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How to set up manufacturing in India is a question global business leaders are asking as India emerges as a top destination for production, innovation, and supply chain diversification. With robust government support, strategic location, and rising demand, it’s no surprise that India market entry is becoming a key focus for companies seeking global scale. Paired with expert market entry consulting and go to market strategy consulting, success in India becomes less about guesswork and more about smart planning.
It all started with one question: “Should we set up a plant in India?”
Arun, a senior leader at a global electronics company, had just read that India’s manufacturing sector could grow to $7.5 trillion by 2031. With over 1.42 billion people, rising demand, and lower costs than China, the idea seemed promising.
But Arun also knew this: entering India isn’t simple. There are rules, roadblocks, and regional differences that can slow you down. Still, with the right steps and smart planning, the rewards can be big.
Here’s the story of how Arun’s team set up a manufacturing unit in India—what worked, what didn’t, and what you need to know before you do the same.
Step 1: Start with a Clear Plan
Before doing anything else, Arun’s team built a detailed business and financial plan. They looked at:
In India, 62% of buyers wait for discounts. So, pricing had to be competitive. They also used tools like SWOT and PESTEL analysis to understand the risks and opportunities in the Indian market.
Step 2: Choose the Right Business Setup
The next question: what kind of company should they register?
They considered two options:
They found that 40% of electronics and auto firms prefer WOS, while 25% choose JVs. Arun’s team decided to go with WOS to protect their IP and keep control but later added a local partner for distribution. This was a key part of their business setup in India strategy.
Step 3: Handle All Legal Requirements Early
India has a lot of paperwork.
They needed a factory license, pollution control approval, GST registration, import-export code, and more. And each state had its own rules. 40% of companies say India’s tax rules and FDI limits are major challenges. Business registration in India takes about 18 days, which is more than double the time it takes in China.
Their solution? Start early and hire a local legal team to avoid delays. Having access to India market entry professionals helped streamline these early-stage processes.
Step 4: Pick the Right Location
They didn’t just pick a city based on trends. They studied:
In cities like Pune and Chennai, land can cost ₹157.9 lakhs per acre. So, they chose an area with PLI (Production-Linked Incentive) support and good infrastructure to save money and time.
Step 5: Invest in Modern Machines
India’s factories are growing fast, but only 25% of small manufacturers use automation.
Arun’s team invested in smart machines, energy-saving systems, and AI tools. They also used a government scheme that supports automation for MSMEs, saving money while boosting output. Alongside their production, they began evaluating the value of building a R&D and supply chain analytics.
Step 6: Build the Right Team
Hiring skilled workers wasn’t easy.
35–40% of electronics and industrial companies say they struggle to find trained workers. So, Arun’s HR team partnered with local engineering colleges and training centres. They also ran workshops to train their global managers on Indian work culture and labour laws. Their go to market strategy consulting partner also suggested digital transformation for deeper operational agility.
Step 7: Run a Small Test Before Going Big
Before starting full-scale production, they did a pilot run. This helped them:
They learned their last-mile logistics needed work. So, they added a multimodal logistics plan and used UPI for fast vendor payments, which helped smooth out operations. This was another example of how to set up manufacturing in India requires strategic risk testing and local alignment.
Step 8: Start Full Production — And Stay Compliant
With everything in place, they launched full operations.
They tracked performance with KPIs and used India’s Digital Public Infrastructure like ONDC for online selling and UPI for quick B2B payments. This helped them expand into Tier-2 and Tier-3 cities where demand is growing.
Why Electronics Companies Are Moving to India
Arun’s team wasn’t alone. Companies like Apple, Samsung, Foxconn, and Pegatron have already invested in Indian manufacturing.
Here’s why:
Common Pitfalls Arun’s Team Avoided (Just in Time)
Even with all the planning, Arun’s team faced a few close calls that could have caused serious delays or extra costs. Thankfully, they caught these mistakes just in time. Here’s what almost went wrong — and how they fixed it.
Ignoring Bureaucracy
At first, the team underestimated how long approvals would take. They assumed things like business registration, environmental clearances, and factory licenses would move quickly. But in India, paperwork takes time — sometimes 18 days or more just to register the business, depending on the state.
If they had waited until the last minute, they would’ve missed their launch deadline. Fortunately, they started the paperwork early, worked with local consultants, and stayed on top of every form and approval. This helped them avoid delays and kept the project on track.
Picking a Location Too Quickly
One of their early site visits was to a beautiful industrial zone with great infrastructure. It looked perfect. But when they dug deeper, they learned that foreign companies couldn’t legally own land there unless one of the directors had an agricultural background — a rule in that state.
They had almost locked in the deal. If they had signed too soon, they would’ve lost time and money trying to unwind it. Doing detailed due diligence and checking state-specific land laws helped them avoid a costly mistake.
Not Using Bonded Warehouses
Initially, the team didn’t explore bonded warehouses. They assumed they’d need to pay all import duties upfront for their machines and raw materials.
Later, they learned that bonded warehouses in India allow you to store imported goods without immediately paying customs duties or GST. If those goods are later re-exported or used in manufacturing for export, the duties can be avoided altogether.
By using bonded warehousing, they could improve cash flow, reduce upfront costs, and simplify inventory management. It was a game-changer — they just wished they had known earlier.
Overlooking Local Hiring Needs
The team had global HR practices in place and assumed they could follow the same playbook in India. But they quickly discovered that labour laws differ from state to state. Wages, working hours, contracts, and even union regulations weren’t the same across locations.
They also struggled to find skilled technicians in some regions. Realizing this, they partnered with local HR consultants and nearby technical institutes. They also adapted their policies to match local rules, which helped avoid compliance issues and improved hiring speed.
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Turning Strategy into Action
India is full of opportunities, but it’s not a market where you can guess your way through.
Arun’s team succeeded because they planned carefully, listened to local experts, and adjusted their strategy to fit India—not the other way around. Today, their plant runs at 90% capacity, and they’re already looking to expand to other states.
In fact, they’re also exploring a dual approach — expanding physical infrastructure while strengthening their global capability centre footprint for innovation and digital transformation. If you’re thinking about how to set up manufacturing in India, remember that success comes with long-term commitment, the right advisors, and on-ground learning through experts in business setup in India, go to market strategy consulting, and India market entry.
What worked for Arun’s team might just be the beginning of a wider conversation around entering India the right way.
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