Due to Covid-19 situation, many countries have instructed their companies to shift their manufacturing bases out of China. Some of the countries have also offered incentives to their companies for shifting out of China. These companies are looking for alternate place to shift out of China. Setting Industry in India and doing business has unlimited advantages. Any company which is deciding to shift their manufacturing bases out of China would look for a country which offers following:
(a) Low Land Cost
(b) Availability of Industrial Infrastructure
(c) Low Construction cost
(d) Availability of Skilled Manpower
(e) Reasonable Manpower Cost
(f) Low Power and Water cost
(g) No Labor problems
(h) Availability of Ports and good Logistics network
(i) Easy of doing business- Least running around for approvals
(j) Low Taxation
(k) Easy Repatriation of the income to their home country
Besides the above mentioned advantages there are plethora of incentives which are offered to foreign companies by the Central and State Governments, and also availability of huge market potential within India to consume the product. The FDI has constantly been rising in India which shows the increasing confidence of the foreign companies in India. “Make in India” Policy of the Indian Government has changed the total outlook of India since 2014. This blog has been written to provide the insight to the Foreign Companies about India who are either planning to shift their manufacturing bases out of China or otherwise planning to set up the industry / business in India. We are sure that you will find the information given in the blog is very interesting. Should you need any additional input or information, feel free to contact us. This blog has following section:
a. Advantages for multinational enterprises (MNEs)
b. Advantages for the Host Countries
a. Setting up Offices (Liaison Office, Branch Office or Project office)
b. Joint Venture with Indian Company
c. Formation of a new wholly owned subsidiary Company
a. Setting up legal existence.
b. Registration of the unit.
c. Pre-Commission Phase.
d. Post-Commission Phase
a. Direct Allotment of Land through MIDC under
b. Procurement of Industrial Land in Resale
c. Other Industrial Services by ASCC
What is Foreign Direct Investment
Investor(company / firm / individual) may like to invest into the portfolio of any foreign company by merely investing in the equities or invest into the business in any of the foreign country through Foreign Direct Investment (FDI) route.
Foreign direct investment (FDI) is an investment in a business (10% or more) by an investor from another country when an investing company also takes control of the ownership of a business entity. With FDI, companies are directly involved with day-to-day operations of the enterprise in the host country. This means they aren’t just bringing money with them, but also knowledge, skills and technology.
Businesses that make foreign direct investments are often called multinational corporations (MNCs) or multinational enterprises (MNEs).
An MNC/ MNE may make a direct investment by creating a new foreign enterprise, which is called a green field investment or investing in an existing plant called a Brownfield investment which mainly made through merger and acquisitions.
Advantages of FDI
FDI provides great advantages for both the MNE and host country, which is often a developing country.
Advantages to multinational enterprises (MNEs):
- Access to new markets
- Access to resources of the host countries
- Reduction in the cost of production
Advantages to the Host Countries:
- FDI offers a source of external capital and increased revenue.
- Creation of direct and indirect employment for the local people
- Economic growth due to collection of taxes
- Development of new industries with strategic alliance.
- Exposure to new business practices, management techniques, economic concepts, and technology that will help them develop local businesses and industries.
Investing in India-Land of Incredible Opportunities
Indian economy is the world’s fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). India although being a developing nation is preferred destination for business collaborations worldwide. It is ranked first amongst South Asian countries for providing Business Conducive Environment. This article is a brief account presenting the Investment procedure in the Indian market for setting up manufacturing industry and Business through FDI.
India is one of the fastest growing economy in the world and an attraction for the investors across globe, this has been proven by substantial increase in numbers of FDI in the country. With the launch of the campaign “Make in India” the FDI inflow has increased by 37%. The campaign promotes ease of doing business in India with the help of Industry favouring policies and incentives.
