Minimum Capital Requirement for Foreign Company Registration in India

There is no prescribed statutory minimum paid-up capital requirement for incorporating a private limited company in India, including a company owned by foreign shareholders.

Accordingly, a foreign company establishing an Indian subsidiary does not necessarily have to introduce a fixed minimum amount such as ₹1 lakh merely to satisfy the Companies Act.

However, the absence of a statutory minimum does not mean that capital should be selected arbitrarily. The proposed authorised and paid-up capital should be commercially appropriate considering the company’s initial expenses, working-capital requirements, business model, FDI regulations and any sector-specific regulatory conditions.

This distinction is particularly important for foreign investors setting up a Wholly Owned Subsidiary in India.

For the complete incorporation process, refer to our Foreign Company Registration in India service page.

Minimum Capital Requirement at a Glance

The earlier statutory minimum paid-up capital requirement for private companies was removed through amendments to the Companies Act.

Is There a Minimum Capital Requirement for a Foreign Company in India?

Private Limited Company

There is presently no general statutory minimum paid-up capital prescribed merely for incorporating a private limited company under the Companies Act, 2013.

A company must nevertheless have an appropriate share-capital structure where it is incorporated with share capital.

The Memorandum of Association and incorporation forms should correctly specify:

• authorised share capital;
• number of authorised shares;
• face value of shares;
• subscribed capital;
• subscribers; and
• shares agreed to be taken by each subscriber.

Foreign-Owned Indian Subsidiary

The position does not change merely because the shareholders are foreign.

An Indian private limited company owned wholly or partly by overseas investors can also be incorporated without a generally prescribed statutory minimum paid-up capital.

Foreign investors should nevertheless determine an appropriate capital amount before preparing the incorporation documents.

Regulated and Special Business Activities

Although the Companies Act does not generally prescribe minimum paid-up capital for a private limited company, separate regulatory requirements may apply to particular activities.

Certain regulated businesses may be subject to:

• minimum net-worth requirements;
• capital adequacy requirements;
• licensing conditions;
• minimum investment requirements;
• sector-specific FDI conditions; or
• other financial eligibility criteria.

Therefore, the proposed business activity should be reviewed before determining capital.

Foreign investors may refer to the Department for Promotion of Industry and Internal Trade for India’s FDI policy framework.

Understanding Share Capital Before Incorporation

Foreign investors often use the terms authorised capital, subscribed capital and paid-up capital interchangeably. They have different meanings.

What Is Authorised Share Capital?

Authorised share capital is the maximum amount of share capital that the company is authorised to issue under its constitutional documents without first increasing its authorised capital.

For example, if a company has authorised capital of ₹10 lakh, it does not necessarily mean that ₹10 lakh must immediately be contributed by the shareholders.

It means that the company’s authorised capital structure permits shares to be issued up to that amount, subject to applicable law.

What Is Subscribed Capital?

Subscribed capital represents the portion of the company’s share capital that the shareholders have agreed to subscribe.

At incorporation, the subscribers to the Memorandum specify the number of shares that they agree to take.

The subscribed capital may therefore be lower than the authorised capital.

What Is Paid-Up Capital?

Paid-up capital is the amount actually paid or credited as paid on the shares issued to shareholders.

For a foreign-owned subsidiary, subscription money introduced by the overseas shareholder should also comply with applicable FEMA and banking requirements.

How Much Capital Should a Foreign Company Choose?

There is no single capital amount suitable for every foreign-owned Indian company.

The decision should be based on the proposed business rather than simply selecting the smallest possible number.

Initial Operating Expenses

The company should estimate the amount required during its initial operating period.

Typical expenses may include:

• employee salaries;
• professional fees;
• office rent;
• security deposits;
• technology expenses;
• marketing;
• travel;
• registrations and licences;
• equipment;
• insurance; and
• general administrative expenses.

Capital should be sufficient to avoid an immediate funding shortage after incorporation.

Incorporation Fees and Stamp Duty

The amount of authorised capital can affect incorporation-related government fees.

MCA’s SPICe+ framework provides concessions for incorporation up to specified levels of authorised capital, while stamp duty can vary according to the state in which the registered office is situated.

Foreign investors should therefore consider incorporation costs when deciding the initial authorised capital.

Current incorporation information can be referred to on the Ministry of Corporate Affairs website.

Sector and FDI Requirements

Before deciding the capital amount, the proposed activity should also be reviewed for:

• sectoral FDI limits;
• Government approval requirements;
• licensing requirements;
• regulatory capital requirements; and
• foreign ownership conditions.

