Introduction:
India is no longer just a large consumer market and is rapidly becoming the next major export production hub in the world. Global companies, from electronics to textiles, not only turn to India to meet domestic demand, but also to export to the US, Europe and beyond.
Thanks to a combination of favorable policies, competitive costs and legal reforms, India is now a strong alternative to China under the China+1 strategy. However, in order to successfully produce for export in India, foreign investors need to understand the compliance framework, take advantage of available incentives and long-term financial plans for sustainability.
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Compliance with regulations for foreign manufacturers
Foreign entities may produce in India through:
- Wholly Owned Subsidiary (WOS)
- Joint Venture (JV) with an Indian partner
- Contract Manufacturing under FDI Automatic Route
The main compliance areas are:
- FDI Reporting under FEMA (Form FC-GPR)
- GST Registration and monthly filings
- Labour laws including PF, ESI, and factory regulations
- Environmental clearances for specific industries
- Import-Export Code (IEC) from DGFT for export operations
Tip: The Single Window Clearing System introduced by Invest India now simplifies multiple regulatory touchpoints in all states.
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Incentives for export-oriented production
India offers lucrative incentives at both central and state level:
Central Schemes:
Production Linked Incentive (PLI) Scheme: Up to 6% cash incentives for incremental production in sectors such as electronics, pharma, white goods, textiles and food processing.
SEZ (special economic zones): Tax-free imports, exemption from 100% income tax on export earnings during the first five years.
RoDTEP Scheme: Repayment of duties/taxes on export products not covered by GST.
State-level incentives (differences by sector/location):
- Capital subsidy on plant & machinery
- Land at concession rates or leasing
- Exemption from stamp duties
- Power tariff subsidy
- SGST reimbursement
What? Example: Tamil Nadu’s Industrial Policy 2025 provides 50% land subsidy and 25% capital investment subsidy for export oriented units in EV production.
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Cost advantage of production in India
Lower input and labor costs in India give it a significant advantage:
Labor costs: 30/50% lower than China in key sectors
Real estate: Affordable industrial parks and publicly rented land
Resources: Subsidized electricity in production zones
Moreover, India’s growing logistics and port infrastructure, including freight corridors, multimodal parks and digitized customs, makes export activities more flexible and cheaper.
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India’s strategic global position
With free trade agreements (FTAs) expanding and closer links with the EU, the UAE and Australia, India offers tariff advantages for export units established here. Moreover, India’s geopolitical neutrality and democratic stability ensure a safer long-term investment environment.
Conclusion:
India is not only open to business; it is ready for global production. With a clear export policy, PLI supported incentives and talent, now is the time to make your India export strategy a reality.
At Instant Advise, we help foreign manufacturers navigate setup, compliance, and government regulations in India. From the establishment of the company to the factory location selection. We’re your on-ground partner.
What? Are you thinking about the production in India for export? Let’s discuss how we can help you go live.
Contact us:
Email: info@instantadvise.com
Phone: + 91 1149000100
