1、Inside IndiasManufacturing Revolution:Strategies and Insights for Business Success Understanding Indias Manufacturing LandscapeNavigating Market Entry and Expansion StrategiesFuturistic Industries,Sustainability,and the Manufacturing SectorPg 04Pg 12Pg 18Issue 58 March 2024|www.india-From Dezan Shir

2、a&Associates India Briefing Issue 58 March 20242IntroductionCreditsPublisher-Asia Briefing Media Ltd.Lead Editor-Melissa CyrillContributors-Naina Bhardwaj,Archana Rao,Umair Haque,Koushan DasDesigners-Aparajita Zadoo,Miguel Enrico AncianoIndia is emerging as an important manufacturing destination in

3、Asia due to several factors.It boasts a large,cost-effective labor force and a massive domestic market of over 1.4 billion people.Its strategic location facilitates access to both domestic and international markets.Government initiatives like the Production-Linked Incentive Schemes aim to attract in

4、vestment and simplify regulatory processes.In the realm of infrastructure,there has been massive spending led by the government and public sector undertakings.Policymakers prioritize renewable energy and frontier industries like IoT and semiconductor manufacturing,besides aligning with global sustai

5、nability goals.Negotiations for trade agreements aim to bolster Indias access to global markets and promote domestic exports.In this edition of India Briefing Magazine,we explore Indias evolving manufacturing landscape,spotlighting key initiatives and investor challenges.We offer insights into marke

6、t entry strategies for foreign stakeholders and expansion avenues for domestic players seeking foreign capital and technology integration.Additionally,we delve into Indias futuristic industries while emphasizing sustainability objectives.Dezan Shira&Associates,with its extensive experience and local

7、 expertise across India,stands ready to assist enterprises in navigating the dynamic Indian market.For inquiries,contact us at .Indias manufacturing prowess is on the rise,offering abundant opportunities for those poised to seize them.ROHIT KAPURManaging DirectorDezan Shira&AssociatesNew Delhi Offic

8、eWith kind regards,Rohit Kwww.india-www.vietnam-www.china- India Briefing Issue 58 March 20243Asia Briefing Ltd.Unit 507,5/F,Chinachem Golden Plaza,77 Mody Road,Tsim Sha Tsui East Kowloon,Hong Kong.Annual SubscriptionIndia Briefing Magazine is published four times a year.To subscribe,please visit pl

9、ease explore the clickable resources below.Inside Indias Manufacturing Revolution:Strategies and Insights for Business Success ContentsUnderstanding Indias Manufacturing LandscapePg 04Navigating Market Entry and Expansion StrategiesPg 12Futuristic Industries,Sustainability,and the Manufacturing Sect

10、orPg 18ReferenceIndia Briefing and related titles are produced by Asia Briefing Ltd.,a wholly owned subsidiary of Dezan Shira Group.Content is provided by Dezan Shira&Associates.No liability may be accepted for any of the contents of this publication.Readers are strongly advised to seek professional

11、 advice when actively looking to implement suggestions made within this publication.For queries regarding the content of this magazine,please contact:All materials and contents 2024 Asia Briefing Ltd.Like India Briefing on FacebookFollow India Briefing on TwitterConnect with Dezan Shira&Associates o

12、n LinkedinView Dezan Shira&Associates on Youtube Follow UsScan the QR code to follow us on WeChat and gain access to the latest investor news and resourcesConnect with us for the latest news,events and insights across Asia.Legal,Tax,Accounting Newswww.india- and W S Advisory and C India Briefing Iss

13、ue 58 March 20244Understanding Indias Manufacturing LandscapeIndias ascent as a premier manufacturing hub for global firms is fueled by several key factors.Its expansive developing economy,coupled with strategic logistics and maritime capabilities,alongside a substantial consumer base,form the bedro

14、ck of its appeal.Investments in both physical and digital infrastructure,complemented by landmark tax reforms,have nurtured a conducive business environment.The governments pro-business policies further amplify Indias attractiveness.Moreover,abundant natural resources and a youthful workforce provid

15、e fertile ground for sustainable growth and innovation.Emphasizing high rates of technology adoption and a commitment to sustainability,Indias readiness for modern manufacturing solidifies its status as a sought-after destination for global firms looking to expand operations.India is strategically p

16、ositioning itself to become a global manufacturing hub to meet domestic growth objectives,achieve export targets,and fulfill geopolitical aspirations.Chapter 1State of the economy and manufacturing ambitionsIndia is projected to be the fastest-growing major economy over the next three years,particul

17、arly as credit rating agencies observe a slowdown in China.India hopes to become the third-largest economy in the world with a GDP of US$5 trillion in the next three years and touch US$7 trillion by 2030 on the back of continued reforms.Ten years ago,India was the 10th largest economy in the world,w

18、ith a GDP of US$1.9 trillion at current market prices.Today,it is the 5th largest with a GDP of US$3.7 trillion(estimate FY24).The Indian economy is now entering a pivotal phase on the S-curve,characterized by rapid urbanization,industrialization,rising household incomes,and increased energy consump

19、tion.This phase,spanning several decades,typically witnesses accelerated growth in these domains.Melissa CyrillDeputy Managing EditorAsia Briefing India Briefing Issue 58 March 20245Indias manufacturing sector currently accounts for around 17 percent of the countrys GDP.The sector is experiencing a

20、surge in investments,positioning the country as a strong emerging player in global supply chains.The mobile phone industry is a standout example and could provide a template for how industrial policies can attract foreign investments and lead to optimal production outcomes.In fact,policymakers in In

21、dia want it to become the new-age factory of the world and aim to raise manufacturing to 25 percent of the GDP by 2025.There is a sense of urgency as wellwith such a large workforce and a median age of around 28,India needs to create jobs at a faster pace which cannot be met by the services sector a

22、lone.Manufacturing sector performanceIn the first quarter of FY 2024(April-June 2023),the manufacturing gross value added(GVA)reached an estimated US$110.48 billion.By January 2024,Indias manufacturing activity measured on the PMI Index recorded 56.5,the highest in four months,driven by increased ex

