So your Indian company wants a UAE subsidiary. You’ll need two things in motion. One is a free zone or mainland company registered in the UAE. The other is the money sent through your authorised dealer bank under RBI’s ODI rules. The UAE part might wrap up in a week or so. India usually takes longer, so start both together.
Planning the move and want both sides handled together? Our business setup in the UAE for Indian companies covers the UAE end and works alongside your CA on the rest.
Plenty of Indian founders assume the UAE part is the hard bit. It usually isn’t. Getting an Indian company subsidiary in the UAE licensed can be done surprisingly fast. The slow part sits back home, with board resolutions, your bank’s ODI desk and reporting that carries on every year after the money moves. Treat the two sides as one project and things go smoothly. Treat them as two separate ones and you’ll probably end up untangling a FEMA problem later.
Subsidiary, Branch or a Brand New Company, Which One Do You Actually Need?
Start here, because it changes which Indian rules apply.
A subsidiary is a separate UAE company that your Indian company owns, fully or partly. It has its own licence, its own bank account and its own liability. This is the route most Indian businesses take. Money going into it from the Indian company counts as Overseas Direct Investment.
A branch isn’t a new company. It’s your Indian company operating in the UAE under its own name. The parent stays fully liable for it. On the Indian side, a branch abroad falls under different FEMA provisions, not the ODI framework, so the paperwork looks different.
A new company owned personally by the founder is a separate thing altogether. If you as an individual put money into a UAE company, that comes under the rules for resident individuals, which are tighter in places. It’s a common mix-up. A founder sets up a UAE company in their own name, then has the Indian company pay its bills. That creates a mess nobody wants to explain to their bank.
If the Indian company is the one doing the business and putting up the money, a subsidiary owned by the Indian company is usually the cleanest answer.
How Does the UAE Side of the Setup Work?
Pretty much like any other company setup, except your shareholder is a company, not a person.
You’ll still choose between a free zone and the mainland. Free zones tend to suit Indian companies doing international trade, tech or services, with quick issuance and simple packages. The mainland makes more sense if the subsidiary will sell directly to UAE customers or bid for local contracts. Neither is better across the board. It depends on who the subsidiary is going to sell to.
Because the shareholder is an Indian company, expect extra documents. The registrar in the UAE will want to see your company’s incorporation certificate and its MOA and AOA. Your board also has to pass a resolution saying yes to the investment and picking who’ll represent the company, and a power of attorney usually goes with it. Here’s the annoying bit. Almost none of these will be accepted as plain photocopies. They need attestation or an apostille first. That attestation step takes longer than people expect, so start it early.
Then there’s the UAE bank account. Banks look closely at corporate shareholders, so have the Indian company’s financials, ownership chart and a clear explanation of the subsidiary’s business ready to go.
What Do the ODI Rules Mean for a UAE Subsidiary?
This is where the Indian side takes over. The rules are the Foreign Exchange Management (Overseas Investment) Rules, 2022, plus the RBI’s regulations and directions under them.
The basics, in plain terms. Investment goes through your Authorised Dealer bank, which in practice is the bank you already use for foreign exchange. Under the automatic route, an Indian company can generally commit up to 400% of its net worth overseas without RBI approval. The UAE company has to be doing genuine business. And the Indian company itself shouldn’t be under investigation or on any RBI caution list.
The process usually runs like this. The board approves the investment. You file the ODI form with your AD bank with supporting documents. The bank reports it and a Unique Identification Number is generated for the UAE entity. Then the money goes out. After that, the ODI rules for your UAE subsidiary keep running. You have to submit proof of the shares issued within the set timeline, plus an Annual Performance Report every year. Miss these and you’ll face late submission fees, and it can complicate your next transaction.
Two more things to watch. There are restrictions on structures where money leaves India and comes back through layers of overseas companies, often called round-tripping. Financial services activities also come with extra conditions. If either applies to you, get specific advice before you set anything up.
ODI rules are detailed and do change, so have your CA or a FEMA specialist review your specific case. This section is a map, not a substitute for that.
The most common mess I see is sequencing. A founder gets the UAE licence in a week, feels great, then pays the first few months of rent and salaries from a personal card because the ODI hasn’t gone through yet. Now there’s a FEMA question to clean up before the investment’s even official. Start the board resolution and the bank conversation on the same day you start the UAE application, and keep company money moving only through the company.
— Khusbhu Bhatia, Partner & Head of Marketing
Why Does This Take Longer Than Founders Expect?
Mostly because of India, honestly. Got your documents attested and picked a quick zone? Then the Dubai or Sharjah paperwork can be done before your next board meeting. The India end often runs longer. Board approvals, AD bank queries and gathering the right documents all take time, and banks vary a lot in how quickly their ODI desks respond.
Usual blockers, roughly in order of how often they show up.
- Indian company documents that aren’t attested yet
- An AD bank asking for more about the UAE company’s business plan
- Board resolutions worded too vaguely
- No UAE bank account ready to receive the ODI money
- Founders paying UAE costs personally while they wait
Picture a Pune-based software company that wants a Dubai free zone entity to bill Gulf clients. Run both sides together, with the board resolution and AD bank paperwork moving while the free zone application goes in, and they’re often operating within a month or two. Run them one after the other, and it can easily stretch to a quarter.
If you want one team watching the UAE side while your CA handles ODI, our business setup in the UAE for Indian companies is built for exactly that handover.
