Indian Subsidiary

The economic liberalization of 1991 was a catalyst for foreign direct investment in India. A subsidiary company is also called a sister company and the company that has a hold on the sister company is called the parent or holding company. The parent company controls wholly or partially the subsidiary company.

Why incorporate an Indian Subsidiary Company?

Limited Liability: The liability of the directors and members of an Indian subsidiary company is the same as that of a private limited company limited to their shares. It means that if the company is incurring any loss and is facing any financial crisis due to any business activity, the personal assets of the shareholders or members of the directors will not be at risk.

Perpetual Succession: The life of the business is not affected by the status of the shareholders and the Indian subsidiary will continue to exist even after the death of the shareholder.

Brand Value: The brand value of the company increases as employees will feel safe in joining a private limited company, sellers will feel safe in giving credit and investors will get relief while investing. New-age startups can become multi-billion companies over the years due to the high brand value of the company.

Expansion: There is more scope for expansion as it is easier to raise capital from venture capitalists, financial institutions, and angel investors, and the benefits of limited liability.

Foreign Direct Investment: 100% FDI is allowed under the automatic route without any prior permission in many industries and business activities. But FDI is not allowed in Proprietorship or Partnership. FDI in a Limited Liability Partnership also requires government approval.

Indian Subsidiary


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