23、port orders.Projections for real GDP growth for FY 2023-24 stand at 7.3 percent,with manufacturing GVA growth forecasted to accelerate to 6.5 percent from a modest 1.3 percent the previous year.Additionally,mining GVA is expected to rise by 8.1 percent,up from 4.6 percent in 2022-23,while constructi

24、on GVA growth is anticipated to remain robust at 10.7 percent,building upon the 10 percent increase observed in 2022-23.Regional spread of manufacturing capacityProjections from Colliers indicate that by 2025-26,the manufacturing market in India could reach an impressive US$1 trillion milestone,with

25、 Gujarat emerging as a key manufacturing hub,closely followed by Maharashtra and Tamil Nadu.These regions boast conducive environments for industrial investments,driven by factors such as labor availability,robust infrastructure,and government support.Notable investments from giants like Toyota,Coca

26、-Cola,and Micron Technology underscore Gujarats emerging appeal as a manufacturing destination.Maharashtra,with its high FDI inflow and well-established and conducive business environment,closely trails Gujarat,while Tamil Nadus skilled workforce,strong traditional industries,and vibrant ODM/OEM eco

27、system contribute to its strong position in the Indian manufacturing landscape.The automotive,electronics,and textiles sectors are leading Indias manufacturing growth trajectory,attracting significant foreign investments and witnessing increased merger and acquisition activities.These three states s

28、tand out in terms of their performance in these sectors alongside other heavyweights like Karnataka,Haryana,and Telangana.HOW WE HELP COMPANIES SUCCEED WITHIN THE MANUFACTURING SECTORDezan Shira&Associates has helped a wide array of foreign and domestic businesses successfully establish and optimize

29、 manufacturing operations in India.At the pre-investment phase,the firm can help evaluate individual markets,identify locations for establishment,and structure supply chains.We can also help maximize profitability and maintain statutory compliance once operational.EXPLORE MORE India Briefing Issue 5

30、8 March 20246Comparative Insights into Indias CompetitivenessLanded cost competitiveness(%)00IndiaUKMexicoItalyGermanyBrazilVietnamThailandChinaPoland9999943136141FactorsIndiaBrazilChinaVietnamWorkforce(Millions)52410878232Water(US$/mtr3)17305865Power(US$/KWh)0.110.1

31、70.150.09Global Innovation Index40571148Logistics Performance Index38511943Benchmarked to India;China cost includes tariff war with USA|Source:BGC Analysis*Landed cost includes tariffs,logistics,labor(productivity adjusted),machinery,electricity,fuelCost of labor in India is less than competing mark

32、ets in Eastern Europe and comparable to ASEANRecent push towards finalizing trade deals offers opportunity to position India as a global manufacturing&export hubSource:IEA,OECD India Briefing Issue 58 March 20247Global Supply Chain DiversificationManufacturing wages(monthly base salary in US$)Key An

33、nouncements by Global Companies to Invest in IndiaCompaniesInvestment/(US$Bn)Time periodSamsung,Foxconn,Lava,Wistron,Pegatron5.6FY 2021-26Siemens Healthcare,Integris Healthcare,Poly Medicure0.5FY 2021-28Nokia,Ciena,Flextronics1.7FY 2022-26Nestle,Hindustan Unilever Ltd,1.5FY 2022-27Daikin Group,Panas

34、onic0.9FY 2022-26Source:JETRO0WorkerEngineerManager200400600800016001800ThailandMalaysiaPhilippinesIndonesiaChinaVietnamIndiaFurthermore,emerging sectors such as semiconductors,agri-tech,and waste management demonstrate promising potential,fueled by advancements in technology and sustaina

35、ble practices.Supportive policies and government initiatives A policy and spending focus on enhancing infrastructure and logistics connectivity,coupled with efforts to streamline bureaucracy,has led to several global multinational corporations(MNCs)redirecting their investments to India.The country

36、is also increasingly being chosen as a key production and assembly base in Asia due to geopolitical factors.“Make in India”,“Atmanirbhar Bharat”(Self-Reliant India),the Production-Linked Incentive(PLI)schemes,the FAME Scheme,the Bharatmala Pariyojana Project to boost highway connectivity India Brief

37、ing Issue 58 March 20248among the countrys major districts,the proposed DESH Bill to reform the special economic zones model,and the National Logistics Policy are among a handful of government initiatives that are playing a pivotal role in bolstering domestic manufacturing and attracting foreign inv

38、estment.Alongside an emphasis on sector-based manufacturing and policies geared towards the creation of local supply chains,the government has prioritized major infrastructure spending.Improving connectivity between industrial hubs,transport corridors and ports,and markets will accelerate the pace o

39、f manufacturing expansion in the country within the coming 10 years.By 2047,India wishes to become a developed country.Scaling up the countrys manufacturing capacity alongside modernization and research and development will serve as necessary growth drivers.Further,Indias ease of doing business refo

40、rms have centered around streamlining and digitizing regulatory compliance processes throughout the entire business lifecycle,spanning from incorporation to the cessation of operations.For example,in the Union Budget for 2023-24,the government declared a reduction in over 39,000 compliances and the

41、decriminalization of more than 3,400 legal provisions.Indias improving logisticsIn terms of logistics,India has moved up six places to reach the 38th rank out of 139 countries on the Logistics Performance Index.The LPI index measures countries on six aspects of logistics performance,including infras

42、tructure quality,customs efficiency,logistics services quality,international shipment arrangements,on-time delivery frequency,and shipment tracking.Logistics is integral to the growth of the manufacturing sector and any improvements in the countrys logistics ecosystem has business positive outcomesr

43、anging from operational efficiency to expanding supplier networks to boosting last-mile-reach to meet demand.The Bharatmala Pariyojna projectThe Bharatmala Pariyojna is a comprehensive infrastructure project aimed at connecting 550 District Headquarters with a minimum 4-lane highway,increasing the n

44、umber of corridors in India to 50 and moving 80 percent of freight traffic to National Highways.This initiative involves the development of logistics parks,inter-corridors,feeder routes,and waterway ports,along with the construction of tunnels,bridges,flyovers,and interchanges to ensure optimized co