A normal consulting company and a regulated financial-services business may have very different capital requirements.

Working-Capital Requirement

The company should estimate how long it may take before Indian operations begin generating sufficient cash flow.

A foreign parent may prefer to contribute enough initial equity to support the subsidiary through its startup period rather than arranging repeated small capital infusions.

Authorised Capital vs Paid-Up Capital

The authorised capital does not necessarily need to equal the paid-up capital.

Can Paid-Up Capital Be Lower Than Authorised Capital?

Yes.

A company may have a higher authorised capital while initially issuing only part of that capital.

This can provide room for future share issues without immediately increasing the authorised capital.

Simple Illustration

Assume a foreign parent plans an Indian subsidiary with:

• Authorised capital: ₹10,00,000
• Initial subscribed and paid-up capital: ₹5,00,000

The company may initially issue shares worth ₹5 lakh while retaining capacity within its authorised capital for further share issues.

The exact structure should be determined based on the company’s funding plan and applicable regulatory requirements.

How Does the Foreign Parent Fund the Indian Subsidiary?

Capital can be introduced at incorporation and may also be increased later.

Initial Share Subscription

At incorporation, the shareholders agree to subscribe to the shares specified in the Memorandum of Association.

Where the subscriber is a foreign company, the incorporation documents generally identify:

• the foreign corporate shareholder;
• authorised representative;
• number of shares subscribed;
• face value;
• total subscription amount; and
• applicable corporate authorisation.

Foreign corporate documents may also require appropriate authentication.

For details, see our guide on Apostille and Notarisation Requirements for Foreign Company Registration in India.

Additional Equity After Incorporation

If the Indian subsidiary requires additional funding, the foreign parent can potentially introduce further share capital after incorporation, subject to:

• availability of authorised capital;
• corporate approvals;
• Companies Act requirements;
• applicable FDI conditions;
• FEMA requirements; and
• RBI reporting.

Where authorised capital is insufficient, it may first need to be increased through the prescribed corporate process.

Loans Are Different From Share Capital

A foreign parent may also consider debt funding in appropriate circumstances.

However, a loan from a non-resident parent is not the same as equity capital.

Foreign borrowing can fall within India’s External Commercial Borrowing or other FEMA framework and may be subject to separate:

• eligibility rules;
• interest conditions;
• maturity requirements;
• end-use restrictions;
• reporting requirements; and
• banking procedures.

A foreign company should therefore not remit funds to its Indian subsidiary as a loan without first reviewing the appropriate regulatory route.

FEMA and FDI Considerations for Share Capital

Foreign investment into an Indian company is governed not only by the Companies Act but also by India’s FDI and FEMA framework.

Automatic Route vs Government Route

In many sectors, foreign investment is permitted under the Automatic Route, subject to the applicable sectoral limit and conditions.

Other investments may require prior Government approval.

The investment route should therefore be checked before the foreign parent commits funds.

For a detailed overview, refer to our FDI and FEMA Compliance in India for Foreign Companies.

Timing of Issue of Shares

For subsequent foreign investment received by an Indian company, FEMA rules generally prescribe timelines for issue of equity instruments after receipt of consideration.

Where applicable, equity instruments are generally required to be issued within the prescribed period after receipt of foreign investment.

Initial subscription at incorporation should be coordinated carefully with the company’s bank and FEMA reporting requirements.

Form FC-GPR

Where an Indian company issues equity instruments to a person resident outside India and the transaction constitutes FDI, the issue is generally required to be reported through Form FC-GPR within 30 days from the date of issue of the equity instruments.

Foreign investment reporting is carried out through the RBI’s prescribed reporting framework.

Current requirements may be referred to under the Reserve Bank of India – Foreign Investment Regulations.

Pricing and Sectoral Conditions

Foreign investment may also be subject to:

• pricing guidelines;
• valuation requirements;
• sectoral caps;
• entry-route conditions;
• ownership restrictions; and
• reporting requirements.

Accordingly, the amount of capital is only one part of the foreign investment analysis.

Commencement of Business and Subscription Money

Foreign investors should also distinguish incorporation from commencement of business.

Section 10A Requirement

A company having share capital is subject to the commencement-of-business requirements under Section 10A of the Companies Act, 2013.

The prescribed declaration confirms, among other things, that subscribers to the Memorandum have paid the value of the shares agreed to be taken by them.

