Delhi, India

The Scope of Manufacturing in India

By Akshya Chandra and Chaitanya Kumar, SKC World

Over the last couple of decades, western nations have looked to southeast Asian countries for advantages in setting up their manufacturing facilities. Over the years, their focus has shifted to tapping its huge market potential. India has been consistently working towards creating the environment that supports manufacturing activities.

The intent of this article is to explore possibilities for large and mid-size organisations to look at India for advantages in both the cost and production ecosystem, and the huge potential market.

  1. Benefits under income tax structure: A new income tax provision allows a lower effective tax rate of 17.16% for manufacturing setups incorporated between 01 October 2019 and 31 March 2023 (existing rate: 27.82%).
  2. Benefit under goods and service tax: Under the “zero rate supply” provisions of the GST Act, an exporter can claim a refund of GST paid on input purchases made against export orders.
  3. Availability of manpower: India has the world’s youngest population, with 64% of its population in the working age group. In 2019, around 3.2 million students enrolled themselves to pursue engineering. There are 14,602 industrial training institutes that impart training in welding, electrical work, etc, with 7.2 million students in attendance.
  4. Manufacturing hubs in India: Across India there are several conglomerate industrial hubs supporting different industries
  5. Scope of investment in India: In May 2020, the government of India increased Foreign Direct Investment (FDI) under an automatic route to 74% from 49% in defence manufacturing. In August 2019, the Indian government allowed 100% FDI through an automatic route for contract manufacturing.
  6. MSME: The Indian government has introduced a concept of micro, small and medium enterprises (MSME) to support the manufacturing setup. The classification is based on investment in plant and machinery and annual turnover. These MSMEs are entitled to various benefits in fee reduction, interest rates, recovery, reduction in electricity rates, and so on.

These are some of the benefits to a manufacturing unit in India. It is an opportune time for people to explore the possibilities of manufacturing and expanding their bases.


Akshay Chandra

Akshay Chandra

GGI member firm
SKC World
Advisory, Auditing & Accounting, Tax
New Delhi, India
T: +91 11 41324 619
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SKC World is a boutique consulting firm on a mission to create an era of conscious entrepreneurship and helping businesses achieve success and scale, joyfully. Akshya Chandra is a Partner – Business Excellence with SKC World.

Akshay Chandra has over 16 years’ experience in the field of finance and business strategy and specialises in relationship management, financial management, and policy formulation.
Chaitanya Kumar

Chaitanya Kumar

GGI member firm
SKC World
Advisory, Auditing & Accounting, Tax
New Delhi, India
T: +91 11 41324 619
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W: skc.world

Chaitanya Kumar is a Partner – People Excellence with SKC World. He is a business coach who has extensive experience in areas of corporate tax, audits, process restructuring, due diligence, and business restructuring.


Published: Business Development & Marketing, No. 10, Autumn 2020 l Photo: Konstantin Kulikov - stock.adobe.com

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