Benefits & Government Incentives for Manufacturing under Make in India for Foreign Nationals & Foreign Corporations: Setting-Up Business in India

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Introduction to Manufacturing under Make in India Scheme: India Business Entry through FDI in India or Foreign Direct Investments in India
On September 25, 2014, the Prime Minister of India announced plans to encourage both domestic and foreign businesses to set up in India, in order to increase the growth rate of the manufacturing sector in India to 12–14% annually. There are several benefits and government incentives available for manufacturers under the Make in India campaign. Make in India emphasizes the development of infrastructure, such as industrial corridors, special economic zones (SEZs), industrial parks, and logistics hubs. These infrastructure projects aim to provide world-class facilities and enable efficient manufacturing operations. The scheme aims to attract foreign direct investment in India by easing FDI norms in India, simplifying procedures, and providing a transparent and predictable investment regime. It encourages foreign companies to set up manufacturing units in India and participate in the country’s growth story. The government has established a single window clearance mechanism to simplify the approval process for setting up manufacturing units. This streamlines the process by providing a single point of contact for obtaining necessary approvals and clearances from various government departments. The government focuses on strengthening intellectual property rights such as patent protection and enforcement mechanisms to encourage innovation and safeguard the interests of innovators and manufacturers. This helps create a favorable environment for research and development activities. Make in India focuses on improving the ease of doing business in India by simplifying procedures, reducing bureaucratic hurdles, and streamlining regulatory frameworks. The government has implemented various reforms to create a business-friendly ecosystem and attract foreign direct investment in India or FDI in India respectively.

What is Make in India
The campaign’s objectives are to increase employment possibilities for citizens and draw in foreign direct investment (FDI). The National Manufacturing Policy, 2012, which was developed by the government, aims to boost the manufacturing sector’s contribution to the GDP from 16% to 25% by 2022. In addition, it seeks to add 100 million new employments in this industry. The National Manufacturing In India and Investment Zones play a key role in this agenda. The notion of industrial growth in conjunction with all States serves as the cornerstone of this policy.

Initiatives for Manufacturing under Make in India: Under the Make in India initiative, the government of India has implemented various initiatives to promote manufacturing in India. These initiatives focus on creating an enabling environment for businesses, fostering innovation, enhancing infrastructure, and providing support to industries. Some key initiatives under the Make in India campaign include:
• The automated route’s upper bound on foreign direct investment in the military industry has increased from 49% to 74%. Nirmala Sitaraman, the finance minister, made this rise in FDI official on May 16, 2020.
• The amount of foreign direct investment in the defense sector is now capped at 49 percent.
• The Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) application processes have been made online, and entrepreneurs can now use these services on a round-the-clock basis through the eBiz website. This made it simpler to submit applications and pay service fees online. The creation of the Investor Facilitation Cell within the Invest India program, which supports investors by offering services throughout all business phases, including before investing, throughout execution, and even after delivery services have been provided.
• Under the auspices of Make in India, numerous initiatives including Skill India, Startup India, Digital India, Pradhan Mantri Jan Dhan Yojna, Smart Cities, AMRUT, Swachh Bharat Abhiyan, Sagarmala, AGNII, etc. have been introduced.
• Additionally, the government unveiled plans to create industrial corridors. These corridors emphasize inclusive growth.
• Mumbai to Delhi Industrial Corridor
• Industrial Corridor between Amritsar and Kolkata
• Mumbai-Bengaluru Industrial Corridor
• Bangalore-Chennai Industrial Corridor
• Industrial Corridor from Vizag to Chennai
• The government has additionally relaxed the restrictions on the licenses and permits needed to Incorporate a Company In India.

Benefits for Manufacturing under Make in India: Under the Make in India initiative, the government of India has implemented various benefits to promote manufacturing in the country. These initiatives focus on creating an enabling environment for businesses, fostering innovation, enhancing infrastructure, and providing support to industries.
• 10 years of permanent status for foreign investors
• The Bankruptcy Code of 2015 is a new bankruptcy law that mandates the implementation of a straightforward and time-limited insolvency procedure by 2017.
• Single tax system for the Goods and Services Tax by April 2017
• Industrial license is now valid for 7 years instead of just 3 years.
• Power connection made within the legally required time span of 15 days rather than 180 days.
• Reduction of the 10-day company incorporation process to one day
• Reduced from 11 documents to 3 documents for the export and import from India

Government Benefits & Incentives covered under Make in India Scheme
1. AMRUT (Atal Mission for Rejuvenation and Urban Transformation)
The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is a flagship program launched by the Government of India with the aim of transforming and rejuvenating urban areas across the country. The mission focuses on providing basic infrastructure and services to improve the quality of life for residents in urban areas.
2. Smart Cities
Smart Cities is an urban development concept that focuses on leveraging technology and data to improve the quality of life, sustainability, and efficiency of cities. It involves the integration of various sectors such as infrastructure, governance, healthcare, transportation, energy, and communication to create intelligent and interconnected urban ecosystems.
3. Skill India
Skill India is a flagship program launched by the Government of India in 2015 with the aim of equipping the country’s youth with industry-relevant skills and enhancing their employability. The program seeks to address the skill gap prevalent in various sectors and empower individuals by providing them with vocational training, upskilling, and entrepreneurship development opportunities.
4. Startup India
Startup India is an initiative launched by the Government of India in 2016 with the objective of fostering the growth of startups and promoting entrepreneurship in the country. It aims to create a favorable ecosystem for startups to thrive, innovate, and contribute to job creation and economic growth.
5. Digital India
The Government of India announced the ambitious program Digital India in 2015 with the goal of transforming India into a knowledge-based society and economy. Utilizing technology and digital solutions, it seeks to close the digital divide, improve connection, advance digital literacy, and foster inclusive growth and development across numerous industries.