45、nnectivity.Funded by the central government,Bharatmala integrates various existing highway projects,including the National Highways Development Project(NHDP).With an estimated investment of INR 10.63 trillion(approx.US$128.04 billion),it prioritizes connecting remote areas and satellite cities of ma

46、jor urban centers.The project spans across states like Maharashtra,Gujarat,Rajasthan,and extends to the Himalayan territories and border regions,with a focus on rural and tribal areas.Additionally,Bharatmala aligns with other government schemes like Sagarmala(for maritime and port infrastructure dev

47、elopment),Dedicated Freight Corridors,and Make in India,serving as both an enabler and beneficiary of national development initiatives.India Briefing Issue 58 March 20249Consequently,India seeks to reduce its logistics costs from 16 percent of the GDP to a global average of 8 percent by 2030.Per som

48、e estimates,the worth of the Indian logistics market will be around US$215 billion in the next two years.The Production Linked Incentive SchemesThe Production-Linked Incentive(PLI)Schemes are a strategic initiative by the Government of India,aimed at fostering domestic manufacturing as a catalyst fo

49、r Indias economic growth and employment generation.The PLI Schemes involve significant financial allocations,with a total outlay of INR 1.97 trillion(over US$23 billion)for 14 key sectors.All sectors approved under the PLI Schemes adhere to a broad framework centered around new and emerging technolo

50、gies.Capacity development in these areas offer India the opportunity to leapfrog and achieve substantial economic gains while also harnessing their export potential.The core objectives of the PLI Schemes are to improve efficiency,foster economies of scale within the manufacturing sector,and position

51、 Indian manufacturers as globally competitive,thereby facilitating their integration into global value chains.Under the PLI Schemes,financial incentives of 4-6 percent are disbursed over a specified period on incremental sales of products manufactured domestically.Incentives are not guaranteed and a

52、re released based on annual performance and meeting stipulated criteria in the respective Scheme Guidelines.Eligible enterprises must hit their yearly targets to receive the incentive payout for the schemes operational period,which ranges from 4-6 years after the base year.The PLI Schemes thus allow

53、 a gestation period for applicants to begin commercial production.Official data released on January 17,2024,showed that the PLI schemes saw over INR 1.03 trillion(approx.US$12.40 billion)worth of investment till November 2023.This investment in turn resulted in production/sales worth INR 8.61 trilli

54、on(approx.US$103.72 billion)(US$1=INR 83.01).Besides,more than 678,000 jobs(both direct and indirect)have been created in the process.Key sectors Compared to Chinas mature manufacturing capacities,India has only recently set the ball rolling.Vendors of large American,European,and Asian companies are

55、 gradually building up their presence in India,with automotive,electronics,and footwear manufacturing being just few examples.Indias automotive sector is a cornerstone of the nations manufacturing prowess and has garnered significant attention from global giants like Toyota,Kia,Tesla,and Ford,signal

56、ing their intentions to either establish,expand,or re-enter manufacturing operations within the country.Likewise,the electronics manufacturing industry has experienced a surge in investments,particularly in the smartphone production segment.Notably,major players such as Apples contract manufacturers

57、 have set up assembly units in India,signaling a shift towards localized production strategies.Furthermore,the textiles and garment manufacturing sectors have witnessed increased investment activities,with several global brands reassessing their sourcing strategies and investing in Indian textile un

58、its to leverage the countrys competitive advantages in this domain.In line with fostering industrial growth,the Government of Indias Ministry of Heavy Industries India Briefing Issue 58 March 202410Investing in PLI Target Sectors:Major States and Union Territories Offering Industrial Setupand Public

59、 Enterprises introduced SAMARTH Udyog Bharat 4.0 in 2021.This strategic initiative aims to bolster the competitiveness of the manufacturing sector,primarily focusing on the capital goods domain.Moreover,the central government remains steadfast in promoting comprehensive national development by prior

60、itizing the development of industrial corridors and smart cities,that feed into investment opportunities and capital requirements in the construction and allied industries.Per investment management company Colliers,upcoming planned industrial corridors are creating a conducive environment for indust

61、rial growth,potentially generating employment opportunities for over 27 million workers.Challenges and opportunities in the manufacturing sector in IndiaAs foreign manufacturers and investors consider entering the Indian market,they will have to navigate diverse challenges and opportunities inherent

62、 in the countrys manufacturing landscape.Mobile manufacturing and specified electronic componentsManufacturing of medical devicesCritical key starting materials(KSM)/drug intermediaries(DI)and active pharmaceutical ingredients(API)White goods(ACs and LEDs)LED manufacturingAC manufacturingTelecom and

63、 networking productsElectronic/technology productsPharmaceuticalsFood productsSolar PV modulesAdvanced chemistry cell(ACC)batteryTextile productsAutomobiles and auto componentsAutomobilesAuto componentsSpecialty steelUttar PradeshNew DelhiUttarakhandWest BengalJharkhandBiharHimachal PradeshMadhya Pr

64、adeshAndhra PradeshOdishaTelanganaChhattisgarhTamil NaduKarnatakaMaharashtraDadraGoaGujaratHaryanaPunjabRajasthanPuducherry India Briefing Issue 58 March 202411Planned Industrial and Freight Corridors and Port ConnectivityUnderstanding Indias regulatory environment and its nuances across different s

65、tates is paramount.Tapping into national industrial programs,including incentives for sunrise industries,can lower costs.Investing in complementary sectors may additionally be necessary to optimize operations and introduce management efficiencies.Indias technology sector present opportunities for in

66、novative and hyperlocal solutions.Recognizing Indias infrastructure deficits,particularly in port capacity,underscores the need for strategic investments in transportation and logistics infrastructure.Exploring partnerships with local entities and subscribing to government schemes can facilitate smo

67、other entry into the market.Moreover,aligning investment strategies with Indias burgeoning sectors,such as mobile phones,renewable energy,and advanced manufacturing,can position foreign manufacturers and investors for long-term success.Ultimately,navigating Indias dynamic business landscape requires