FDI Inflow in India
FDI is an important monetary source for India’s economic development. Economic liberalization started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country. India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the Greenfield FDI ranking
During last 5 year the FDI inflow of India has been as under:-
- 2018-19: $ 64.37 Billion
- 2017- 18: $ 61.96 Billion
- 2016-17: $ $60.1 Billion
- 2015-16: $ 55.55 Billion
- 2014-15: $ 45.14 Billion
During the fiscal ended March 2019, India received the highest-ever FDI inflow of $64.37 billion. India has emerged as top FDI destination surpassing China and the US. India has also allowed 100% FDI in many sectors since 2016.
The transparency in the system of Indian government has raised the confidence of the foreign Investors resulting in continuous growth of business relations with other countries.
Though India being a developing nation drive the economy with development friendly reforms, the nation always welcome setup of innovative business ideas of the investors. Sustainability of such ideas would be challenging in any of the developed nation due to presence of multiple competitors. India is a cost effective market for doing business which is instrumental in boosting global trade.
Why India is Preferred Destination
Some of the underlying factors of India being a preferred destination for setting up business are:
- Availability of High Skilled / Skilled / unskilled workforce and Operational Manpower comparatively at the lower cost than other countries.
- Robust Infrastructure in every state promoted industrial areas which is must for the operation of the industry & supply chain operations.
- Availability of Government Incentives
- Sector specific industrial policies
- Single Window Clearances.
- Business Friendly Law: Taxation system has resulted in transparency and uniformity in the Indian economy. It makes easier for international investors to actualise their plans of entering India.
- Start-up ecosystem: India is a hub for start-ups from technology to e-commerce, and financial services. Indian market is open to accepting new business.
- Economical operational costs: The cost of the basic amenities required for businesses is lower in India as compared to other countries.
Who Can Invest in India
Following are eligible to invest in India:
- A Non-resident entity
- OCBs (Overseas Corporate Body) with the prior approval of Government of India if the investment is through Government route; and with the prior approval of RBI if the investment is through Automatic route.
- A company, trust and partnership firm incorporated outside India and owned and controlled by NRIs.
- Foreign Institutional Investor (FII) and Foreign Portfolio Investors (FPI) and NRI can invest in the capital of Indian company under the Portfolio Investment Scheme or trade through a registered broker in the capital of Indian Companies on recognised Indian Stock Exchanges as per the terms and condition of FEMA regulations
- A Foreign Venture Capital Investor (FVCI) registered with SEBI may invest up to 100% of the capital of an Indian company engaged in any activity mentioned in Schedule 6 of Notification No. FEMA 20/2000.
Commencement of Business in India
Foreign Companies can commence business in India as under:
- By establishing offices of foreign entity
- By collaborating with an Indian Company / Joint Venture (JV)
- By forming a wholly owned subsidiary of a foreign company
Foreign Company through their Indian Offices can carry out following activities:
- Export/Import of goods
- Rendering professional or consultancy services
- Carrying out research work, in which the parent company is engaged.
- Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
- Representing the parent company in India and acting as buying/selling agents in India.
- Rendering services in Information Technology and development of software in India.
- Rendering technical support to the products supplied by the parent/ group companies.
- Foreign airline/shipping Company.
The above stated activities can be carried out by setting Liaison/Branch/Project Office subject to RBI clearance and guidelines.
For carrying out manufacturing/services and other related business operations Investors can enter Indian market by
- Having a Joint Venture with any Indian company or
- by forming a wholly owned subsidiary of a Foreign Company
Establishing Offices of Foreign Entity
- Liaison office: It represent parent company in India and develop network. It cannot undertake any commercial /trading/industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel. It can promote export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India. It cannot earn any income in India. Before opening of liaison office a company must have earned profit consequently for 3 years amount not less than USD 50,000. Validity period for opening the office is three years, which is renewable. To know more click here.
- Branch office: Branch office is allowed to conduct all the activities mentioned above subject to RBI clearances. There is a general permission to non-resident companies for establishing Branch Office in the Special Economic Zones (SEZs). Such Branch Offices would be isolated and restricted to the Special Economic zone (SEZ) alone and no business activity/transaction will be allowed outside the SEZs in India, which include branches/subsidiaries of its parent office in India. No approval shall be necessary from RBI for a company to establish a branch/unit in SEZs to undertake manufacturing and service activities subject to specified conditions.