180-Day Timeline

The declaration for commencement of business is required within the prescribed period of 180 days from incorporation, subject to the applicable provisions.

Accordingly, the initial capital stated in the incorporation documents should represent an amount the subscribers genuinely intend to contribute.

This is another reason not to choose the capital figure casually.

Does Higher Authorised Capital Increase Company Registration Cost?

Potentially, yes.

MCA Filing Fee

Government filing fees can depend upon the authorised share capital.

Under the SPICe+ incorporation framework, companies with authorised capital up to the prescribed limit may enjoy a filing-fee concession, although other charges can still apply.

State Stamp Duty

Stamp duty on incorporation documents can vary by state.

Therefore, two companies with the same authorised capital but different registered-office states may have different overall incorporation costs.

Practical Capital Selection

A foreign investor should therefore balance:

• expected funding requirement;
• incorporation cost;
• future capital requirements; and
• administrative convenience.

Choosing an unnecessarily high authorised capital can increase initial costs, while choosing an excessively low amount may require an early capital increase.

Practical Capital Examples

The appropriate amount depends heavily on the business.

Service or Consulting Subsidiary

A foreign consulting, software or professional-services company may initially require capital mainly for:

• employees;
• office expenses;
• professional fees;
• technology;
• marketing; and
• general working capital.

Such companies may not require significant fixed-asset investment at the beginning.

Trading or Import Business

A trading or import company may require considerably more funding for:

• inventory;
• customs duties;
• GST;
• warehousing;
• logistics;
• customer credit; and
• supplier payments.

The initial capital requirement may therefore be significantly higher than for a service company.

Regulated or Capital-Intensive Business

A regulated or manufacturing business may require additional capital because of:

• plant and machinery;
• licences;
• infrastructure;
• regulatory net-worth requirements;
• sector-specific conditions; or
• long startup periods.

Such businesses should conduct a detailed capital assessment before incorporation.

Common Capital Planning Mistakes

Assuming ₹1 Lakh Is Still the Statutory Minimum

The old ₹1 lakh minimum paid-up capital requirement for private companies was removed.

Foreign investors should therefore not rely on outdated incorporation checklists that continue to state ₹1 lakh as a mandatory statutory minimum.

Choosing Capital That Is Too Low

Although there may be no statutory minimum, extremely low capital may create practical funding issues immediately after incorporation.

The company may need funds for rent, employees, registrations, professional costs and other expenses before revenue begins.

Choosing Excessive Authorised Capital

A very high authorised capital is not automatically beneficial.

It may increase incorporation fees or stamp duty without providing an immediate commercial advantage.

Receiving Foreign Funds Without Planning the Regulatory Route

Foreign investment should be received through the appropriate banking and regulatory route.

The company should determine in advance whether the funding represents:

• share subscription;
• additional equity;
• permitted debt;
• reimbursement; or
• another permitted transaction.

Confusing Capital Requirement With FDI Approval

Having sufficient capital does not automatically mean foreign investment is permitted.

FDI eligibility depends primarily upon the proposed business activity, investor jurisdiction, sectoral cap, entry route and applicable conditions.

Capital Planning Checklist

Before Incorporation

Foreign investors should confirm:

• proposed business activity;
• FDI eligibility;
• Automatic Route or Government Route;
• sector-specific capital requirements;
• expected startup expenses;
• initial working-capital requirement;
• authorised capital;
• subscribed capital;
• face value of shares;
• proposed shareholding;
• foreign corporate shareholder documentation; and
• likely future funding requirements.

After Incorporation

The company should monitor:

• receipt of subscription money;
• commencement-of-business compliance;
• foreign investment documentation;
• banking records;
• share allotment or issue documentation;
• FC-GPR reporting, where applicable;
• statutory registers;
• share certificates;
• future capital requirements; and
• annual FEMA reporting.

Frequently Asked Questions

What Is the Minimum Capital Required for a Foreign Company in India?

There is no generally prescribed statutory minimum paid-up capital for incorporating a private limited company in India.

However, the capital should be commercially appropriate for the proposed business and any applicable sector-specific requirements.

Is ₹1 Lakh Minimum Capital Still Compulsory?

No.

The earlier statutory requirement of ₹1 lakh minimum paid-up capital for a private company was removed.

Does a Wholly Owned Subsidiary Need Minimum Capital?

There is generally no prescribed minimum paid-up capital merely because the Indian company is a wholly owned subsidiary of a foreign company.

