Manufacturing in India
Manufacturing Company Registration in India: PLI, SEZs & Tax Planning
Manufacturing incentives in India depend on the sector, location, eligibility rules and application windows. This guide explains relevant PLI schemes, Special Economic Zones, incorporation options and tax considerations without assuming every incentive is available to every new project.
Quick answer
What tax rate applies to a new manufacturing company in India?
Section 115BAB provides a 15% base rate (about 17.16% after surcharge and cess) only for companies meeting its conditions, including commencing manufacturing by 31 March 2024. As that deadline has passed, new projects should not assume eligibility. PLI incentives are separate and depend on the relevant sector scheme, eligibility criteria and application window.
The Production Linked Incentive (PLI) scheme
The PLI scheme pays eligible manufacturers a direct cash incentive of 4% to 18% on incremental sales, across 14 priority sectors — electronics, pharmaceuticals, auto components, textiles, solar PV, batteries and more — with a combined outlay of roughly ₹1.97 lakh crore (around US$23 billion). This is real cash paid against actual sales growth, not a tax deferral or a one-time grant, which is why it has become central to how many global manufacturers now think about setting up production capacity in India. Eligibility criteria, rates and thresholds vary significantly by sector, so mapping your specific product category against the scheme details is one of the first things worth doing before you commit to a location or scale. Pharmaceutical manufacturers have their own dedicated PLI tranches on top of the general scheme — see our pharma & healthcare company registration guide for the specifics.
Section 115BAB: check eligibility before using the concessional rate
Section 115BAB provides a 15% base corporate tax rate — roughly 17.16% after surcharge and cess — for domestic manufacturing companies that satisfy its conditions, including commencing manufacturing or production by 31 March 2024. That commencement deadline has passed. A new manufacturing project starting now should not assume it can qualify unless the law changes or a specific legal basis applies. Only an eligible domestic company can use this regime; a Branch Office cannot. Assess the ownership structure and tax position on the actual facts before using this rate in a business plan.
Special Economic Zones and sector-specific programmes
Eligible units in notified Special Economic Zones may benefit from duty-free imports of capital goods and raw materials. Supplies for authorised operations may qualify for zero-rated GST treatment where the legal conditions are met. These benefits are separate from sector-specific PLI schemes. Section 115BAB is available only to companies that meet its statutory conditions, including the manufacturing commencement deadline of 31 March 2024. Electronics and semiconductor projects may also qualify for dedicated support, depending on the relevant scheme, project type and current application rules.
Choosing your entity and location
A Wholly Owned Subsidiary is often suitable for a foreign manufacturer because it is a separate Indian company and can support local operations and investment. Access to PLI depends on the relevant scheme’s eligibility rules and application window; Section 115BAB is limited to companies that meet its conditions, including the 31 March 2024 manufacturing commencement deadline. Where you physically locate production matters too — beyond SEZ eligibility, several individual states run their own industrial policies and land incentives on top of the central schemes above; see our guides to company registration in Gujarat, Maharashtra and Tamil Nadu — three of India's largest manufacturing states — for what each offers specifically.
Incorporation process
The core incorporation sequence — DSC and DIN issuance, name reservation via SPICe+ Part A, drafting your MOA and AOA, and SPICe+ Part B filing — is the same for a manufacturing company as for any Indian private limited company. See our step-by-step incorporation guide for the full walkthrough, and our guide to FLA Return and transfer pricing compliance for the annual filings that follow for a foreign-owned subsidiary.
FAQs: manufacturing company registration in India
What is the Production Linked Incentive (PLI) scheme? The PLI scheme pays eligible manufacturers a direct cash incentive of 4%–18% on incremental sales, across 14 priority sectors including electronics, pharmaceuticals, auto components, textiles, solar PV and batteries, with a combined outlay of roughly ₹1.97 lakh crore (around US$23 billion). Eligibility and exact rates vary significantly by sector, so we typically run a dedicated incentive-mapping exercise as part of structuring any manufacturing entry.
What tax rate applies to a new manufacturing company in India? Section 115BAB provides a 15% base corporate tax rate (about 17.16% after surcharge and cess) for qualifying domestic manufacturing companies, but eligibility includes a requirement to commence manufacturing by 31 March 2024. That deadline has passed, so a new project starting production now should not assume it qualifies. Check current law and the company’s facts before relying on this regime.
What benefits do Special Economic Zones (SEZs) offer manufacturers? Units operating in one of India’s 276 operational Special Economic Zones get duty-free imports of capital goods and raw materials, and zero-rated GST on inputs, alongside other zone-specific incentives. This is separate from, and can be combined with, sector-specific schemes like the PLI.
Is there a dedicated scheme for electronics and semiconductor manufacturing? Yes. Beyond the general PLI scheme, electronics and semiconductor manufacturing have their own dedicated support, including fiscal assistance of up to 50% of project cost for fabs and assembly/testing facilities under the Semicon India Programme — reflecting the specific strategic priority India has placed on this sector.
What entity structure should a foreign manufacturer use in India? Many foreign manufacturers use a Wholly Owned Subsidiary because it is a separate Indian company and can be better suited to local operations, hiring, contracts and investment. Only companies that satisfy the statutory conditions — including the 31 March 2024 manufacturing commencement deadline — may qualify for Section 115BAB; a new project should not assume the 15% rate is available. A Branch Office is taxed under the rules applicable to foreign companies and cannot use this domestic-company regime.
How much does it cost to register a manufacturing company in India? The MCA government filing fee for the SPICe+ incorporation form itself is nil for authorised capital up to ₹15 lakh, under Schedule I of the Companies (Registration Offices and Fees) Rules, 2014. What you actually pay is state stamp duty, which varies by which Indian state you register your office in, plus professional fees — separate from any industrial land, SEZ unit costs or PLI application costs that come later. We quote incorporation cost as a fixed figure once we know your structure and state.
Next step
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