68、 patience,strategic planning,and a willingness to adapt to local market dynamics.By leveraging opportunities and addressing challenges proactively,foreign firms can unlock the vast potential of Indias manufacturing sector.New DelhiNagpurWarangalKolkataVisakhapatnamChennaiDadriSahnewalBhusawalItarsiK

69、haragpurVijayawadaRajkharswanAndalDankuniSonnagarBengaluruKochiMumbaiHyderabadMajor portsFreight corridorsIndustrial corridorsKandlaNew MangaloreTuticorinEnnoreParadipKolkata-HaldiyaPort BlairMormugaoJNPTAmritsarAmritsar-Kolkata Industrial Corridor(DMIC)Delhi-Mumbai Industrial Corridor(DMIC)Chennai-

70、Bengaluru Industrial Corridor(CBIC)Vizag-Chennai Industrial Corridor(VCIC)East Coast Economic Coridor(ECEC)Hyderabad-Nagpur Industrial Corridor(HNIC)Hyderabad-Warangal Industrial Corridor(HWIC)Hyderabad-Benaluru Industrial Corridor(HBIC)Bengaluru-Mumbai Industrial Corridor(BMIC)Extension of CBIC to

71、Kochi via CoimbatoreDelhi-Nagpur Industrial Corridor(DNIC)North South DFC-Vijayawada to ItarsiWDFC-Dadri-JNPTEDFC-Sahnewal-Sonnagar-DankuniEast Coast DFC-Vijayawada to KharagpurEast West DFC-Bhusawal-Nagpur-Rajkharswan-Dankuni Bhusawal-Nagpur-Rajkharswan-Andal India Briefing Issue 58 March 202412Nav

72、igating Market Entry and Expansion StrategiesAs Indias domestic manufacturing sector experiences robust growth on the back of millions of MSMEs,reaching the next level of growth,accessing global export markets,and achieving sustainable success will require greater expertise,technology,and capital in

73、vestments.Chapter 2Indias emergence as a significant economic player presents attractive prospects for foreign investors and businesses alike.The country has distinctive attributes,including a dynamic policy environment,large and differentiated consumer markets,and a robust digital infrastructure.By

74、 2031,India is projected to drive one-fifth of global economic growth.This will be underpinned by the convergence of several key trends,including global offshoring capabilities,digital innovation,and a shift towards cleaner energy sources.Indias favorable demographic profilereflected in its large wo

75、rkforce and customer marketas well as its consistent growth trajectory makes it a relatively safe bet as a manufacturing investment destination.Market entry strategies for foreign manufacturersDespite the scale of the India opportunity,foreign manufacturing firms may find specific Indian states to b

76、e more advantageous,with a strong presence of allied sectors,business incentives,subsidies,robust infrastructure,and essential utilities.Foreign companies must meticulously evaluate factors such as the ease of doing business,implementation of government policies,economic conditions,pricing,labor ava

77、ilability,regulatory environment,supply chain efficiency,proximity to transport nodes,and raw material accessibility before establishing their enterprise.Naina BhardwajAssistant ManagerInternational Business AdvisoryContributorMelissa CyrillDeputy Managing EditorAsia BriefingAuthorGAIN THE INTELLIGE

78、NCE NEEDED TO MAKE INFORMED DECISIONS FOR YOUR ASIA BUSINESSScale and avoid disruptions to your Asia business with well-timed and informed moves,via our country benchmarking,location selection,and supply chain and partner matching services.For support in the India market,feel free to contact our pro

79、fessionals at .EXPLORE MORE India Briefing Issue 58 March 202413Indias FDI Regulatory LandscapeProposal submission and document uploading on foreign investment facilitation portal.All proposals shared with Ministry of External Affairs(MEA)and Department of Revenue(DoR).Case assigned to relevant mini

80、stry by Department for Promotion of Industry and Internal Trade(DPIIT)within two working days.Proposal scrutinized and communication for additional information/clarification,if required,is done within one week.Proposal shared online with the Reserve Bank of India(RBI)for review from Foreign Exchange

81、 Management Act(FEMA)perspective within two days.Competent authority gives its decision in next two weeks.FDI approval process162534100%automatic routeUp to 100%automatic routeUp to 100%government and automatic routeUp to 100%under government routeAgriculture,automotive,biotechnology(greenfield),bro

82、adcast content services,chemicals,education,ecommerce activities,construction of hospitals,food processing,healthcare(greenfield),IT/BPM,among others.Infrastructure company in the securities market,Insurance,medical devices,pension,petroleum refining(by PSUs),power exchangesBanking(private sector),b

83、iotechnology(brownfield),defense,healthcare(brownfield),pharmaceuticals(brownfield),private security agencies,telecom services.Banking(public sector),food products retail trading,core investment company,investment by foreign airlines,multi-brand retail trading,satellite,among others.Expansion strate

84、gies for Indian manufacturersIn the rapidly evolving landscape of the manufacturing industry,Indian players,including ODM(original design manufacturer)/OEM(original equipment manufacturer)entities,find themselves at a pivotal moment ripe with opportunities for expansion.As companies worldwide conten

85、d with increasing supply chain risks and are keen to distribute their supplier networks across a wider geography,Indian manufacturing players stand much to gain.With the right strategies in place,they can not only solidify their market presence but also thrive in an increasingly competitive global e

86、conomy.Market diversification:One of the key strategies for expansion involves diversifying into new markets.This entails exploring untapped regions within India and venturing into international territories where demand for their products exists.By conducting thorough market research and understandi

87、ng consumer preferences and regulatory landscapes,manufacturers can identify emerging opportunities and mitigate risks associated with overreliance on a single market.India Briefing Issue 58 March 202414Indian CompanyLimited Liability Partnership(LLP)JointVentureWholly OwnedSubsidiaryLLPModes of Inc

88、orporation Available to a Foreign Investor to Set Up Business in IndiaJV/Wholly Owned Subsidiary as(i)Private Limited or(ii)Public Limited Company,subject to Companies Act,2013Subject to provisions of LLP Act,2008FDI permitted under automactic route for LLPs operating in sectors/activities where 100