- Project Office: Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and the project is funded directly by inward remittance from abroad or the project is funded by a bilateral or multilateral International Financing Agency or the project has been cleared by an appropriate authority or a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.
Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners. Joint Venture may entail the foreign investor in Established distribution/ marketing set up of the Indian partner/s, available financial resource of the Indian partner/s and Established contacts of the Indian partner/s which help smoothen the process of setting up of operations. Foreign companies can enter into JV by acquiring stake of the Indian partner/s in their existing establishment or form a new business enterprise with their Indian partner/s..
Following are the eligible investee:-
- Private Limited Company:-
- Indian company can issue equity shares under FDI under FDI at a fair price.
- Newly incorporated company or in case of subscription to the Memorandum of Association during Private Limited Company Registrationby an NRI or Foreigner, the shares can be issued at a face value.
- Partnership Firm / Proprietary concern:-
- A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non repatriation basis except in the firm or proprietary concern engaged in any agricultural/plantation or real estate business or print media sector. NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option
- Investment by non-residents other than NRIs/PIO: A person resident outside India other than NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment in the capital of a firm or a proprietorship concern or any association of persons in India.
- Limited Liability Partnerships (LLPs) subject to compliance of LLP act 2008:-
- FDI is permitted under the automatic route in Limited Liability Partnership (LLPs) operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI-linked performance conditions.
- An Indian company or an LLP, having foreign investment, is also permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions
- Conversion of an LLP having foreign investment and operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI linked performance conditions, into a company is permitted under automatic route. Similarly, conversion of a company having foreign investment and operating in sectors/activities where 100% FDI is allowed through the automatic route and there are no FDI-linked performance conditions, into an LLP is permitted under automatic route.
- Trusts: – FDI is not permitted in Trusts other than in Venture Capital Fund (VCF) registered and regulated by SEBI and ‘Investment vehicle’.
- Investment Vehicle:- An ‘investment vehicle’ registered and regulated under relevant regulations of SEBI or any other authority is permitted to receive foreign investment from a person resident outside India or entity registered outside India (other than an individual who is citizen of or any other entity which is registered / incorporated in Pakistan or Bangladesh).
- Start up Companies: – Start-ups can issue equity or equity linked instruments or debt instruments to Foreign Venture Capital Investor (FVCI) against receipt of foreign remittance, as per the FEMA Regulation. In addition, start ups can issue convertible notes to person resident outside India subject to the following conditions:
- A person resident outside India (other than an individual who is citizen of Pakistan or Bangladesh or an entity which is registered / incorporated in Pakistan or Bangladesh), may purchase convertible notes issued by an Indian start up company for an amount of twenty five lakhs rupees or more in a single tranche.
- A start up company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with approval of the Government.
- A person resident outside India may acquire or transfer, by way of sale, convertible notes, from or to, a person resident in or outside India, provided the transfer takes place in accordance with the pricing guidelines as prescribed by RBI. Prior approval 15 from the Government shall be obtained for such transfers in case the start up company is engaged in a sector which requires Government approval.A start up company issuing convertible notes to a person resident outside India shall receive the amount of consideration by inward remittance through banking channels or by debit to the NRE / FCNR (B) / Escrow account maintained by the person concerned in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time.
- Provided that an escrow account for the above purpose shall be closed immediately after the requirements are completed or within a period of six months, whichever is earlier. However, in no case continuance of such escrow account shall be permitted beyond a period of six months.
- NRIs may acquire convertible notes on non-repatriation basis in accordance with Schedule 4 of the Notification No.FEMA.20/2000-RB dated 3rd May 2000.
- The start up company issuing convertible notes shall be required to furnish reports as prescribed by Reserve Bank of India.
