7946 Overseas Companies Registers their Indian Subsidiary Company from FY 2018-19 to FY 2022-23; says Minister Nirmala Sitharaman [Read Order]

The Finance and Corporate Affairs Minister Nirmala Sitharaman revealed that a noteworthy 7,946 overseas companies successfully registered their subsidiary entities in India during the period from Financial Year (FY) 2018-19 to FY 2022-23. The minister provided this information in response to queries posed by Members of Parliament Dr. Ranjith Reddy and MP Kanimozhi Karunanidhi in the Lok Sabha.

Foreign companies, incorporated outside India, have the opportunity to establish various forms of business presence in India, such as branch offices, project offices, liaison offices, or representative offices. However, this can only be achieved after adhering to the stipulations of RBI regulations and other sector-specific requirements. Within 30 days of establishing such offices, foreign companies are required to seek registration from the Registrar of Companies (Delhi and Haryana) by submitting necessary documents under Section 380 of the Companies Act, 2013.

Addressing specific questions about the number of foreign firms starting and ceasing operations in India, Minister Sitharaman clarified that the figures provided pertained to foreign companies opening or closing their places of business under Section 380 of the Companies Act, 2013, from 2018 to 2023 (till January). Additionally, the minister emphasised that foreign companies could invest in India not only by establishing a place of business but also through Indian subsidiaries, which are Indian companies under the ownership of foreign holding companies.

Between FY 2018-19 and FY 2022-23 (up to November), a total of 7946 foreign companies opted for the latter route by registering their Indian subsidiary companies. Notably, data from the Department for Promotion of Industry and Internal Trade (DPIIT) website revealed an overall increase in foreign direct investment (FDI) in India, rising from USD 62,001 million in FY 2018-19 to USD 71,355 million (Provisional figure) in FY 2022-23.

Addressing concerns about the business atmosphere in the country, especially in comparison to investor sentiments towards China post-pandemic, Minister Sitharaman emphasised that business decisions, including commencing operations through Indian subsidiaries or establishing/closing a place of business, are influenced by multiple factors such as operational viability, sectoral strategy, global priorities, market size, and resource allocation. The increase in foreign direct investment reflects the confidence of foreign investors in India's business environment.

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