Direct answer
A foreign company sets up an Indian subsidiary the same way any promoter would: by incorporating a private limited company with the Ministry of Corporate Affairs, then reporting the foreign investment received to the Reserve Bank of India under FEMA, and finally completing a set of post-incorporation registrations before the entity can start operating and banking normally. For a Chennai-based promoter group or a foreign parent choosing Chennai as its Indian base, the incorporation process, the forms used and the regulatory authorities involved are identical to those anywhere else in the country. The genuinely local part is which PNPC office coordinates the engagement and the practical Chennai context, such as registered office arrangements and the local ROC filing office (Chennai falls under the Registrar of Companies, Tamil Nadu).
Key Takeaways
- A foreign parent typically incorporates its Indian subsidiary as a private limited company, using the MCA's SPICe+ integrated incorporation form.
- Foreign investment received on incorporation must be reported to the RBI under FEMA, principally through the FC-GPR filing once shares are allotted.
- Post-incorporation, the subsidiary needs PAN, TAN, a current bank account, GST registration where applicable, and other statutory registrations before it can operate.
- The choice of directors (at least one resident director is required by law) and the registered office address are settled before filing incorporation documents.
- PNPC's Chennai office coordinates incorporation, FEMA reporting and the post-incorporation compliance checklist as one engagement.
Choosing the entity structure
Most foreign parents setting up in India choose a private limited company, since it offers limited liability, a familiar governance structure, and straightforward access to further equity and debt funding. A wholly-owned subsidiary, where the foreign parent holds effectively all the shares (with nominee shareholding as required by the minimum two-shareholder rule for a private company), is the most common structure. Alternatives such as a branch office or liaison office are regulated differently and serve narrower purposes, generally suited to companies that want a presence in India without conducting full-scale commercial operations, so most operating businesses choose the subsidiary route instead.
Incorporation through SPICe+
Company incorporation in India is done through the MCA's SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) web form, which combines company incorporation with related registrations, such as PAN and TAN application, EPFO and ESIC registration, and opening a bank account, into a single integrated filing. The process requires name reservation, digital signature certificates for the proposed directors, identity and address proof for directors and shareholders (with additional apostille or notarisation requirements for foreign directors and the foreign corporate shareholder), and the company's memorandum and articles of association.
At least one director on the board must be a person who has stayed in India for the minimum period prescribed under the Companies Act in the preceding financial year, so foreign parents typically appoint a local resident director alongside their own nominees. The registered office can be anywhere in India; a Chennai address is common where the promoter group already has operations, a manufacturing facility, or an advisory relationship in the city.
FEMA and RBI reporting once shares are allotted
Once the subsidiary is incorporated and the foreign parent subscribes to its shares, the investment is treated as foreign direct investment and falls under FEMA. The subsidiary company must report this to the RBI through the FIRMS portal, primarily through the FC-GPR (Foreign Currency-Gross Provisional Return) filing, which records the allotment of shares to the non-resident shareholder. This filing is time-bound from the date of allotment, and the exact number of days allowed should be checked against the current RBI Master Direction rather than assumed.
The sector the subsidiary operates in also needs to be checked against the FDI policy to confirm it falls under the automatic route, since a government-route sector would require approval before the investment is even received, which changes the sequencing of the whole incorporation.
Post-incorporation compliance checklist
Incorporation is the start, not the end, of setting up. Once the certificate of incorporation is issued, the subsidiary typically needs to open a current bank account in the company's name, which requires the incorporation certificate, PAN, board resolution and KYC documents for the authorised signatories. GST registration is required if the subsidiary's activities and turnover bring it within the GST framework. Depending on the business, other registrations may apply, such as Shops and Establishments registration, Professional Tax registration in Tamil Nadu, and Import Export Code if the subsidiary will trade across borders.
The subsidiary also has ongoing compliance obligations from day one: statutory audit, annual filings with the ROC, income tax return filing, and, for as long as the parent's foreign shareholding is outstanding, an annual FEMA return covering foreign liabilities and assets (commonly referred to as the FLA return).
Common timeline pressures
The two things that most often delay a subsidiary launch are document authentication for the foreign parent (board resolutions, certificate of incorporation of the parent, and identity documents for foreign directors typically need to be notarised and apostilled in the parent's home jurisdiction, which takes time to arrange) and the resident director requirement, when the foreign parent has not already identified someone who can fulfil that role. Planning for both early avoids the incorporation timeline stretching out unnecessarily.
What PNPC does
PNPC's Chennai office assists foreign parents and their India-facing teams through subsidiary incorporation:
- Advises on entity structure and confirms the applicable FDI route for the parent's sector.
- Prepares and files the SPICe+ incorporation application, including PAN and TAN.
- Coordinates document authentication requirements for foreign directors and the parent shareholder.
- Prepares and files the FC-GPR and other FEMA reporting once shares are allotted.
- Assists with post-incorporation registrations (bank account documentation, GST, Professional Tax, Shops and Establishments) and sets up the ongoing compliance calendar.
Where the Chennai specifics actually bite
Incorporation itself is a central process - the form set, the approval route and the Companies Act requirements are identical countrywide. Three things are not. The filing is made to the jurisdictional Registrar of Companies for the state, which for a Chennai-registered entity is the ROC at Chennai. Stamp duty on the incorporation documents and on any partnership or LLP deed is levied by Tamil Nadu at state rates, so the same paperwork costs a different amount here than it would in another state. And once it hires its first employee the entity picks up two Tamil Nadu registrations that have nothing to do with the MCA: registration under the Tamil Nadu Shops and Establishments Act, and professional tax enrolment. On that second point, Tamil Nadu runs professional tax on a half-yearly cycle rather than a monthly one - the two periods are April to September and October to March, statutorily payable by 30 September and 31 March respectively (local bodies sometimes extend these; confirm with Greater Chennai Corporation). Professional tax is capped at Rs 2,500 a year per person by Article 276 of the Constitution, but the slabs and the filing rhythm are set by the state, so a payroll calendar built for another state will not carry over unchanged.
Next step
If your organisation is planning to set up an Indian subsidiary with Chennai as the base, contact PNPC's business setup team early to sequence document authentication, incorporation and FEMA reporting correctly from the outset.