Sector Guide — Manufacturing

India Entry for Manufacturing (SEZ & PLI)

India is the centre of the ‘China + 1’ manufacturing shift. Foreign manufacturers can own 100% of an India operation and tap Production Linked Incentive schemes — if the entity, location and incentives are lined up early.

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In short: Foreign manufacturers usually enter India through a wholly owned subsidiary under the 100% automatic FDI route, then optimise location (industrial corridors, SEZs) and apply for Production Linked Incentive (PLI) schemes available across 14+ sectors. The core workstreams are entity + FEMA setup, site/SEZ selection, PLI eligibility, customs and GST, and factory/labour compliance.

Why India for manufacturing?

India offers scale, competitive labour and utility costs, PLI-backed incentives across priority sectors, and the pull of the ‘China + 1’ diversification move by global manufacturers. Combined with improving logistics corridors and ports, it is now a serious alternative for both domestic-market and export plays.

Entity & FDI for a manufacturing setup

Most manufacturing activities sit on the 100% automatic FDI route, so the default vehicle is a wholly owned subsidiary — no prior government approval, only post-allotment FC-GPR to the RBI. A few defence, atomic and legacy sectors carry caps; confirm your sector on FDI entry routes and sector caps.

Location & industrial zones

Location drives cost, incentives and market access. States operate industrial parks — SIPCOT (Tamil Nadu), MIDC (Maharashtra), APIIC (Andhra Pradesh) — alongside SEZs and dedicated freight/industrial corridors (DMIC, CBIC). See our best locations for foreign companies guide and the state hubs for Tamil Nadu, Gujarat and Andhra Pradesh.

Production Linked Incentive (PLI) schemes

PLI covers 14+ sectors — electronics & IT hardware, automobiles & components, pharma, telecom, solar, white goods, textiles and more
Incentives are paid on incremental sales of goods manufactured in India over a base year
Eligibility depends on committed investment and output thresholds
We confirm the current position and applicable scheme for your product

Customs, GST & duty optimisation

EPCG — duty-free import of capital goods against an export obligation
MOOWR bonded manufacturing — customs duty deferred until domestic clearance
GST input credits and export refunds for zero-rated exports

Factory & labour compliance

Factory licence under the state Factories Act
State pollution-control board consents (Consent to Establish / Operate)
Compliance under the new labour codes as notified
PF / ESI registration and monthly contributions
Environmental clearances where applicable

Frequently asked questions

Can a foreign company own 100% of a manufacturing company in India?

Yes. Most manufacturing sectors allow 100% FDI under the automatic route, so a foreign parent can run a wholly owned manufacturing subsidiary with only post-allotment FC-GPR reporting to the RBI.

What are PLI schemes?

Production Linked Incentive schemes pay cash incentives on the incremental sale of goods manufactured in India, across 14+ priority sectors, to attract investment and boost domestic output. Eligibility depends on committed investment and production thresholds.

Which Indian states are best for manufacturing?

Tamil Nadu (auto and electronics), Gujarat (chemicals, industrial, GIFT City) and Andhra Pradesh (ports and corridors) are leading manufacturing destinations, alongside Maharashtra. We match the state to your product, supply chain and incentives.

What is bonded manufacturing (MOOWR)?

The MOOWR scheme lets you import capital goods and inputs into a customs-bonded facility with customs duty deferred until the goods are cleared domestically — improving cash flow for export-oriented manufacturing.

Reviewed by CA Regi Tom Antony, Regi Tom Antony & Associates. Last updated: July 2026.

Entering India as a manufacturer?

We coordinate the entity, incentive scheme and factory-side compliance end-to-end.

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