How to Start a Manufacturing Business in India From the US

India’s manufacturing sector is on the rise, and now is the perfect time to tap into this growth. With the sector contributing 17% to India’s GDP in 2024, it’s expected to reach 25% by 2030. This growth is fueled by initiatives like “Make in India” and “Atmanirbhar Bharat,” making it a market that promises substantial returns for businesses willing to take the leap. 

But stepping into this dynamic market can feel confusing due to complex regulations, cultural differences, and the competitive domain requires more than just a great product.

This blog will guide you through the essential steps to start a manufacturing business in India from the US. We’ll cover everything you need to know to turn your business vision into reality in one of the world’s fastest-growing economies. Let’s begin. 

Key Takeaways

• Conduct Thorough Market Research: Understanding the Indian manufacturing domain and identifying high-growth sectors will help you choose the right niche for your business.
• Create a Solid Business Plan: Outline your product line, target market, and manufacturing process, while also developing detailed financial projections to guide your strategy.
• Understand the Legal and Compliance Requirements: Register your business, secure necessary licenses, and comply with Indian regulations like GST, PAN, and labor laws to ensure smooth operations.
• Secure the Right Funding: Explore various funding options, from bank loans to government schemes, to ensure you have the financial support to launch and sustain your operations.
• Choose an Optimal Location and Facility Setup: Consider proximity to suppliers, infrastructure, and a skilled workforce when selecting your manufacturing site, while also focusing on efficient plant design.

Benefits of Setting Up a Manufacturing Plant in India

India is increasingly becoming a preferred destination for businesses, especially companies in the US, looking to expand their manufacturing operations. While China still leads the global manufacturing front, India offers several advantages that make it an attractive alternative. Here’s why:

• Cost-Effective Labour: India offers highly competitive labour rates, which can significantly reduce operational costs compared to China. This makes it an ideal location for companies seeking to maximize efficiency while controlling expenses.
• Favorable Tax Environment: The Indian government has taken action to improve the business climate by reducing corporate tax rates. The corporate tax rate was lowered from 30% to 22%, and foreign companies with Indian subsidiaries can qualify for even lower tax rates of 15%.
• Expanding Consumer Market: With the world’s second-largest population, India is on track to become the largest consumer market by 2030. This offers businesses an enormous potential customer base, presenting opportunities for growth and increased sales.
• Skilled Talent Pool: India produces approximately 1.5 million engineers each year, providing businesses with a large talent pool to support innovation and manufacturing processes.
• Government Incentives: India offers various incentive schemes to support manufacturing across industries, including:
  
  • Electronics Manufacturing: Schemes such as the Modified Electronics Clusters Scheme (MEC) and the Production Linked Incentive Scheme (PLI) encourage growth in the electronics sector.
  • Textiles & Automotive: The Textile Industry Incentive Scheme and Automotive PLI Scheme drive growth in these vital industries.
  • Renewable Energy Manufacturing: India is offering attractive incentives to boost renewable energy manufacturing, aligning with global sustainability trends.

With these advantages, India presents a unique opportunity for businesses looking to set up a manufacturing plant while tapping into a growing market and reducing costs.

Now that you know the benefits, let’s walk through the steps required to start your manufacturing business in India. 

How to Start A Manufacturing Company in India from the US: Step-by-Step Proces

‍Starting a manufacturing business in India from the US requires careful planning, understanding the legal framework, and securing the necessary resources. Here’s a step-by-step guide to help you manage the process:

1. Detailed Project Report (DPR) & Techno-Economic Feasibility Report (TFER)

• Detailed Project Report (DPR): This document outlines every crucial detail of your business, including raw material costs, labor expenses, machinery, land, and working capital. It also includes financial projections like ROI (Return on Investment).
• Techno-Economic Feasibility Report (TFER): A deeper analysis of the project’s technical and financial viability. It evaluates the technology, financial needs, potential risks, and profit estimates, helping you assess whether your manufacturing business will be financially and technically feasible.

2. Registering Your Indian Entity

In India, manufacturing businesses can be set up as a private limited company or a public limited company. Foreign businesses can either acquire an existing company or establish a wholly-owned subsidiary under India’s Foreign Exchange Management Act (FEMA). 

Alternatively, entering into a joint venture (JV) offers the benefit of local expertise and market access. The registration process is mostly online, with documents requiring notarization and apostilling. Once submitted, the registration usually takes about 4 to 6 weeks.

3. Securing Funding

Adequate funding is crucial for setting up a manufacturing business. You can explore bank loans, venture capital, and government schemes like MUDRA loans for small businesses. 

MSME loans are a great option, offering low-interest rates and flexible repayment terms. Platforms like FlexiLoans can provide fast access to capital without asset requirements, making financing more accessible.

4. Establishing a Presence in India

Any entity, foreign or domestic, must establish a physical presence in India. This can be done by registering a partnership firm or a limited liability partnership (LLP), or a company. 

Expanding into India requires understanding regulatory frameworks and setting up the right structure. VJM Global offers expert support to handle the compliance domain and establish a successful manufacturing presence in India. Contact us now.

5. Choosing the Location & Land

Consider factors such as proximity to raw materials, transportation infrastructure, labor availability, and market access. Some Indian states offer specific incentives for certain industries, such as reduced land costs or tax breaks. 