89、%FDI is allowed through the automatic route and there are no FDI linked performance conditionsFor carrying out manufacturing/services and other related business operationsOREssential Processes and Compliances for Setting Up a Business in IndiaSetting up legal existenceRegistering and starting a unit

90、Pre-commissioning phase Post-commissioning phase Obtain Digital Signature Certificate(DSC)for proposed Directors Obtain Director Identification Number(DIN)for the Directors Approval for proposed Company/LLP Name Finalization of supporting documents Filing of e-forms with CRC Verification of document

91、s Consent to establish&operate Obtain Permanent Account Number(PAN)Registration for Tax Account Number(TAN)Registration of GST Registering/categorization of unit in State Approval for State Incentives(Optional)IEM/EM Registration MSME Registration Acquisition of Land Environment,Forest and Wildlife

92、Clearance Permission for Land Use Pollution Board Industrial License Consent to Establish Factory Layout Plan Approval Registration of Boilers Building Plan Approval Registration under Contract Labor Act 1970 Registration under BOCW Act Power for construction Provisional Fire Approval Approval for l

93、ifts and Escalator Environment,Forest and Wildlife Clearance Permission for Land Use Pollution Board Consent to operate Building Completion certificate Final Fire Approval Water Connection Power Authorization for hazardous waste Professional Tax Registration Central Excise Registration Shops&Establi

94、shment Act Employee Registration with ESIC Employer Registration with EPFO Trademark/Brand Registration Importer Exporter Code(IEC)Customs-Special Valuation Branch Grant for Bureau of Indian Standards(BIS)License Quality Marking Certificate India Briefing Issue 58 March 202415 Strategic partnerships

95、 and collaboration:Collaborating with other businesses,suppliers,distributors,or even competitors can unlock synergies and create mutually beneficial opportunities.Whether through joint ventures,licensing agreements,or strategic alliances,manufacturers can leverage partnerships to broaden their reac

96、h,access new technologies,and penetrate new customer segments.Adoption of digital technologies:The advent of Industry 4.0 has revolutionized the manufacturing landscape,presenting manufacturers with opportunities to embrace digital technologies,such as IoT,AI,data analytics,and automation.By digitiz

97、ing their operations,streamlining workflows,and responding swiftly to market demands,manufacturers can enhance operational efficiency,improve product quality,and gain a competitive edge in the market.Technology transfer and IP:Indian firms and foreign stakeholders stand to mutually benefit by facili

98、tating access to cutting-edge technologies and intellectual property.While one party may possess strengths in IP,the other might offer capital and market familiarity,or vice versa a trend increasingly observed in Indias rapidly expanding startup sector.Properly negotiated JVs,licensing agreements,an

99、d partnerships between domestic and foreign companies will foster the acquisition of new knowledge,skills,and technologies,thereby enhancing productivity and competitiveness.Moreover,such collaboration can broaden the Indian entitys exposure to the global capital market while refining its business m

100、odel to become more sophisticated.Embracing sustainability in operations:Sustainability has emerged as a key driver of consumer preferences and regulatory policies globally.Indian manufacturers can distinguish themselves by embracing environmentally friendly practices across their value chain,from s

101、ourcing raw materials to product packaging.By adopting energy-efficient technologies,recycling waste materials,and minimizing carbon emissions,manufacturers can enhance their brand reputation,attract environmentally conscious consumers,and comply with evolving regulatory standards.At present,several

102、 countries,including Germany,France,the UK,and the Netherlands,Spain,Colombia,Uruguay,Chile,among others,have a carbon tax mechanism in place.Moreover,the European Union(EU)has issued several policies to ensure sustainable trading activities within the European market,including the EU Action Plan fo

103、r the Circular Economy,the EU Biodiversity Strategy for 2030,and the Carbon Border Adjustment Mechanism(CBAM).Foreign firms with India suppliers or Indian companies selling to foreign markets,such as the EU,will need to meet their environment,social,and governance(ESG)standards.Enhancing supply chai

104、n efficiency:A robust and efficient supply chain is indispensable for meeting customer expectations,reducing costs,and maintaining a competitive edge.Manufacturers can optimize their supply chain network by identifying bottlenecks,streamlining processes,and leveraging digital solutions such as suppl

105、y chain analytics and real-time tracking.By enhancing supply chain efficiency,manufacturers can improve inventory management,reduce lead times,and ensure seamless coordination with suppliers and distributors.India Briefing Issue 58 March 202416Regulatory and legal considerations for manufacturing op

106、erationsDeciding where to go in India carries as much weight as the decision to enter the country itself.Certain states offer more conducive environments for investors and investments,while others have emerged as focal points for specific industries,such as Tamil Nadus prominence in the electronics

107、and automobile sectors.Its crucial to evaluate whether the chosen location presents any distinct risks or advantages.Further,if the manufacturing operation is in a polluting industry,the investor will need to secure various environmental clearances.Key legal considerations before investing in Indias

108、 manufacturing sector include the following:Location selection:Choosing a location based on various criteria such as business-friendly policies,incentives,infrastructure,availability of skilled labor,proximity to ports and markets,etc.,is crucial.Most Indian states offer incentives like land discoun

109、ts or parcels in industrial parks,stamp duty rebates,tax breaks,and single window clearance.However,the approval process varies across states due to differences in systems of bureaucracy and documentation compliance.Land acquisition:Clear title and access to land free from mortgage and litigation is

110、 critical.Industrial parks and SEZs offer ready-to-use land,but private land acquisition requires conversion to industrial use,which involves compliance with local laws.It is advisable to lease or buy land in industrial parks.Due diligence:Conducting thorough due diligence is essential whether scopi

111、ng potential suppliers,partners for business matchmaking,or starting a joint venture.Proper documentation,compliance with regulations,and no pending legal actions are important to ensure.Environmental compliance:If the factory intends to use hazardous substances,or its output is polluting,additional

112、 documentation and approvals will be necessary,potentially lengthening the registration process.Compliance with Factories Act:Understanding and adhering to the Factories Act,1948,which applies to manufacturing units with specific worker thresholds,is mandatory.Obtaining factory licenses and pre-cons

