How to Set Up a Subsidiary in India from the UK: 2026 Guide After CETA

A UK company can set up a subsidiary in India by incorporating a private limited company under the Companies Act, 2013. In most sectors the UK parent can hold 100% of the shares under the automatic FDI route, with no prior government approval, and it reports the investment to the Reserve Bank of India after the shares are allotted.

The India-UK Comprehensive Economic and Trade Agreement (CETA) has been in force since 15 July 2026. It cut tariffs, opened services markets and brought a social security agreement with it. It did not change how an Indian company is incorporated. If you want to set up a subsidiary in India from the UK today, you still deal with the Ministry of Corporate Affairs, FEMA and the Indian tax system, in that order.

This guide covers the full route as the rules stand in November 2026: what CETA changed, which structure to pick, the FDI conditions, who can be a director, the paperwork a UK parent has to prepare, the SPICe+ filing, RBI reporting, tax and yearly compliance.

What CETA changes for a UK company entering India

CETA is a trade agreement, so most of its effect is on what your Indian subsidiary can import, sell and staff. India and the UK signed it on 24 July 2025 and brought it into force on 15 July 2026, together with a Double Contributions Convention (DCC) on social security.

The practical reading is simple. CETA improves the commercial case for an Indian entity. The legal route to getting one is the same route every foreign company takes.

Is a subsidiary the right structure?

For most UK companies that plan to earn revenue in India, a private limited subsidiary is the right vehicle. It is a separate Indian legal entity, the parent's exposure stops at its share capital, and it can carry on any business the FDI policy allows.

The alternatives exist for narrower purposes.

A branch or liaison office keeps the UK company itself on the hook for Indian liabilities. That is the reason most groups incorporate a subsidiary once they expect to invoice Indian customers or employ staff.

FDI rules that apply to a UK parent

Foreign investment in an Indian company is governed by FEMA and the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. Every sector falls under one of two entry routes.

Under the automatic route, the UK parent invests without asking the Government of India or the RBI for permission. It only reports the investment afterwards. IT and software services, most manufacturing, business consulting and B2B trading sit here with 100% foreign ownership allowed.

Under the government route, the investor applies for approval before any money moves. Multi-brand retail and print media are examples, and both also carry ownership caps below 100%. A few activities are closed to FDI altogether, including lottery, gambling, chit funds and trading in real estate.

Three points are worth checking before you file anything:

• Match the subsidiary's planned activity to its exact entry in the current consolidated FDI policy. The objects clause in the memorandum should use the same description.

• Some sectors attach conditions even at 100%, such as minimum capitalisation for certain financial services or sourcing norms in single-brand retail.

• The restrictions on investors from countries sharing a land border with India do not apply to a UK parent. They can apply if the parent's beneficial owner sits in one of those countries.

Shares issued to a non-resident also have to respect FEMA pricing rules. Subscription at face value at the time of incorporation is permitted. Later issues to the UK parent need a valuation certificate.

Requirements to incorporate a private limited subsidiary

The Companies Act, 2013 sets the same baseline for a foreign-owned company as for a domestic one.

Nationality is not a barrier for directors. A British citizen can sit on the board of the Indian company. The residency test looks only at days spent in India, so a UK national who lives in India qualifies as the resident director.

If an individual ultimately holds 10% or more of the Indian company through the UK parent, the subsidiary must record that person as a significant beneficial owner and report it to the Registrar.

Documents a UK parent needs

Document preparation is where UK applicants lose the most ground, because anything signed or issued outside India has to be notarised and apostilled before the Registrar will accept it. The UK is a member of the Hague Apostille Convention, so the FCDO Legalisation Office apostille is enough. Consular legalisation at the Indian High Commission is not required.

From the UK parent company

• Certificate of incorporation from Companies House

• Articles of association

• Board resolution approving the investment in India, naming the authorised representative who will sign as subscriber, and consenting to use of the group name

• Identity and address proof of the authorised representative

From each director

• Passport for foreign nationals. PAN is mandatory for Indian nationals.