Formation of Company or LLP
Foreign companies can set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy. For registration and incorporation, an application has to be filed with Registrar of Companies (ROC). Once a company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies.
The foreign exchange management act of India allows a foreign companies to invest in India as wholly owned subsidiary by forming:-
- Limited Liability Partnership (LLP)
- Private Limited Company
- Public Limited Company
The Following table represents the requisites for establishment of different types of business in India:
|Particulars||Private Limited||Public Limited||LLP|
|Max Members||200||No Limit||No Limit|
|Min Directors||2||3||2 Designated Directors|
|Resident Director||1 Mandatory||1 Mandatory||1 Designated Partner|
|Minimum Capital||One Lakhs||Five Lakhs||Any|
|Transfer of ownership||Allowed||Allowed||Allowed|
|Subscription of shares to Public||Not allowed||Allowed||Not allowed|
|Issue of Prospectus||Not Mandatory||Mandatory||Not Mandatory|
|Commencement of Business/ Operations||Declaration to be filed prior to commencement||Declaration to be filed prior to commencement||Immediately after obtaining certificate of incorporation|
|Legal Status||Pvt Ltd. Co. is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act||Public Ltd. Co. is a separate legal entity registered under Companies Act, 2013. The Directors are liable for defaults made under the act||LLP is a separate legal entity registered under LLP Act, 2008. The Designated partners of LLP are liable for contraventions under the act|
|Governing Act/ Law||Companies Act, 2013||Companies Act, 2013||LLP Act, 2008|
|Annual Statutory Filings||Annual statement of accounts & annual return with ROC||Annual statement of accounts & annual return with ROC||Annual statement of solvency & annual return with ROC|
|Annual Filings & Audit||IT returns to be filed. Audit mandatory||IT returns to be filed. Audit mandatory||IT return to be filed. Audit mandatory in case turnover exceeds INR 40 lakhs or contribution exceeds INR 25 lakhs|
Register of Company (ROC) is the Registration and Controlling authority of all companies in India.
Following are the stages of the registration process with ROC:
- Application for Digital Signature Certificate (DSC).
- Application for Director Identification Number (DIN).
- Appointment of Directors: minimum 2 directors (One director of the company must be resident in India).
- Filling of Form for approval of company name.
- ROC payment after approval and application for Certificate of Incorporation.
- Preparation & stamping of MOA and AOA.
- Application for Pan Card and Opening of new Bank account once Corporate Identity Number (CIN) & Certificate of Incorporation is received.
- After subscription of share, capital documents have to be submitted for FDI compliance.
Allotment,Transfer,Conversion and Remittance of Shares
Once the amount is received from the investor. There is a set process for making him a business collaborator. Further process is as follows:
- Issuance of Shares to be done within 60 days from receiving inward remittance.
- Transfer of Capital Instruments: Permission granted to Non-Resident (NR) / Non Resident Indian (NRI) for acquisition of capital instruments in following ways: NRI to NRI, NRI to Resident, Resident to NR, while a person resident outside India can sell capital instruments of an Indian company on a recognized Stock Exchange in India through a registered stock broker as per the set norms.
- Conversion into Equity: Indian companies have been granted general permission for conversion of External Commercial Borrowings (ECB) received in convertible foreign currency (excluding those deemed as ECB) into equity shares/fully compulsorily and mandatorily convertible preference shares, subject to conditions under the extant ECB guidelines and FDI policy.
- Repatriation: Repatriation for dividend and Interest on fully, mandatorily & compulsorily convertible debentures is freely repatriable without any restrictions.
- Remittance : Remittance of asset (i.e. sale proceeds of share and securities and their remittance) is governed by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 under FEMA.
FDI Routes, Industrial Sectors AND Investment Caps
Apart from being a critical driver of economic growth, Foreign direct investment (FDI) is a major source of non-debt financial resource for the economic development of any country. In India there are two routes through which FDI can enter. They are:
- Automatic route, a route without government clearances.
