UK Subsidiary Formation in India
Entity structuring, incorporation, and RBI/FEMA reporting for UK parent companies setting up an Indian subsidiary.
Why UK Companies Set Up in India
Setting up a wholly-owned or majority-owned subsidiary in India is the most common route for UK companies expanding into the Indian market. The process runs under the Companies Act, 2013, with foreign direct investment (FDI) from the UK permitted under the automatic route in most sectors - meaning no prior RBI or government approval is needed before incorporation.
India offers a large domestic market, a skilled and cost-effective workforce, and - for a subsidiary structured as a domestic Indian company - an effective corporate tax rate of approximately 25.17% under Section 200 of the Income-tax Act, 2025 (the erstwhile Section 115BAA). For UK groups specifically, India's large English-speaking talent pool and overlapping working hours with UK time zones make it a common location for engineering, GCC/back-office, and customer support functions.
Entity Options for a UK Parent
The right structure depends on the parent's objectives, funding plans, and how much local operational control is needed.
Wholly Owned Subsidiary (Private Limited Company)
The most common route - a Private Limited Company under the Companies Act, 2013, with the UK parent holding up to 100% of the shares. Offers full operational control, limited liability, and the ability to raise further funding or bring in an Indian JV partner later if needed.
Limited Liability Partnership (LLP)
100% FDI is permitted in LLPs under the automatic route, but only in sectors and activities where 100% FDI is already allowed with no FDI-linked performance conditions attached. LLPs suit UK parents wanting pass-through tax treatment on the Indian side, though most groups still prefer the Private Limited route for fundraising flexibility.
Branch or Liaison Office
For parents wanting a presence without incorporating a separate Indian company - filed via Form FNC with RBI. A Liaison Office can only undertake representational activities; a Branch Office has wider permitted activities but needs specific RBI approval and is taxed as a foreign company at a higher rate.
Incorporation Process
The core steps stay the same regardless of the parent's country - what changes is the DTAA position and the paperwork on the UK side (board resolutions, apostille/notarisation of documents, and so on).
Name Reservation
DSC for proposed directors, followed by RUN/SPICe+ Part A name approval with the RoC.
SPICe+ Filing
Drafting of MOA & AOA and SPICe+ Part B filing - PAN and TAN applied for within the same form.
Certificate of Incorporation
RoC issues the Certificate of Incorporation along with PAN and TAN.
Bank Account & Subscription
Indian bank account opened and subscription money remitted from the UK parent.
FC-GPR Filing
Shares allotted to the parent are reported to RBI via Form FC-GPR on the FIRMS portal.
Post-Incorporation
GST, Startup India/DPIIT, EPF & ESI, Shops & Establishment, and the compliance calendar set up.
Key Considerations for UK Parent Companies
- DTAA PositionThe India-UK DTAA governs withholding tax treatment on royalty, technical fee, and management fee remittances back to the UK parent.
- Group ReportingUK parents commonly need the Indian subsidiary's statutory financials restated to a UK-compatible reporting standard (FRS 102/IFRS) for year-end group consolidation.
- FC-TRS FilingUK parents used to Companies House's share transfer process often assume the same forms apply in India; equity movements need Form FC-TRS filed with RBI, in addition to any UK-side filings.
- Funding RoutesFollow-on funding can come in as equity, ECB (External Commercial Borrowing), or intercompany loans, each with a different RBI reporting route and pricing/tenure restriction.
- UK-Side TaxUK CFC rules under Part 9A TIOPA 2010, Diverted Profits Tax, and other UK-side positions need coordination with the parent company's UK tax advisor - we handle the Indian entity's compliance end.
Protecting Your Brand Name
A trademark registered in your home country doesn't automatically extend to India - protecting your brand name and logo here needs a separate India trademark application, ideally filed alongside incorporation.
Frequently Asked Questions
Does a UK parent company need RBI approval to invest in an Indian subsidiary?
In most sectors, no prior RBI approval is required - FDI from the UK falls under the automatic route, and the investment is reported to RBI via Form FC-GPR after the shares are allotted.
Can a UK Ltd company hold 100% of its Indian subsidiary?
Yes. A UK parent can hold up to 100% of an Indian Private Limited subsidiary in most sectors under the automatic route, subject to at least one resident director being appointed under Section 149(3).
Do UK group financial statements need to be restated for Indian consolidation?
Typically yes. UK parents commonly need the Indian subsidiary's statutory financials, prepared under Indian GAAP/Ind AS, restated to a UK-compatible reporting standard such as FRS 102 or IFRS for year-end group consolidation.
How is a share transfer between a UK parent and its Indian subsidiary reported?
Any transfer or fresh allotment of shares to the UK parent needs to be reported to RBI via Form FC-TRS (for transfers) or Form FC-GPR (for fresh allotment), in addition to updating the Indian subsidiary's statutory registers under the Companies Act, 2013.
Why does UK-India group consolidation cause more friction than founders expect?
Indian statutory financials are prepared under Ind AS, which is based on IFRS but carries a number of India-specific carve-outs and modifications - in areas such as deferred tax treatment, functional currency, and certain revenue recognition timing - that don't exist under FRS 102 or standard IFRS. A straightforward currency-and-format conversion of the Indian numbers often isn't enough for UK group consolidation; what's usually needed is a proper GAAP reconciliation that identifies where Ind AS and the UK parent's reporting standard genuinely diverge, not just a translation exercise.