The business activity and applicable regulatory requirements should nevertheless be checked.

Can a Foreign Company Start With a Small Paid-Up Capital?

Potentially, yes, where no separate sectoral requirement applies.

However, the company should have sufficient funding to meet its genuine initial business requirements.

Can Authorised Capital Be Higher Than Paid-Up Capital?

Yes.

A company may maintain authorised capital above its initial paid-up capital so that additional shares can potentially be issued later without immediately increasing authorised capital.

Can the Foreign Parent Increase Capital Later?

Yes.

The foreign shareholder may make additional equity investment subject to the company’s authorised capital, corporate approvals, FDI eligibility, FEMA requirements and RBI reporting.

Does Higher Authorised Capital Increase ROC Fees?

It can.

MCA incorporation fees are linked in part to authorised share capital, and applicable stamp duty may also vary.

Is Foreign Share Capital Subject to RBI Reporting?

Yes, where the issue constitutes foreign direct investment.

Applicable reporting, including Form FC-GPR, should be completed within the prescribed timelines.

Is Share Capital the Same as an Intercompany Loan?

No.

Equity investment and foreign borrowing are governed by different legal and FEMA frameworks.

An intercompany loan should therefore be reviewed separately before funds are remitted.

Does Capital Have to Be Paid Before Company Incorporation?

Subscribers undertake to subscribe to shares through the incorporation documents.

After incorporation, the subscription amount and commencement-of-business requirements should be completed within the prescribed statutory and FEMA framework.

Can the Indian Subsidiary Use Foreign Share Capital for Business Expenses?

Generally, funds received as share capital may be used for legitimate business purposes subject to applicable law, FDI conditions, regulatory restrictions and the company’s approved business activities.

What Capital Should a Foreign Company Normally Choose?

There is no universal amount.

The company should estimate its setup expenses, payroll, rent, inventory, regulatory requirements and initial working capital and then determine an appropriate capital structure.

Official Regulatory Resources

Foreign investors should refer to official sources for current requirements:

• Ministry of Corporate Affairs
• MCA – Companies Act and Rules
• Department for Promotion of Industry and Internal Trade
• Reserve Bank of India
• Foreign Investment Facilitation Portal

How EzyBiz India Can Assist

EzyBiz India Consulting LLP assists foreign companies, multinational groups and overseas entrepreneurs with structuring and establishing their Indian subsidiaries.

Our assistance can include:

• India-entry structure advisory
• FDI eligibility review
• Capital structure planning
• Authorised and paid-up capital planning
• Foreign shareholding structure
• Company name reservation
• Foreign shareholder documentation
• Apostille and notarisation guidance
• Digital Signature Certificates
• Director Identification Numbers
• MOA and AOA preparation
• SPICe+ incorporation
• PAN and TAN
• Bank account opening assistance
• Commencement-of-business compliance
• GST registration
• FEMA and FC-GPR reporting
• Accounting and bookkeeping
• Payroll and tax compliance
• Transfer pricing
• Ongoing company-law compliance

Planning the capital structure together with the FDI, banking and operational requirements can help avoid unnecessary incorporation costs and repeated capital restructuring after the Indian company has been established.

Related Services

• Foreign Company Registration in India
• Foreign Company Registration Timeline in India
• Resident Director Requirement for Foreign Companies in India
• Apostille and Notarisation Requirements for Foreign Company Registration in India
• Wholly Owned Subsidiary in India
• Setting Up Business in India
• FDI and FEMA Compliance in India for Foreign Companies
• India Market Entry Consulting

Prepared and Reviewed By

Anil Agrawal, Chartered Accountant
Founder, EzyBiz India Consulting LLP
20+ Years of Experience in Tax, Regulatory and Business Advisory

Last Updated: 6 September 2026

Disclaimer

This article provides general information regarding authorised capital, subscribed capital, paid-up capital and foreign investment for companies incorporated in India with foreign shareholders.

Although there is generally no prescribed minimum paid-up capital requirement for incorporating a private limited company under the Companies Act, separate minimum capital, net-worth, licensing, FDI or other regulatory requirements may apply depending upon the company’s proposed business activity and sector.

Foreign investment is also subject to applicable FEMA regulations, FDI policy, sectoral conditions, pricing requirements, banking procedures and reporting obligations. Requirements may change from time to time.

Professional advice should therefore be obtained before deciding the capital structure, receiving foreign investment, issuing shares or arranging debt funding for a foreign-owned Indian company.