Executive summary
India has become one of the most discussed manufacturing destinations in Asia, supported by a large domestic market, policy incentives and growing supplier ecosystems in sectors such as electronics. But the decision to manufacture in India should rest on a company's own economics, not on national headlines. This guide sets out what overseas companies should evaluate – demand, incentives, location, partners, approvals, talent and supply chains – and where the main execution risks lie.
What the official data shows
Incentives have attracted real investment. According to the Press Information Bureau (December 2025), Production Linked Incentive (PLI) schemes across 14 sectors had led to realised investment of about ₹2 lakh crore by September 2025, with incremental production and sales of over ₹18.7 lakh crore and employment of over 12.6 lakh people (direct and indirect). Cumulative incentives disbursed under PLI schemes for 12 sectors stood at ₹23,946 crore as of 30 September 2025. The gap between investment realised and incentives disbursed is worth noting: incentives are paid against performance thresholds, after investment and production are achieved.
Electronics has scaled fastest. The same release reports domestic mobile-phone production rising from ₹18,000 crore in 2014–15 to ₹5.45 lakh crore in 2024–25.
[Semiconductors](/insights/india-semiconductor-investment-guide-founders) are moving from policy to projects. According to a January 2026 PIB release, ten semiconductor manufacturing and packaging projects had been approved with cumulative investment of ₹1.60 lakh crore across six states.
Foreign investment remains strong. DPIIT data shows FDI equity inflows of about USD 58.8 billion in 2025–26, up 18% in US-dollar terms on the previous year (provisional figures).
New policy is in the pipeline. The Union Budget 2025–26 announced a National Manufacturing Mission covering small, medium and large industries. Its detailed design and operational status should be confirmed at official sources before it is included in a business case.
Seven areas to evaluate
1. Demand – domestic, export or both
Clarify whether the plant will serve Indian customers, export markets, or both. Domestic-market plays depend on price points and distribution; export plays depend on logistics, trade agreements and customers' sourcing policies. Many PLI schemes are tied to incremental sales, so demand assumptions directly affect incentive eligibility.
2. Incentive fit – central and state
Central schemes such as PLI are sector-specific, have defined eligibility windows and require committed investment and sales thresholds. States offer their own capital subsidies, land concessions, power tariffs and tax reimbursements, which vary widely. Do not add central and state incentives together without checking compatibility, caps and conditions – some schemes restrict stacking.
3. Location and infrastructure
Industrial clusters differ in supplier depth, port access, power reliability and labour availability. Evaluate specific industrial parks, not just states. Ask about plug-and-play facilities, water and power connections, and realistic timelines for utilities.
4. Partner and entry model
Options include a wholly owned subsidiary, a joint venture with an Indian company, contract manufacturing, or acquisition of an existing facility. A joint venture can bring land, approvals experience and customer relationships, but requires careful governance. Check sectoral FDI limits early – most manufacturing permits 100% foreign ownership under the automatic route, but some sectors have caps or require approval.
5. Approvals and compliance
Factory setup typically involves land conversion, environmental clearances, building approvals, fire safety, labour registrations and utility connections across central, state and local authorities. India's Economic Survey 2024–25 itself highlighted the burden of regulation on enterprises and called for states to lead deregulation. Build approval timelines into your plan and use state single-window systems, while recognising that single-window access does not remove underlying requirements.
6. Talent and operations
India offers a large engineering workforce, but experienced shop-floor supervisors, quality engineers and maintenance technicians in specialised processes can be scarce in newer clusters. Plan for training, retention and senior leadership on the ground during ramp-up.
7. Supply chain and localisation
Assess which inputs can be sourced locally today and which must be imported, the duties on those imports, and local-value-addition requirements in incentive schemes. Supplier development – often working with Indian MSMEs – is frequently the slowest part of localisation and the most important for long-term cost.
Common execution risks
Collaboration models worth considering
Nirji Ventures analysis. For many overseas companies, the first step need not be a greenfield plant. Lower-commitment options include contract manufacturing with an Indian partner, a technology licence, or a minority investment in an existing manufacturer. These can validate demand and supplier capability before a larger commitment. Where technology transfer is central, a joint venture with clear IP terms may balance speed and control.
Practical next steps
This guide is general analysis, not legal, tax or investment advice. Take professional advice on your specific situation.
If you are evaluating manufacturing in India and looking for partners or perspectives across Asia Pacific, tell us what you are working on and the capabilities you bring.
Japanese companies evaluating India manufacturing
Japanese startups and established companies can use our India-entry guide to compare manufacturing, R&D and pilot objectives, assess Indian partners and decide whether a JV fits the project. Read it alongside the location and operating considerations above.