- Government route, prior investment clearances from the authorised departments is must which covers three stages online application with the required document, Internal Verification procedure and the Final Approval.
Different areas where FDI has been allowed through automatic or government route have been categorised into four sectors:
- 100% FDI permitted through Automatic route.
- 100% FDI permitted through Government route.
- 100% FDI permitted through Government + Automatic route.
- Up to 51% FDI permitted through Government/ Automatic route.
- 100% FDI permitted through Automatic route :
Agriculture & Animal Husbandry, Plantation (FDI is allowed only in Tea, Coffee, Rubber, Cardamom, Palm oil tree, Olive oil tree and not in any other plantation activity), Mining & Exploration of metals & non-metals ores excluding titanium bearing minerals and its ores, Coal & Lignite mining in respect of eligible activities (including captive consumption), White Label ATM Operations, Pharmaceuticals – Greenfield Sector and Medical device manufacturing, Manufacturing, Exploration of Petroleum & Natural Gas (including marketing of petroleum products & natural gas), Asset Reconstruction & Credit Information Companies, Up-link of non-’News & Current Affairs’ TV Channels, Down linking of TV channel, Railway Infrastructure, single Brand Retail Trading, Duty Free Shops, Construction Development project, Transport services, Civil Aviation – Greenfield & Brownfield, Cash & Carry Wholesale Trading, Broadcasting Carriage Services, Other Services at Airport,
- 100% FDI permitted through Government route:
Publishing/ printing of scientific and technical magazines/specialty journals/ periodicals, Mining and minerals separation of titanium bearing minerals & ores and its value addition & integrated activities, Retail Trading including through e-commerce in respect of food products manufactured and/ or produced in India, Publication of facsimile edition of foreign newspapers, Satellites-establishment and operations.
- 100% FDI permitted through Government + Automatic route.
Following Industrial Sectors have infusion of Investment upto 49% is through Automatic route above 49% government route:
Telecom Services, Defence industry, Air Transport Services, Banking – Private Sector, Private Security Agencies.
For Pharmaceutical Brownfield sector automatic route is upto 74% above 74% government route is applicable.
- Up to 51% FDI permitted through Government/ Automatic route.
- Insurance upto 49% through Automatic Route.
- Petroleum Refining by PSUs upto 49% through Automatic Route.
- Infrastructure Companies in Securities Markets upto 49% through Government Route.
- Terrestrial Broadcasting FM (FM Radio) upto 49% through Government Route.
- Print Media upto 26% through Government Route.
- Digital Media upto 26% through Government Route
Prohibited Sectors under FDI
The Government has not allowed any FDI under following sectors:
- Lottery Business including Government/private lottery, online lotteries etc.
- Gambling and Betting including casinos
- Chit funds.
- Nidhi company.
- Trading in Transferable Development Rights (TDR).
- Real Estate Business or Construction of farm houses.
- Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
- Sectors not open to private sector investment- atomic energy, railway operations (other than permitted activities mentioned under the Consolidated FDI policy).
Restrictions due to Covid-19
Government of India vide its press note No. 3 dated 17 April 2020 made the following amendment in FDI policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic:
- A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defense, space, atomic energy and sectors/activities prohibited for foreign investment.
- In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview of the above, such subsequent change in beneficial ownership will also require Government approval.
Stages of Compliances for Setting Business in India
For Setting up business entity in India there are four stages of compliances.
- Setting up legal existence.
- Registration of the unit.
- Pre-Commission Phase.
- Post-Commission Phase.
- Setting up Legal existence
- Director Identification Number (DIN)
- Permanent Account Number (PAN)
- Tax Account Number (TAN)
- Digital Signature Certificate (DSC) for proposed Directors
- Consent to establish & operate Approval for proposed Company/ LLP Name along with Filing of e-forms with CRC and GST registration.
- Registration of the unit
- Registering / categorization of unit in State: As MSME, LSI, SLSI, Mega/ Ultra Mega Project.