113、truction approvals are part of the compliance process.Employee regulations:Compliance with labor laws and regulations regarding the hiring of skilled,semi-skilled,or unskilled labor is necessary.Employers must procure registrations and licenses based on the number of employees and their occupational

114、 classification.Importing equipment:Clearances from customs authorities are required for importing technology or equipment.Proper agreements related to financing and importation need to be in place.Ongoing compliances:After construction and equipment installation,ongoing compliance with the Factorie

115、s Act and labor regulations is mandatory.Health and safety standards for workers,as well as public display of notices,must be maintained.Many states have streamlined certain compliances through digital governance,but there continues to be periodic factory visits and onsite inspections by government

116、officers to certify that all compliances are being met.India Briefing Issue 58 March 202417 Responsibility of designated occupier:The individual identified as the occupier in the registration application,typically a manager or director of the company,bears responsibility for ensuring factory complia

117、nce with the requirements outlined in the Factories Act,labor laws,and other essential standards regarding health,safety,amenities for workers,and timely payments.It is advisable to appoint a manager or director familiar with local compliance nuances to serve as the designated occupier.FDI restricti

118、onsThe Indian government has been closely scrutinizing foreign direct investment(FDI)proposals originating from bordering countries,especially since April 2020.These proposals,totaling INR 1 trillion,have predominantly targeted sectors such as heavy machinery,automobile manufacturing,auto components

119、,computer software and hardware,trading,e-commerce,as well as light engineering and electricals.However,only around 50 percent of these proposals have received clearance from the government,with the remaindera significant figureeither withdrawn or rejected according to official sources cited by the

120、media in December 2023.Currently,pending applications are under review by security agencies and relevant ministries.Notably,in a separate development,Chinas largest automaker SAIC entered into a joint venture with the JSW Group to bolster MG Motors presence and growth in the Indian market.The overar

121、ching emphasis remains on evaluating the strategic importance and potential ramifications of FDI inflows from bordering nations on Indias economic and security interests.SummaryThe path to expansion for Indian manufacturers necessitates a strategic approach and a willingness to embrace innovation an

122、d adaptability.By diversifying into new markets,forging strategic partnerships,adopting digital technologies,embracing sustainable practices,and enhancing supply chain efficiency,manufacturers can unlock new growth opportunities and better position themselves for sustained success in the global mark

123、etplace,especially in the face of supply chain shocks,geopolitical pressures,and black swan events.As firms navigate the complexities of expansion,manufacturers must remain agile,proactive,and committed to delivering value to their customers and stakeholders.In the pursuit of growth,manufacturers in

124、 India can not only expand their market reach through forging alliances with international partners,but also contribute to the nations economic development and competitiveness on the global stage.By embracing expansion strategies,Indian manufacturers can chart a course toward sustainable growth and

125、prosperity in the years to come.Where to Invest in India:Analyzing Gujarat,Maharashtra,and Tamil Nadus Business EnvironmentREAD MORERELATED READING India Briefing Issue 58 March 202418Futuristic Industries,Sustainability,and the Manufacturing SectorCompanies can enhance the power of Make in India th

126、rough the adoption of Industry 4.0 technologies to boost manufacturing output,mitigate carbon emissions,and implement sustainable practices,which in turn will entice more foreign investors.Chapter 3India has strategically embraced technological advancements in various sectors,including manufacturing

127、,to ensure efficiency and future relevance.The country has also moved up the rankings of the Global Innovation Index(GII),from a rank of 81 in 2015 to 40 in 2023.As India seeks to transition to Industry 4.0,its manufacturing sector is having to consider five key trends:adoption of advanced technolog

128、ies and Internet of Things(IoT),talent management strategies,supply assurance policies,holistic smart factory initiatives,and a focus on corporate social responsibility.Indian factories in certain segments have invested in robots,such as Epsons SCARA and 6-Axis robots.High-precision robots and autom

129、ation technology cater to a diverse spectrum of industries,including manufacturing,automotive,F&B,battery production,packaging,pharmaceuticals,and logistics,and help to ensure adherence to global quality standards.Currently,Indias top conglomerates and high-tech startups are leading the countrys adv

130、ancements in futuristic industries and their applications.In addition to innovation and higher productivity,a focus on sustainability and mitigating carbon emissions are other considerations for Indian manufacturers embracing new technologies.Given Indias manufacturing ambitions and the desire to ge

131、t integrated into global value chains,the government is simultaneously working on strategies to attract investments from multinational companies.Emerging technologies and their applications in manufacturing The manufacturing sector is undergoing significant transformations.We discuss some of the key

132、 emerging technologies that promise enhanced operational resilience,productivity,and sustainability across various industries in India.Companies that are able to adopt them into their growth strategies and production lines will Archana RaoBusiness EditorIndia BriefingCo-AuthorMelissa CyrillDeputy Ma

133、naging EditorAsia BriefingCo-Author India Briefing Issue 58 March 202419become more competitive and align better with the evolving regulatory landscape.1.Digitization:Manufacturing is embracing digitization to modernize processes,reduce errors,and improve decision-making with real-time analytics.Tec

134、hnologies like AI,cloud computing,and 3D printing are being adopted to enhance competitiveness and operational efficiency.Leading Indian firms in this domain include Tata Consultancy Services(TCS)and Infosys.Tata Elxsi Ltd is a prominent AI solutions provider offering design and technology services

135、for the automotive,broadcast,communications,healthcare,and transportation industries.2.Automation and robotics:Automation is improving speed,efficiency,and precision in manufacturing.Robots handle repetitive tasks,while collaborative robots(“cobots”)work alongside humans for more dangerous operation

136、s,leading to increased output rates and reduced labor costs.Wipro PARI,Simelabs,ABB,and Hi-tech Robotics are some of the leading robotics companies in India.3.4D and 3D printing:Three-dimensional(3D)printing applications are found to lower supply chain costs,construction waste,and carbon footprints.

