FACTORY SET UP IN INDIA- Things to be kept in mind

 FACTORY SET UP IN INDIA


Since the year 1992, India has been focusing on its service industry and agriculture and achieved tremendous growth in service sector in areas of IT and ITes, Pharmaceuticals, space research and defense.

 

Now, India has started focusing on developing its manufacturing sector and government of India has launched various schemes to attract foreign companies for Factory set up in India.

 

There are many advantages of setting up manufacturing unit in India like huge consumer market, cheaper cost of production, high skilled labor, friendly government policies and incentives and shorter lead times for customers. 

 

Following factors should be kept into consideration before looking to set up a factory in India by any foreign company:

 

1)      Type of Entity

 

Firstly, it is important to decide upon what type of entity to be set up in India for doing manufacturing of goods. There are many options for foreign company registration in India like branch office, private limited company, public limited company and Limited liability partnership.

 

Out of all the above, private limited company and public limited company are most preferable since it provides lesser rate of taxation as compared to other forms of entities.

 

Further, foreign company can incorporate a wholly owned subsidiary wherein foreign company will hold majority shares of Indian private or public limited companies.

 

Infect, subsidiary company registration in India is one of the most popular and preferable mode of entity registration by foreign companies since it offers many advantages.

 

 

2)      Detailed Project Report (DPR) and feasibility study

 

Second step is to prepare a detailed project report or conduct feasibility study to determine the financial, legal and technical feasibility of the project. It would be a comprehensive study or report containing all the major facts relating to the project like cost of project, availability of raw material and manpower, marketing, amount of investment, land and building, factory, financial projections, target customers and market, employees etc.

 

3)      Land Acquisition and location

 

Third step is to determine where to acquire the land, which industrial area or commercial areas are preferable, what are the government policies and incentives etc.

 

 

4)      Getting necessary approvals and licenses

 

There are lots of licenses and approvals required for setting up factory in India. On an average, around 40 to 50 licenses are required for setting up factory in India. It may increase or decrease depending upon the nature and type of manufacturing. Therefore, it is advisable to hire an expert consultant who may assist in getting all the approvals and licenses. Further, the licenses and approvals are required both before the construction of factory building, during the construction as well as after the construction of factory building.

 

5)      Construction of factory

 

Next step is construction of factory building. It again requires expertise and experience of an Indian consultancy firm which may assist in entire construction process including finalization of architect, civil structural engineers, contractors, purchase of materials and entire project management.

 

 

6)      Acquisition of plant and machinery

 

Once factory building is constructed, next step is acquisition of plant and machinery. Machinery may be imported from abroad or it may also be procured locally.

 

 

7)      Production and trial run

 

Last step is the production and trial run.

 

 

Conclusion

 

Factory set up in India is a challenging task and requires expert guidance all the time right from inception till the very end. It includes all the steps as mentioned above.

Foreign Company Registration in India

 

At EzyBiz India, we may provide complete handholding at each stage right from entity registration to DPR to land acquisition to factory construction to getting all approvals and licenses to final production and trial run.

Location: Taiwan

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