growth opportunities, and navigate the complexities of doing business in one of the
world’s fastest-growing economies. It enables synergies between global expertise and local market
dynamics, fostering sustainable growth and competitive advantage in the Indian business landscape.