- Approval for State Incentives (Optional).
- IEM/ EM Registration.
- MSME Registration
- Pre-Commission Compliance covers:
- Acquisition of Land.
- Environment, Forest and Wildlife Clearance
- Permission for Land Use: In case the industry is located outside an industrial area.
- Pollution Board: Application to State Pollution Boards before commencement of construction activity and production activities under Water Act and Air Act for issuance of Consent to Establish is to be made.
- Industrial License
- Environment Clearance (If required)
- Applications for temporary water & electricity connection
- Factory Layout Plan Approval.
- Factory registration.
- Registration of Boilers.
- Building Plan Approval.
- Registration under Contract Labour Act 1970.
- Registration under Building and other construction workers
- Power/ Electricity for construction.
- Provisional Fire Approval.
- Approval for lifts & Escalator.
- Post-Commissioning Compliances covers :
- Consent to operate: It is obtained from pollution control boards of every state before commencement of activity. A mandatory licence on renewable basis.
- Final Fire Approval: It is obtained from Local Fire Authority.
- Building Completion certificate/ Completion Certificate: A critical and a mandatory certificate that certifies the construction is done as per the development rules. It is obtained from Application to Special Planning Authority / Town Planning / Local municipality / development authority / agricultural department / other local bodies such as Nagar Nigam / Gram Panchayat as applicable
- Authorization for hazardous waste: Application to local hazardous waste management company for Collection/ Reception/ Treatment/ Transport/ Storage and Disposal of Hazardous waste
- Applications for permanent water & electricity connection
- Professional Tax Registration
- Central Excise Registration
- Shops & Establishment 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
Taxes in India are levied by both Central and State Government levels. Major Central Taxes includes Income tax, Central Goods and Service Tax (CGST), Integrated Goods and Service Tax (IGST) and Custom Duty. Major State Taxes includes State Goods and Service Tax (SGST), Stamp duty and Registration. Dividend Distribution Tax is levied on the Dividend declared by the company.
To know tax implication on companies in India, click here
- Dividends: Dividends can be repatriated without any restrictions after payment of Dividend Distribution Tax (DDT)
- Capital: AD Category-I bank can allow the remittance of sale proceeds of a security (net of applicable taxes) to the seller of shares resident outside India, provided the security has been held on repatriation basis, the sale of security has been made in accordance with the prescribed guidelines and NOC/tax clearance certificate from the Income Tax Department is needed. Investments are subject to lock-in period of 3 years in the case of construction development sector.
Interest on fully, mandatorily & compulsorily convertible debentures is also freely repatriated without any restrictions (net of applicable taxes).
Maharashtra-Most Popular Indian Investment Destination
Maharashtra, a state in the western region of India is second-most populous state and third-largest state by area. The state is well connected to all the major markets with 4 international and 7 domestic airports, over 303,000 km of road network and 6,165 km of rail network. The state’s coastline of 720 km and presence of 2 Major ports (JNPT & MBPT) and 53 minor ports facilitate about 22% of the total cargo transport in India. Jawaharlal Nehru Port Trust (JNPT), the largest container port in the country, is connected to 34 Container Freight Stations (CFS) and 46 Inland Container Depots (ICD). The state has a total installed power capacity of over 43,000 MW.
Maharashtra is the most industrial friendly and favored state in India. Gross State Domestic Product (GSDP) of Maharashtra is US$ 387Billion. It is also largest economy of India with 15.01% share of total GDP of country in 2017-18. Cumulative FDI inflow of US$ 113.82 Billion from Apr 2000 to Dec 2017 is received by the Maharashtra which is one third of total FDI inflow of the country.
Maharashtra contributes in a large extent to the country’s industrial output. Strong Connectivity, robust infrastructure, availability of manpower, , Sectorial Policies and Incentives, Single Window Clearances has made Maharashtra a Powerhouse of Industrialisation. It has 36 districts divided into six revenue divisions.
