A Singapore-headquartered B2B SaaS company had been selling to Indian enterprise clients through a reseller arrangement for two years. As the India business grew, the founders made two decisions: hire a six-person engineering team in India, and engage Indian clients directly rather than through a reseller. Both decisions required a legal entity in India. The question was which structure, and what the compliance obligations looked like from day one.
FDI in the technology sector — software development, SaaS, IT services — is permitted under the automatic route in India. A wholly owned subsidiary of a foreign company requires no prior RBI approval to be incorporated or capitalised.
Choosing the Right Structure
For a foreign company intending to hire employees, enter contracts, and invoice Indian clients, a Private Limited Company is the correct structure. The alternatives — a Liaison Office, Branch Office, or Project Office — are not permitted to engage in commercial activity or hire employees on a permanent basis. A Liaison Office can only facilitate communication between the Indian market and the foreign parent. For commercial operations, a Private Limited subsidiary is the only viable option.
A wholly owned subsidiary (WOS) of a foreign company is incorporated under the Companies Act, 2013 — the same legal framework as any Indian Private Limited Company. The foreign parent holds 100% of the shares. The subsidiary has its own CIN, PAN, TAN, and GST registration, and operates as an independent legal entity.
The Setup Timeline
Week 1
Director Identification & DIN
A minimum of two directors are required for a Private Limited Company. At least one director must be an Indian resident (ordinarily residing in India for 182 days or more in the preceding calendar year). One Singapore-based founder was appointed as a director and needed a DIN — obtained via DSC (Digital Signature Certificate) and SPICe+ filing.
Week 1–2
Name Reservation and Incorporation Documents
Company name reserved via MCA's RUN process. MOA and AOA drafted to reflect a technology services and software company. MOA objects were drafted broadly to cover both software development for the parent and direct client services in India, avoiding a future amendment requirement.
Week 2–3
SPICe+ Filing and Certificate of Incorporation
Integrated incorporation form filed — covering incorporation, PAN, TAN, and GST (optional at this stage). MCA processed within 5 working days. Certificate of Incorporation issued, CIN allotted.
Week 3–4
Share Subscription and FC-GPR
The Singapore parent company subscribed to shares in the Indian subsidiary — the initial capital infusion. The subscription amount was remitted from Singapore to the Indian subsidiary's bank account. FC-GPR was filed on the FIRMS portal within 30 days of the allotment, with the required valuation certificate and FIRC.
Month 2
GST Registration and Statutory Setup
GST registration obtained for the Bangalore registered office. Opening board meeting held: auditor appointed, bank account authorised, director declarations (MBP-1, DIR-8) tabled, and company seal (where required) authorised.
Ongoing Compliance: Two Layers
The Indian subsidiary carries a dual compliance burden — the standard Companies Act obligations applicable to all Indian companies, and the FEMA obligations that arise from its foreign shareholding.
MCA Annual Compliance
MGT-7 (Annual Return within 60 days of AGM), AOC-4 (Financial Statements within 30 days of AGM), minimum 4 board meetings per year, DIR-3 KYC for all directors annually by 30 September, auditor appointment and NFRA compliance.
FC-GPR for Each Capital Infusion
Each time the Singapore parent infuses additional equity capital, FC-GPR must be filed within 30 days of allotment. Multi-tranche capitalisations — common as the India team scales — each require a separate filing.
FLA Return — Annual FEMA Reporting
The FLA (Foreign Liabilities and Assets) return must be filed with the RBI by 15 July each year. It reports the total FDI position — cumulative equity received from the foreign parent — on the company's balance sheet. Even a nil-movement year requires filing if FDI is on the books.
Transfer Pricing Documentation
Payments from the Indian subsidiary to the Singapore parent — for software licences, technical services, management fees — are related-party transactions subject to transfer pricing rules. TP documentation (Form 3CEB if threshold crossed) must be maintained annually.
The Outcome
Result
- Indian WOS incorporated in 3 weeks — Certificate of Incorporation issued
- FC-GPR filed within 30 days of initial capital allotment — no FEMA violation
- GST registration obtained for Bangalore office within 2 weeks of incorporation
- First board meeting completed — auditor appointed, statutory registers established
- Annual compliance calendar established — MCA and FEMA filings tracked for Year 1
- Engineering team of 6 onboarded as employees of the Indian entity within 6 weeks of incorporation
What Foreign Companies Setting Up in India Should Know
- 01
The resident director requirement is non-negotiable.
At least one director of the Indian subsidiary must have been ordinarily resident in India for 182 days or more in the previous calendar year. If the foreign parent's team is entirely offshore, they must identify and appoint an Indian resident director — typically a trusted local professional or a nominee director service — before incorporation.
- 02
FC-GPR has no grace period.
The 30-day filing window from the date of allotment is strict. Unlike some MCA filings which carry additional fees for late submission, late FC-GPR is a FEMA contravention requiring compounding. File as soon as the allotment is made and the FIRC is received.
- 03
The FLA return is overlooked every year.
The FLA return (due 15 July annually) is the most consistently missed FEMA obligation for foreign subsidiaries. It is not triggered by a specific event — it is a calendar-based requirement that requires active tracking. Non-filing attracts penalty and RBI notice.
- 04
Overseas directors need DIR-3 KYC.
All directors — including the Singapore-based parent's nominee directors holding a DIN — must complete DIR-3 KYC by 30 September each year. A deactivated DIN blocks all company filings. Overseas directors often do not know about this obligation; track it proactively.