• Address proof such as a bank statement or utility bill, dated within the last two months

• Passport-size photograph, email address and mobile number

• Signed consent to act as director (Form DIR-2) and the declaration of interests in other entities

For the registered office

• Rent or lease agreement, or ownership proof

• No-objection letter from the property owner

• Utility bill for the premises, dated within the last two months

Names have to match across every document. A director shown as "Jon" on a bank statement and "Jonathan" on a passport is a common reason for resubmission.

How to set up a subsidiary in India from the UK: step by step

Incorporation is filed online with the Ministry of Corporate Affairs through one integrated form, SPICe+. Nobody from the UK parent has to travel to India for it.

1. Confirm the entry route. Check the planned activity against the FDI policy and settle the shareholding, including who holds the nominee share.

2. Pass the parent's board resolution. It approves the investment, appoints the authorised representative and names the proposed directors.

3. Get digital signatures. Every proposed director and the authorised representative needs a Class 3 digital signature certificate, since all MCA forms are signed electronically.

4. Reserve the name. Part A of SPICe+ takes up to two proposed names with the objects of the company. Check the MCA and trade mark registers first.

5. Notarise and apostille the UK documents. Do this alongside the name application so the two tracks finish together.

6. Draft the memorandum and articles. Where a subscriber signs outside India, the memorandum and articles are signed on paper, notarised and apostilled, then attached to the filing.

7. File SPICe+ Part B with the linked forms. The same submission applies for director identification numbers, PAN and TAN. The linked AGILE-PRO-S form covers GST registration if you opt for it, EPFO and ESIC registration, and the bank account request.

8. Receive the certificate of incorporation. The Registrar issues it with the Corporate Identity Number, PAN and TAN. The company exists in law from the date on that certificate.

The certificate is the midpoint for a foreign-owned company. The FEMA steps that follow decide whether the investment is properly on record with the RBI.

After incorporation: capital, FC-GPR and commencement

A newly incorporated subsidiary cannot trade until its shareholders have paid for their shares and the company has told the Registrar so. For a UK-owned company, that payment is also a foreign investment that must be reported to the RBI.

Two details cause most FC-GPR problems. The remittance must come from the investor named in the memorandum, and the amount received must match the shares allotted. A payment from a group affiliate or a director's personal account does not count as the parent's subscription.

A late FC-GPR can be regularised by paying a late submission fee, which grows the longer the delay runs. An unreported investment is a FEMA contravention that surfaces later, usually during a funding round, a share transfer or an exit.

Depending on the business, the subsidiary may also need GST registration, an Importer-Exporter Code, and the state's Shops and Establishments and professional tax registrations.

Tax position of a UK-owned Indian subsidiary

An Indian subsidiary is a domestic company for tax purposes and pays Indian tax on its worldwide income. Since 1 April 2026 the governing law is the Income-tax Act, 2025, which replaced the 1961 Act and renumbered its sections without changing corporate rates.

• Corporate tax. A domestic company can opt for the concessional rate of 22% under section 200 of the 2025 Act, the successor to section 115BAA. With surcharge and cess the effective rate is about 25.17%. A company that chooses this rate gives up most deductions and incentives.

• Dividends to the UK parent. The subsidiary withholds tax when it pays a dividend. The India-UK double taxation agreement generally limits that tax to 10% for a UK corporate shareholder, which is lower than the domestic rate. To claim the treaty rate, the parent needs a tax residency certificate from HMRC and must be the beneficial owner of the dividend. Treaty relief can be refused if obtaining it was a principal purpose of the arrangement.

• Transfer pricing. Every transaction between the subsidiary and its UK group has to be priced at arm's length. That covers management fees, cost-plus service arrangements, royalties, loans and goods. The subsidiary keeps supporting documentation and files an accountant's report on these transactions each year. Sign the intercompany agreements before the first invoice is raised.

• GST. Registration is required once turnover crosses the threshold, and from the first day for some categories of supplier. Services the subsidiary exports to its UK parent can qualify as zero-rated if payment arrives in convertible foreign exchange and the other export conditions are met.

• Customs duty. Goods imported from the UK attract the CETA preferential rate only when they satisfy the rules of origin and travel with the required origin documentation.

