Capital Requirement under Law

• There is no mandatory minimum capital requirement for incorporating a subsidiary in India.
  
• The Companies Act, 2013 allows companies to be formed with any amount of capital as decided by the promoters.
  
• Companies must declare an authorized and paid-up share capital during incorporation.
  

Private Limited Subsidiary

• A Private Limited subsidiary can be incorporated with a paid-up capital as low as ₹1
  
• The capital must be subscribed by the shareholders at the time of incorporation.
  
• There is no requirement to maintain a minimum net worth post-incorporation
  

Public Limited Subsidiary

• A Public Limited subsidiary must have a minimum paid-up capital of ₹5 lakhs.
  
• It must also comply with additional requirements like the minimum number of directors and shareholders.
  
• It is subject to more rigorous compliance than a private limited company.
  

Foreign Subsidiary under FDI

• For sectors under the automatic route, no specific capital threshold is prescribed.
  
• In sectors under the government approval route, capital norms may be set by regulators.
  
• Adequate capital should be maintained to support business operations and regulatory expectations.
  

Banking and Operational Requirements

• The declared capital must be deposited in the subsidiary’s bank account after incorporation.
  
• This capital can be used for operational expenses once the business commences.
  
• Proper accounting and audit must reflect the utilization of the initial capital.