137、The 3D innovation space is currently dominated by the US and Europe.The process by which a 3D printed object transforms into another structure due to external energy input is known as 4D printing.This external energy can take various forms such as temperature,light,or other forces.Industries includi

138、ng aerospace,automotive,clothing,construction,healthcare,and others are actively exploring the potential applications of 4D printing technology.ABB Robotics,Simpliforge,and Kelvin6k are examples of additive manufacturing(AM)companies making advances in the Indian construction sector.4.Augmented real

139、ity(AR):AR is streamlining workflows,boosting productivity,and cutting operational costs in manufacturing.Smart glasses empower workers to perform tasks with increased efficiency and accuracy.5.Digital Twin:Digital Twins replicate physical assets and processes digitally,providing insights into perfo

140、rmance and enabling predictive maintenance,contributing to smarter and more efficient manufacturing processes.6.Advanced Materials:Innovations in nanotechnology,composites,and smart materials are revolutionizing industries by creating lighter,stronger,and more sustainable products with enhanced perf

141、ormance and durability.There are over 80 Advanced Materials startups in India,including Zerocircle,Lucro,Canvaloop,Sigachi,Phillips Carbon Black,Epilson Carbon,Raphe mPhibr,Nanospan,EnviGreen,Sidwin Fabrics,etc.7.Sustainable manufacturing:Businesses are adopting eco-friendly production processes,res

142、ource-efficient technologies,and circular economy principles to minimize waste and energy consumption.Modern technologies like automation,AI,and advanced sensors play a crucial role in advancing sustainable manufacturing practices.Indias semiconductor manufacturing ambitionsIndia is strategically po

143、sitioning itself in the global semiconductor market,aiming for economic growth and technological advancement.The Indian semiconductor market,valued at US$30 billion India Briefing Issue 58 March 202420Indias Most Sustainable Companies(Sustain Labs Paris Report,2023).Godrej Consumer Products,Tech Mah

144、indra,HDFC Limited,Wipro,Tata Consumer Products,Cipla,Marico,Hindustan Unilever,Tata Consultancy Services,Dr.Reddys Laboratories,HCL Tech,Infosys,Tata Communications,Maruti Suzuki India,UltraTech Cement,Bharti Airtel,Asian Paints,Glenmark Pharmaceuticals,Tata Chemicals,Larsen&Toubro,Welspun India,Am

145、buja Cements,Tata Power Company,Reliance Industries Limited,and Tata Steel.in 2023,is projected to reach US$55 billion by 2026,with smartphones,automotive parts,and computing/data storage driving over 60 percent of this growth.The Indian government has approved the establishment four facilities unde

146、r its flagship semiconductor program:a.Micron Technologys advanced semiconductor assembly and testing facility in Sanand,Gujarat;b.Semiconductor fab in Dholera,Gujarat set up by Tata Electronics Private Limited(TEPL)and Taiwans Powerchip Semiconductor Manufacturing Corp(PSMC);c.Semiconductor ATMP un

147、it set up by Tata Semiconductor Assembly and Test Pvt Ltd(TSAT)in Morigaon,Assam;andd.Semiconductor ATMP unit set up by CG Power,in partnership with Renesas Electronics Corporation,Japan,and Stars Microelectronics,Thailand in Sanand,Gujarat.The semiconductor schemes in India are as follows:Scheme fo

148、r setting up of Semiconductor Fabs in India:Fiscal support of 50 percent of project cost on a pari-passu basis for all technology nodes will be provided under the Scheme by the central government.State incentives will be in addition to this,depending on the location of the investment.Scheme for sett

149、ing up of Display Fabs in India:Fiscal support of 50 percent of project cost on a pari-passu basis will be provided under the Scheme by the central government.State incentives will be in addition to this.Scheme for setting up of Compound Semiconductors/Silicon Photonics/Sensors Fab and Semiconductor

150、 Assembly,Testing,Marking and Packaging(ATMP)/OSAT facilities in India:Fiscal support of 50 percent of capital expenditure on a pari-passu basis will be provided under the Scheme by the central government.State incentives will be in addition to this.Design Linked Incentive(DLI)Scheme:The Centre for

151、Development of Advanced Computing(C-DAC),operating under the Ministry of Electronics and Information(MeitY),will steer the implementation of the DLI scheme.a.Chip Design Infrastructure Support:C-DAC will establish the India Chip Centre to host cutting-edge design infrastructure,including Electronic

152、Design Automation(EDA)Tools,IP Cores,and support for Multi-Project Wafer(MPW)fabrication and post-silicon validation.This infrastructure will be made accessible to supported companiesb.Product Design Linked Incentive:Approved applicants engaged in semiconductor design will receive reimbursement of u

153、p to 50 percent of eligible expenditure,with a ceiling of INR 150 million(approximately US$1.80 million)per application,as fiscal support.c.Deployment Linked Incentive:Approved India Briefing Issue 58 March 202421applicants deploying semiconductor designs for Integrated Circuits(ICs),Chipsets,System

154、 on Chips(SoCs),Systems&IP Cores,and semiconductor-linked designs in electronic products will receive an incentive of 4-6 percent of net sales turnover over 5 years,capped at INR 300 million(approximately US$3.61 million)per application.Sustainable manufacturing practices and environmental considera

155、tionsBusinesses worldwide are under increasing pressure to reduce carbon emissions and mitigate their environmental impact.It is imperative for industries with substantial emission outputs to take proactive measures to minimize their carbon footprint.Key factors that support companies in becoming mo

156、re environmentally conscious include:1.Energy efficiency:Employing techniques and systems that progressively reduce carbon emissions and energy consumption.2.Circular economy strategy:Implementing strategies to minimize waste and recycle materials back into the production process,thus reducing overa

157、ll waste generation.3.Use of sustainable materials:Prioritizing the use of recycled and environmentally friendly raw materials throughout the production process.Environmentally friendly practices offer a competitive advantage,while incidents harming the environment may lead to loss of clients and ca

158、use reputational damage.Moreover,sustainability initiatives prove economically viable by reducing waste and optimizing resource use,resulting in cost savings and improved profit margins.Sustainable factories are better positioned to meet industry standards,reducing the need for costly audits.Additio

159、nally,an efficient supply chain enhances a manufacturing enterprises public image,shortens delivery times,improves reliability,and enables better forecasting,leading to cost savings by avoiding overproduction.Business strategies in the era of carbon tax policiesAs the global focus on sustainability

