Sector brief 03 of 08
Manufacturing & Engineering
Most manufacturing takes 100% FDI without prior approval. Central schemes were enlarged in 2026 and the land-border rule was eased for priority supply chains, but several windows have closed, so check scheme status and file before committing capital.
In this brief
Everything in this sector brief
11 pages, from the market case to the set-up roadmap and every incentive with its status.
Manufacturing and engineering
Most manufacturing takes 100% FDI without prior approval. Central schemes were enlarged in 2026 and the land-border rule was eased for priority supply chains, but several windows have closed, so check scheme status and file before committing capital.
ReadRecent foreign investments in manufacturing
Foreign partners are behind recent chip, component and defence projects: Foxconn–HCL at Jewar, Clas-SiC at Bhubaneswar, APACT in Andhra Pradesh, the third ECMS tranche and the Safran–BEL joint venture.
ReadFDI rules for manufacturing
Most manufacturing needs no Government approval for foreign investment. Defence, and investors with ownership from a country sharing a land border with India, are the main exceptions.
ReadRegulators and registrations for a plant
Most factory approvals are issued by state bodies through state single-window portals. Central industrial filings run through the National Single Window System (NSWS). Timelines vary by state and project category.
ReadCentral incentives for manufacturers
Central support is largest for electronics, chips and critical inputs. Terms are summarised; the notified scheme guidelines govern eligibility and payment. Several windows have closed and several Budget 2026-27 schemes await guidelines.
ReadState incentives for manufacturers
States compete with capital subsidies, SGST refunds and stamp duty waivers. States set incentive amounts by zone and project size; confirm current terms with the state agency before committing.
ReadTax, customs and zones for manufacturers
Bonded manufacturing and new electronics exemptions cut tax and duty costs. A foreign-owned company can pay 25.168%; a branch pays 36.40 to 38.22%. The 15% regime for new manufacturers is closed to new entrants.
ReadSet-up roadmap for manufacturers
From entry decision to commercial production in ten steps. Sequence matters: central and state incentives depend on when investment starts and when applications are filed, so scheme applications come before capital is committed.
ReadWhat to watch in manufacturing
Ownership tests, scheme milestones and dates drive most compliance risk for foreign manufacturers. These are the watch-outs the sources flag, with the rule behind each and where it is explained in more detail.
ReadRecent changes for manufacturers
What changed since 2025 for foreign manufacturers in India, in date order: GST rate reform, the Labour Codes, Budget 2026-27, the land-border easing under Press Note 2, Semicon 2.0 and the 2026 electronics tax exemptions.
ReadSources for the manufacturing guide
The full reference list behind the manufacturing and engineering pages, grouped by subject. Secondary sources are marked. Figures are quoted from these sources and have not been independently audited.
ReadUpdates
Recent changes
- low impact
- high impact
- medium impact
- high impact
- medium impact
Planning your move into India?
Talk to IMC about your entry structure, approvals, incentives, tax and the first year of compliance.