• Social security for seconded staff. A UK employee posted to the subsidiary on or after 15 July 2026 keeps paying UK National Insurance for an assignment of up to 60 months. The employer applies to HMRC for a certificate of coverage, which shows the Indian authorities that no provident fund contributions are due. Employees hired locally in India fall under Indian social security law as usual.

Annual compliance for the subsidiary

A foreign-owned private company has the same Companies Act duties as any Indian company, plus RBI reporting that exists only because the shareholder is non-resident. The Indian financial year runs from 1 April to 31 March.

The FLA return is the one UK-owned companies miss most often. It is due every year in which the company has foreign investment on its balance sheet, even if no new money came in during the year.

Mistakes UK companies make when setting up in India

• Reading CETA as an investment treaty

• CETA does not give a UK investor a right to arbitrate against the Indian state. Until a bilateral investment treaty is signed, protection comes from the shareholders' agreement, commercial contracts and the dispute resolution clause you negotiate.

• Paying the share capital from the wrong account

• The subscription money has to arrive from the UK parent's own bank account. Funds sent by a sister company, a director or a payment platform leave the AD bank unable to certify the FC-GPR.

• Treating the resident director as a formality

• The resident director carries the same statutory duties and personal exposure as any other director. Choose someone who will read what they sign, and give that person real visibility over filings.

• Starting intercompany billing without agreements

• Many subsidiaries begin by providing services to the UK parent on a cost-plus basis. Without a signed agreement and a supportable mark-up, the transfer pricing position is weak from the first year.

• Funding operations through informal parent loans

• A loan from the UK parent to the Indian subsidiary is an external commercial borrowing under FEMA, with its own eligibility and reporting rules. Sending working capital as an undocumented advance creates a contravention that equity funding would have avoided.

• Stopping at the certificate of incorporation

• The company is not ready to operate until the capital has been received, FC-GPR filed and the commencement declaration made. Hiring or invoicing before that point creates problems that take longer to fix than the steps would have taken to complete.

Getting your Indian subsidiary set up properly

A UK company can hold its Indian business through a wholly owned subsidiary, and CETA has made the commercial case for doing so stronger. The legal work has not become lighter. Company law, FEMA and tax each have their own filings, and they have to be done in the right sequence.

Accorp Partners works with foreign companies on incorporation, FEMA reporting and ongoing compliance in India. If you are planning to set up a subsidiary in India from the UK, talk to our team before you sign the board resolution, so the structure and the paperwork are right the first time.

Frequently asked questions

1. Can a UK company own 100% of an Indian subsidiary?

Yes, in any sector where the FDI policy allows 100% foreign investment under the automatic route. Indian company law still requires two shareholders, so the parent holds all shares except one, and a nominee holds that one on the parent's behalf.

2. Does CETA make it easier to set up a subsidiary in India from the UK?

It makes running one more attractive. The incorporation procedure, FDI routes and RBI reporting are the same as before 15 July 2026. What changed is the duty on goods from the UK, social security for seconded employees and access to government tenders.

3. Does a director have to live in India?

One of them does. At least one director must have spent 182 days or more in India during the financial year. The other directors can live in the UK or anywhere else.

4. Do UK documents need an apostille for Indian incorporation?

Yes. Company documents and director documents issued or signed in the UK are notarised and then apostilled by the FCDO Legalisation Office. India accepts apostilled documents from the UK without further consular attestation.

5. Is there a minimum share capital?

The Companies Act sets no minimum for a private limited company. A few regulated sectors set their own capital floors for foreign investors, so check the FDI conditions for your activity.

6. Can the subsidiary send profits back to the UK?

Yes. Dividends are freely repatriable through the AD bank once Indian tax has been withheld. Fees for services or royalties paid to the parent are also permitted, subject to withholding tax and transfer pricing rules.

7. Should we open a branch office instead?

A branch suits a UK company with a narrow, permitted activity that does not want a separate Indian entity. It needs approval through an AD bank, cannot manufacture, and exposes the UK company directly to Indian liabilities. Most groups planning to grow in India choose a subsidiary.

8. Does anyone from the UK parent need to travel to India?

Not for incorporation. The filings are electronic and UK signatories can execute documents at home before a notary. Some banks ask to meet a director or authorised signatory when opening the account, so confirm this with the bank early.