160、intensifies,its imperative for businesses to understand and adapt to evolving global policies.Below are some key considerations and recommendations:Understanding carbon tax implications:Carbon taxes are becoming increasingly common worldwide as governments seek to mitigate climate change.These taxes

161、 incentivize businesses to invest in carbon reduction technologies and adopt sustainable practices.Its crucial for your business to understand the implications of carbon taxes on your operations and bottom line.Some countries implementing carbon tax measures include Sweden(US$137/CO2metric ton),Swit

162、zerland(US$101/CO2metric ton),Liechtenstein(US$101/CO2metric ton),Norway(US$69/CO2metric ton),Finland(US$62/CO2metric ton),and France(US$52/CO2metric ton).Investing in carbon reduction technology and remanufacturing:Numerous studies indicate that production modes used in the manufacturing sector are

163、 key contributors to both the excessive consumption of resources and energy and the accumulation of waste products,making the sector one of the largest global sources of environmental pollution.Investing in emission reduction technologies not only directly decreases carbon emissions but also meets t

164、he demands of end consumers for low-carbon footprint products.Remanufacturing is also an India Briefing Issue 58 March 202422India Updates Ecomark Scheme to Boost Eco-Friendly ChoicesIn an effort to promote sustainable living and environmental conservation,the Ministry of Environment,Forest,and Clim

165、ate Change(MoEF&CC)has overhauled its Ecomark notification,aimed at encouraging eco-friendliness in design and production processes.The revised Ecomark Scheme,officially announced on October 13,2023,introduces accreditation and labeling for household and consumer products.These products must meet sp

166、ecific environmental criteria while adhering to quality standards in accordance with Indian norms.Products accredited under the Ecomark Scheme will adhere to stringent environmental criteria,ensuring minimal environmental impact throughout their lifecycle.The initiative aims to incentivize manufactu

167、rers to transition towards environmentally friendly production methods.Administered by the Central Pollution Control Board in collaboration with the Bureau of Indian Standards(BIS),the Ecomark Scheme represents a significant stride towards fostering individual and collective choices that embrace eco

168、-friendly practices in India.The government envisions Indias circular bioeconomy reaching US$300 billion by 2030,through advancements in high-performance bio-manufacturing.effective approach to recycling waste resources and transforming production into a low-carbon approach.Consider exploring these

169、avenues to reduce your carbon footprint while remaining competitive in your industry.Tailoring tax policies to industry needs:Different industries have unique challenges and requirements when it comes to carbon emissions.Tailored carbon tax policies,including tax reliefs,returns,and emissions reduct

170、ion agreements,can help address these challenges effectively.Advocate for policies that are specific to your industrys needs.Preparing for global carbon emissions policies:While the European Union(EU)spearheads policy implementation,impacting global export-oriented manufacturing,several countries li

171、ke Brazil,Brunei,Indonesia,Thailand,Turkey,and Vietnam are poised to adopt carbon tax measures in the near future.These nations recognize the necessity of domestic initiatives to ensure global competitiveness and avoid higher costs in the export market.Stay abreast of global carbon tax trends and re

172、ady your business to adhere to new regulations while capitalizing on emerging opportunities.BUILD YOUR ASIA BUSINESS WITH TURNKEY MARKET ENTRY AND CROSS-REGIONAL SUPPORTDezan Shira&Associates assists corporate clients with issues related to due diligence,corporate establishment,legal contracts,tax a

173、nd audit compliance,intellectual property,policy formation,transactional advice,negotiations,and dispute resolutions.For support in the Indian market,reach our experts at .EXPLORE MORE India Briefing Issue 58 March 202423 Embracing sustainable practices:Sustainability is no longer just a buzzwordits

174、 a business imperative.Embrace sustainable practices throughout your operations,from supply chain management to product design and manufacturing.Engage in strategic partnerships within your supply chains to foster a collaborative approach to sustainability.Adapting to market forces:A carbon tax send

175、s price signals that allow market forces to determine the best ways to reduce emissions.Be proactive in adapting to these market forces by developing tailored solutions that align with your business operations,innovations,and investment strategies.EU carbon tax programThe EUs Carbon Border Adjustmen

176、t Mechanism(CBAM)came into effect on October 1,2023,initiating the transitional phase lasting until December 31,2025.During this period,importers are obligated to:1.Register in the provisional CBAM register.2.Calculate embedded emissions in imported goods using CBAM-Regulation methods.3.Document and

177、 report calculated emissions quarterly without requiring financial compensation.Companies in seven carbon-intensive sectors,including steel,cement,fertiliser,aluminium,and hydrocarbon products,will have to share data regarding carbon emissions with the EU.Starting January 1,2026,the permanent CBAM s

178、ystem will be fully enforced,imposing extensive obligations:1.Importers must apply for authorized CBAM declarant status.2.Embedded emissions require verification by an accredited auditor.3.Purchase CBAM certificates for a fee,calculated based on the weekly average auction price of EU ETS allowances.

179、4.Submit an annual CBAM declaration by May 31,reporting on the previous years imported goods and corresponding CBAM certificates.5.Gradual reduction and offset of free allocations by CBAM certificates will replace the existing EU Emission Trading System by 2034.EU importers were required to submit t

180、heir first CBAM report by January 31,2024,detailing embedded emissions in goods imported during the initial quarter of CBAM application(October 1,2023-December 31,2023).According to a report by the think tank Global Trade Research Initiative(GTRI),the CBAM is anticipated to result in a 20-35 percent

181、 tax on imports of electricity,aluminum,cement,fertilizers,hydrogen,iron,and steel into the EU.Notably,Indias exports of iron ore pellets,iron,steel,and aluminium products constitute 26.6 percent of its total exports to the EU and were valued at US$7.4 billion in 2023.DOING BUSINESS IN INDIAThis com

182、prehensive online Doing Business guide provides key economic,geographic,tax,and regulatory insights for foreign enterprises,investors,managers,and expats to understand India and chart their path to a healthy business.Find spotlight and explainer articles,news,updates,factsheets,useful tools,and webi

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