Maharashtra’s infrastructure sector has grown significantly over the last decade, with a substantial rise in the number of industrial clusters and public-private partnership (PPP) projects. Maharashtra has approximately 289 Industrial Areas where Industrial Land/Plots are: Leasehold Land (Government Land on perpetual Lease) and Freehold Land (Private Land). Maharashtra Industrial Development Corporation is a lead agency for developing Industrial Area in Maharashtra which acquires Land, develop infrastructure and allot the land on Leasehold basis for the activities.
MIDC is having total 289 industrial areas with approx 89000 hectors of land all over Maharashtra. Some industrial areas are developed for dedicated industrial activities like Wine Parks, Silver Parks, Food Parks, Textile Parks, Floricultural Park, IT Parks and about 9 SEZs with around 13 Chemical zones for chemical activities.
MIDC is having largest water supply network with dedicated electricity feeders for industries for continues supply.
Following are the key industrial Clusters in Maharashtra:
- Mumbai, Raigad & Thane:- IT and ITES, Gems & Jewellery, Logistics, Pharma / Chemical, Engineering.
- Pune:- Auto, Defence, IT / ITES and ESDM, Engineering, Chemical, FMCG
- Solapur:- Textile, Food Processing
- Ahmednagar:– Nashik:- Food Processing, Engineering, Winery
- Nagpur – Amravati:- Food Processing, Logistics, IT, Textile
- Aurangabad:- Engineering, Auto, Pharma, Chemical
Maharashtra is one of the stragetic state in specific to Industrial needs for Industrial growth. The state has sector specific Industrial zones, Industrial Policies and Incentives. To know more on the Preferred Industrial state, Maharashtra Click here
Why Choose Maharashtra to Set up Industry and Commercial Office
Maharashtra is No.1 investment destination in India. It is strategically located and well connected through Road, Rail, Air and Water network. Industrial environment including polices and infrastructure is better as compare to other states in the country. With very high literacy rate Maharashtra have large base of skilled and industrial labour, making it an ideal destination for knowledge-based and manufacturing sectors.
MIDC’s initiative of Ease of Doing Business has also contributed significantly to become most investor’s friendly state in country. Under Ease of doing business all the industrial Licenses & permission can be availed online in single window system through governments MAITRI Cell (Maharashtra Industry, Trade and Investment Facilitation).
Maharashtra Industrial Development Corporation (MIDC) allots lands on priority basis for FDI projects.
Incentives offered to the Industries in Maharashtra
As per Maharashtra Industrial Policy – 2019 following incentives can be availed by eligible industries:-
- Industrial Promotion Subsidy (IPS) in form of ‘Gross SGST’ Abatement
- Stamp Duty Exemption
- Electricity Duty Exemption
- Power Tariff Subsidy
- 20% additional incentive for food processing units, agro units processing units and Farmer Producer Organizations (FPOs)
- Additional incentives for Thrust Sectors, Green Energy and Industry 4.0
- Special Incentives for underdeveloped areas
- Special Incentives for SC/ST and Women Entrepreneurs
Government of Maharashtra offers plethora of incentives to the Foreign companies setting up their factories / manufacturing units in Maharashtra. To know in the various incentives offered by the Government of Maharshtra please click here
Allotment of Plot in Maharashtra under Foreign Direct Investment (FDI)
MIDC may consider application of a foreign entity for allotment of industrial plot on priority under FDI Category on following conditions:
- Remittance Certificate from RBI before Plot allotment & also at various stages of Investment.
- Minimum shareholding of the foreign entity should be 51%.
- Minimum paid up equity shall not be less than 25% of the project cost.
- Minimum investment for A, B & C area should be Rs. 20 Crs. or USD 4 million whichever is more.
- Minimum investment for other areas (D, D+, NID & Naxal affected etc.) should be Rs. 10 Crs. or USD 2 million whichever is more.
- For A, B & C areas land rate per 1000 Sq.mtrs is Rs. 1 Cr. & other areas land rate per 2000 Sq.mtrs is Rs. 1 Cr.
