HOW TO SET UP A MANUFACTURING INDUSTRY IN INDIA| MANUFACTURING PLANT SET UP IN INDIA
INTRODUCTION
Manufacturing unit, India has a GDP of $2.3 trillion and is the world’s ninth-largest economy by purchasing power parity ($8 trillion). Despite this, manufacturing accounts for only 16 percent of the country’s GDP, compared to approximately 52 percent for the services sector. India generates barely 2% of global industrial output, a tenth of what its neighbor China does. Manufacturing expansion is critical for India’s economic prosperity.
In order to take advantage of the present demographic dividend, India will need to produce approximately one million jobs per month for the next ten years. Manufacturing unit has the ability to give large-scale employment for the youthful Indian population, allowing a huge segment of the people to escape poverty. In order to foster and accelerate the expansion of the country’s Manufacturing unit sector, the Indian government has adopted “Make in India” as a fundamental policy program. India has various advantages that could help it become a manufacturing powerhouse, including a vast pool of engineers, a young labor force, salaries half those in China, and huge domestic consumption of produced goods.
These variables become even more crucial as China, the world’s leading Manufacturing unit location, faces labor shortages and pay increases that is outpacing inflation. Manufacturing unit has emerged as one of India’s fastest-growing industries. Mr. Narendra Modi, India’s Prime Minister, initiated the “Make in India” program to promote India as a Manufacturing unit powerhouse around the world.
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ESSENTIALS TO KEEP IN MIND
- Conduct Research-A company’s success or failure is determined by its research strategies. It’s critical to understand the level of competition you’ll encounter after incorporating your company.
- Choose a Location- Because the location is such an important aspect of a business, choose a location for your factory or manufacturing unit. Decide on the market where you’ll sell your goods as well.
- Make a proper team- After you’ve decided on a location and product line, you should hire seasoned manufacturers. Distribute tasks and duties among departments like as operations, sales, marketing, inventory management, and public relations, among others.
- Apply for Licenses and Registrations- Any business that does not have a license or registration is deemed illegal. As a result, seek professional guidance and complete MSME/NSIC company registration in order to carry out manufacturing activities.
The Manufacturing Plant License is contingent on the products that you produce. When it comes to the common license –
A- Formation of business either as a private limited company or LLP or OPC or, sole proprietorship, or partnership
1. For a company – refer to the Companies Act, 2013
2. For LLP – refer to the Limited Liability Partnership Act, 2008
3. For a sole proprietorship and partnership, no registration is required.
B- Tax Registration.
GOODS AND SERVICE TAX REGISTRATION (GST)
The GST registration is explained in sections 22, 23, and 24 of the Central Goods and Services Act, 2017. Section 22 talks about the person liable for GST registration. Section 23 provides a list of persons not liable for GST registration. Last but not least, Section 24 provides for the mandatory registration of a certain set of persons.
Registration is mandatory for every place of business from where a taxable supply isMade. Separate registration is to be taken for separate states. However, a single registration for all the branches present in one state would suffice the requirement of the provision provided that one such place is determined to be the Principal Place of Business.
In the case of the Composition levy, a person opting for a composition scheme has to make sure that all the branches registered under the same PAN follow the composition scheme. It is not allowed for some branches to follow composition scheme and others to follow normal scheme if they use the same PAN for registration.
Registration is compulsory for the following persons –
- Suppliers making inter-state supplies
- Casual taxable persons
- Non-resident taxable persons
- E-Commerce operators
- Persons liable under reverse charge mechanism
Following people are exempt from taking registration –
Section 23 provides that A person shall not be liable to take registration under the Act if he is an agriculturist, is engaged in the supply of goods or services, or both which are exempted either under the CGST Act or IGST Act.