Gujarat and Maharashtra offer industry-specific subsidies, while Special Economic Zones (SEZs) provide benefits such as tax holidays and duty-free imports. Businesses can also choose between greenfield projects (building a new facility on unused land) or brownfield projects (using existing facilities). The choice depends on the company’s risk tolerance, time, and budget.

6. Registration, Licenses & Compliance

For manufacturing plants employing more than 10 workers with power or 20 workers without power, Factory Registration under the Factories Act, 1948, is mandatory. This involves submitting a detailed building plan, environmental clearances, and safety measures.

Depending on the industry, additional registrations and licenses may be required, including environmental clearances, industry-specific approvals, and labor law compliance (e.g., Employee Provident Fund, Minimum Wages Act).

7. Product Prototyping & First Production Run

After setting up the factory, you can begin prototyping your product to test its design and functionality. Once the prototype meets expectations, proceed with the first production run to ensure that operations are smooth before mass production.

8. Mass Production

With everything in place, you can move on to mass production. Before starting large-scale production, ensure that you have secured the necessary raw materials and that your production process is optimized for efficiency.

Following these steps can help to successfully establish your manufacturing business in India, ensuring compliance and operational efficiency at every stage.

Also Read: What All Formalities Are Required To Be Completed By A Company Post Incorporation

Once you're familiar with the setup process, registering your business is the next crucial step. Here’s what you need to know to get your manufacturing company up and running.

Registering Your Manufacturing Business in India From the U.S.

Here's a breakdown of the key steps involved in registering your manufacturing business:

• Director’s DSC and DIN Preparation: First, you'll need to prepare the Directors' Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) through Form DIR-3. 
• Company Name Reservation: You’ll then reserve your proposed company name through Form INC-1. This step ensures your business has a name that is compliant with Indian regulations.
• Formation of Legal Documents: The next step involves drafting documents like the Memorandum of Association (MOA) and Articles of Association (AOA), including consent letters, affidavits, and powers of attorney.
• Company Registration Application: After preparing the documents, the company registration application is filed using Form INC-7 to officially establish your business entity.
• Additional Documentation Submission: You’ll need to submit further documents to the relevant Registrar of Companies (ROC) as required. This ensures all necessary compliance steps are completed.
• Obtaining Key Identifications: Your manufacturing business will need to secure several key registrations, such as a Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), and Goods and Services Tax Identification Number (GSTIN).
• Brand and Intellectual Property Protection: It’s also important to protect your intellectual property. This includes registering trademarks, logos, patents, and designs to safeguard your brand in India’s competitive market.

Expert guidance and a thorough understanding of Indian regulations through this process can set your manufacturing business up for long-term success. VJM Global provides the expertise and support needed to help you through each stage of the registration process. Get in touch today.

Also Read: How can I register a business in India from the USA? Simplified Process for Foreigners

With all the steps in mind, partnering with the right experts can make the entire process easier. Here’s why VJM Global is the ideal choice for supporting your manufacturing setup in India.

Why Choose VJM Global for Setting Up Your Manufacturing Process in India?

Establishing a manufacturing process in India requires legal, financial, and regulatory compliance to ensure smooth operations. VJM Global offers the expertise you need to simplify the setup process and help you hit the ground running. Here’s how we can help:

• Company Registration & Legal Compliance: We handle the complete company registration process, from reserving your company name to filing necessary legal documents, ensuring your business is set up well.
• Regulatory & Tax Compliance: VJM Global guides you through securing all necessary registrations, including PAN, TAN, GSTIN, and the licenses required to operate legally in India’s manufacturing sector.
• Setting Up Financial Infrastructure: We help with setting up a business bank account, ensuring financial compliance, and advising on best practices for managing your manufacturing business finances in India.
• Intellectual Property Protection: Safeguard your ideas with our comprehensive IP services, including trademark, patent, and design registrations, to safeguard your brand in the Indian market.
• Ongoing Support & Advisory: We offer continuous support as you set up and scale your manufacturing operations, ensuring compliance and streamlining processes to help your business thrive.

At VJM Global, we take the complexity out of setting up your manufacturing process in India. 

Final Thoughts

Setting up a manufacturing process in India presents significant opportunities, but it requires careful attention to legal, financial, and regulatory aspects. Company registration, securing necessary licenses, ensuring compliance with Indian laws, and protecting intellectual property are all critical steps for a successful business launch. 

With VJM Global’s expertise, you can tackle these complexities and set up your operations seamlessly. Take the first step towards a smooth and compliant manufacturing setup in India: Get started today for expert guidance and support.

FAQs

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1. What’s the first step in setting up a manufacturing business in India?

The first step is registering your company. This includes reserving your company name, filing the necessary legal documents, and securing the required licenses to operate legally.

2. Do I need to hire a local team for my manufacturing business?

While not mandatory, hiring local talent can be beneficial. It helps you better understand the market, tackle business regulations, and deal with any local compliance issues.

3. How do I handle taxes in India for my manufacturing business?

Taxes can be complex, but you’ll need to register for PAN, TAN, and GSTIN to ensure your business complies with Indian tax laws and regulations.

4. Do I need a business bank account in India?

Yes, a local business bank account is essential for managing operations, fulfilling tax requirements, and ensuring smooth financial transactions within India.

5. How can I protect my brand in India?

To protect your brand, you should register trademarks, patents, and designs. This ensures that your intellectual property is safeguarded as you expand your business in India.

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