- 100% of the investment should come within 2 years from the date of possession with an extension of a year if the delay is beyond control. The entire investment may be brought up front or in different stages as under:-
- Before Allotment of land: Minimum to extent of land cost.
- Before approval of Building plan: Minimum 25% of proposed FDI.
- Before granting of OC/BCC: Minimum 50% of proposed FDI.
- Before commencement of project: 100% of proposed FDI.
- Land is allotted on priority bases in FDI, in case of default the penalty would be 25% of prevailing land premium per year after the expiry of period. Transfer of open plot will not be allotted, it will have to be surrendered to MIDC.
Allotment of land under FDI category is done on priority basis once application alongwith all required documents is submitted to MIDC. Scrutiny of application is done by various department of MIDC and if application is approved by all the department. Land allotment is done on priority basis.
MIDC has categoried its Industrial Areas into different Industrial zones (A,B,C,D and D+) based on nearness to the city area and developed infrastructure. A fall into fully developed and D+ into developing Industrial Area. The land rates varies of each Industrial zones. To know the different Industrial Areas and the prevailing official Land rates, Click here
ASCC: Industrial Consultant, Maharashtra-India
ASCC is a leading Industrial Real Estate Consultant in Maharashtra is a registered Pvt and SSI (in service sector) established in 2004 with a track record of serving about 450+ industries which includes 31 Fortune 500 companies or MNCs.
ASCC with its team of highly skilled specialists provides strategic and operational support for doing business in India. The strategic support includes selection of site for setting up the industry (Acquisition of Leasehold Industrial Land under Priority Allotment (FDI), allotment through e-bidding, Resale Industrial land) and all legal property transfer formalities, and operation support includes support for obtaining all requisite consents, NOCs, permissions and licenses to establish and run the industry. For detailed profile of ASCC please Click here.
ASCC can be your service provider for all activities mentioned in this Blog. In addition, we can also provide your following customised services.
Direct Allotment of Land through MIDC under Priority Allotment:
- Providing you the complete information for decision making at your end for selection of location and site.
- Arranging site visit
- Guidance for preparation and submission of project report and application to MIDC.
- Case representation to MIDC.
- Guidance for Meeting with MIDC
- Liaison with MIDC for issuance of Offer Letter and Allotment Order.
- Arranging Survey, Demarcation and Possession of Land.
- Full assistance for execution of Agreement to lease with MIDC
- Monitoring entire allotment and transfer process.
- Any other service needed by you for procurement and transfer of Industrial land
Procurement of Industrial Land in Resale:
- Selection of Location
- Offering Industrial Properties through the database.
- Short listing and site visit.
- Meeting with the seller.
- Negotiation to decide the terms.
- Due Diligence and Title Verification.
- Structuring of the deal.
- Preparation and finalization of MoU.
- Handling entire Transfer Process.
- Any other services needed for procurement of Industrial land
Other Industrial Services by ASCC:
- In-depth study for selection of location
- Guidance for approval of RBI / Government for Funds Transfer
- All Business and Industrial approval
- Registration of MSME & LSI
- All other registration for
- MPCB Consent to Establish and Operate
- Factory Plan Approval and License from DISH
- Petroleum and Explosives License (HSD and other Class A, B, C Petroleum Products, Chemicals, Gas Cylinder Rules for Canteen/Cafeteria.)
- Contract Labour License as Principal Employer / Site Registration
- MIDC – Approvals:
- Building Plan Approval
- Provisional and Final Fire NOC
- Building Completion Certificate, Occupancy Certificate
- Any other permission & licenses to establish & run the industry
ASCC is One Stop Solution for services related to setting up Business and Industry in India. you can reach us at:
Ascent Supply Chain Consultants Pvt.Ltd.
406, Raheja Arcade,
Sector 11, CBD Belapur,
Navi Mumbai -400614
E-Mail : firstname.lastname@example.org