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APPLICATION PROCEDURE
- Time Limit for getting registered –
30 days from first becoming liable to be registered or5 days prior to the commencement of business in cases of casual/non-resident taxable person if the proper officer does not take any action within 3 days of receipt of an application for registration or within 7 days of getting clarifications, as sought, the application is automatically deemed to be approved,
- Effective Date of registration –
If the said application is being submitted within 30 days from the day on which the person becomes eligible to get registered on the day the person becomes eligible to be registered
If the application is submitted after 30 days – on the day on which registration is
Granted
CANCELLATION OF REGISTRATION
The Registration may be cancelled by the proper officer under Act Suo moto, or on an application filed by the registered person or his/her legal heirs
C. FACTORY LICENSE OR SHOP ACT LICENSE ANYONE
- Application is the first step. The factory owner must go to the local area inspector and fill out an application.
- The next step is to pay the requisite Fee To register the factory, the interested applicant must pay the required amount. The government issues a registration certificate once you’ve been registered.
- Employers should notify the Inspector of any necessary corrections by submitting an application in the approved form. The employer must pay the stipulated amount and obtain the registration certificate in the appropriate format after submitting the form.
- The employer must renew the certificate every year by submitting an application to the Inspectors in the required manner.
Every state promulgates its own Acts to govern Shops and Establishments existing in the respective states. These Acts regulate the payment of wages, working hours, leaves, holidays. Work conditions etc., of people working in such shops and establishments.
Any Premises where –
- Goods are sold, either by retail or wholesale.
- Services are rendered to customers.
- And includes storehouse, warehouse workplace, etc., which are used in connection with the business whether attached to the shop or not.
SHOP AND ESTABLISHMENT LICENSE
Once a shop / an establishment is registered under the applicable Act, a license is issued to them. It is mandatory that the license be displayed at a prominent place in every shop establishment.
PROCEDURE
1. An application is to be submitted to the Chief Inspector within the 30 days of commencement of work in the shop/establishment
2. The application should contain, inter alia, the following information –
- Name of the employer and manager
- Name and postal address of the shop/establishment
- Category of the shop/establishment
- Number of employees etc.,
3. The application should be accompanied with proper fees, as prescribed. The inspector verifies and processes the application, after which a license is issued to the applicant
4. The license remains valid for a period of 5 years from the date on which it is issued.
The Micro, Small and Medium Enterprises Development Act, 2006
The Micro, Small and Medium Firms Development Act, 2006 was adopted by the Indian government to promote the promotion, development, and enhancement of the competitiveness of micro, small, and medium enterprises, as well as for issues connected with or incidental thereto. Enterprises involved in the manufacture or production of commodities for any of the industries listed in the first schedule of the industries (Development and Regulation) Act, 1951.
Manufacturing companies are classified according to the amount of money they invest in plants and machinery.
FOR MSME CATEGORY (AS PER AMENDED DEFINITION), PLEASE FOLLOW BELOW TABLE:
| CRITERIA | MICRO | SMALL | MEDIUM |
| Investment | Investment in plant and machinery does not exceed Rs. 1/– Crore AND | Investment in plant and machinery does not exceed Rs. 10/– Crore AND | Investment in plant and machinery does not exceed Rs. 50/ Crore AND |
| Turnover | Turnover does not exceed Rs. 5/- Crore | Turnover does not exceed Rs. 50/- Crore | Turnover does not exceed Rs. 250/- Crore |
CONCLUSION
India is a desirable location for foreign manufacturing ventures. Several mobile phones, luxury, and automobile brands, among others, have established or are considering doing so in the country. India’s manufacturing sector has the potential to exceed $1 trillion in revenue by 2025. With a GDP of US$ 2.5 trillion and a population of 1.32 billion people, the adoption of the Goods and Services Tax (GST) will turn India into a common market, attracting investors. Production industries differ greatly in terms of size, location, product, manufacturing process, techniques used, workforce, total product value, and societal relevance.
The type of raw materials utilized in the manufacturing process, as well as the impact of the manufacturing process on the entire ecological system, have been significantly considered in recent years. Starting a new manufacturing company can be a difficult endeavour. To start a manufacturing business, one must examine a variety of aspects such as product line, market, and location. The government is focusing on establishing industrial corridors and smart cities in order to secure the country’s overall growth. The corridors will also help in integrating, monitoring, and building a favourable environment for industrial development, as well as promoting advanced manufacturing methods.
For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.