Ease of Doing Business in India: Business Setup in India
The business regulation is done on the basis of 10 areas
1. Starting a Business:
• Businesses with an authorized capital of up to Rs. 15 Lakh are exempt from paying an incorporation fee.
• The Shram Suvidha site offers registration for Employee State Insurance Corporation (ESIC) and Employee Provident Fund Organization (EPFO) as a common online service with no physical touchpoints.
• In Mumbai and Delhi, there is no obligation for inspection prior to registration under the Shops & Establishment Act.
• For the purpose of incorporating a firm, the Permanent Account Number (PAN), Tax Deduction & Collection Account Number (TAN), and Director Identification Number (DIN) have been combined into a single form (SPICe).

2. Dealing with Construction Permits
• The duration of construction permits dropped between the Doing Business 2018 and 2020 reports, falling from 128.5 to 98 days in Mumbai and from 157.5 to 113.5 days in Delhi.
• Total procedures decreased to 11 in Delhi and 19 in Mumbai.
• The sanctioning of building plans within 30 days is regarded as approval.

3. Trading Across Borders
• For customs reasons, there are now only three crucial documents required for both the import and export of goods.
• The online application system e-Sanchit enables traders to submit all documentation digitally.
• To ease trade, the Central Board of Excise and Customs (CBEC) has put into place the “Indian Customs Single Window Project.” Exporters and importers can submit their customs clearance documentation electronically at the same location. The government has introduced “PCS1x,” which aims to bring 27 maritime stakeholders together on a single platform.

4. Enforcing Contracts
• Commercial Courts and High Court Appellate Divisions now exist in Mumbai and Delhi.

5. Getting Credit
• A geographically unified electronic register that allows for asset type-specific registration is called the Central Register of Securitization Asset Reconstruction and Security Interest (CERSAI).

6. Getting Electricity
• No physical documents are accepted; only two documents are now required to get an electricity connection. If no right of way
• (RoW) is needed, an electricity connection is given in 7 days; if RoW is needed, it is provided in 15 days.
• In Delhi and Mumbai, the total number of procedures was lowered to 3 and 4, respectively.
7. Registering the property
• All sub-registrar offices in Delhi and Mumbai have been digitalized, and the Land Records Department has access to their records.

8. Resolving Insolvency
• The process for insolvency under the Fast-track Corporate Insolvency Resolution Process (CIRP) for mid-sized businesses must be finished within 90 days, with a maximum grace period of an additional 45 days.

9. Paying taxes
• The tax rate for newly established domestic manufacturers is currently 15%.
• Minimum alternative tax rate for companies availing exemptions/ incentives reduced from 18.5% to 15%
• The taxpayer now only needs to file 2 GST returns as opposed to 3 previously.

Foreign Direct Investment major reforms:
• FDI in some sectors is allowed via the Automatic route or the Government route.
• The Indian or non-resident corporation does not need the government of India’s authorization to use the Automatic Route.
• Procedure for Investment under the Government Route
• First, File an application proposal for foreign investment together with any necessary supporting documentation online at www.fifp.gov.in, the Foreign Investment Facilitation Portal.
• The second step is: Internal approvals process
• The appropriate Ministry/Department will be identified by DPIIT, and the proposal will then be distributed within two days. Additionally, the plan would be distributed online to the RBI within two days of receipt for views from the perspective of FEMA.
• The Ministry of Home Affairs must additionally approve any proposed investments from Pakistan or Bangladesh.
• Following receipt of an online application, DPIIT would have 4 weeks to submit its comments, and the Ministry of Home Affairs (if relevant), 6 weeks to submit comments.
• In light of the aforementioned, the applicant may be asked for clarifications or further information, which must be given within a week.
• FDI proposals that total more than INR 50 billion (or around $775 million) must be presented to the Cabinet Committee on Economic Affairs for consideration.
• Final authorization is done Within 8 to 10 weeks after the proposal is complete in every way, it is authorized.

Sectors involved in the Make in India
1. Automobile
2. Automobile components
3. Aviation
4. Biotechnology
5. Chemicals
6. Construction
7. Defence Manufacturing
8. Electrical Machinery
9. Electronic Systems
10. Food processing
11. IT and BPM
12. Leather
13. Media and Entertainment
14. Mining
15. Oil and Gas
16. Pharmaceuticals
17. Ports and ships
18. Railways
19. Renewable Energy
20. Roads and Highways
21. Space
22. Textiles and Garments
23. Thermal Power
24. Tourism and Hospitality
25. Wellness

Conclusion
The initiatives and benefits for manufacturing under the Make in India campaign have created a conducive environment for domestic and foreign businesses to invest in India’s manufacturing sector. The initiatives such as Atal Mission for Rejuvenation and Urban Transformation, Smart Cities, Skill India, Startup India, and Digital India have focused on infrastructure development, skill enhancement, technology adoption, and ease of doing business. These initiatives, along with the major FDI reforms, have resulted in several benefits for manufacturers.
The government’s efforts to simplify regulations, enhance transparency, and provide incentives have made India an attractive investment destination for manufacturers. The FDI reforms have relaxed restrictions and increased foreign ownership limits in various sectors, encouraging foreign companies to set up manufacturing units in India.
Overall, the initiatives and benefits offered under the Make in India campaign have propelled the manufacturing sector, attracting investment, creating jobs, fostering innovation, and positioning India as a global manufacturing hub. With continued government support and policy reforms, the manufacturing landscape in India is poised for further growth and success.
Authored By: Adv. Anant Sharma & Chandana Surthi

 

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