Ownership tests, scheme milestones and dates
Most compliance risk for a foreign manufacturer in India comes from three places: who ultimately owns the investor, what a scheme requires before it pays, and which dates count for eligibility. The items below are the watch-outs the sources flag. The dated changes behind several of them are listed under recent changes.
Land-border owners anywhere in the chain
Beneficial ownership follows the PMLA definition. More than 10%, or any control, from a land-border country needs approval even when the investing entity sits elsewhere. Up to 10% non-controlling land-border ownership is automatic but still needs prior reporting on the FIF/NSWS portal. The 60-day decision target applies only to stakes of up to 49% in Indian-controlled companies in priority sectors such as electronic components, capital goods and polysilicon. See FDI rules and land-border investors.
Incentives are paid after verification
ECMS incentives are paid over the scheme tenure (FY2025-26 to FY2031-32) after claims are verified, not upfront. Plan working capital accordingly. State top-ups that follow central disbursal, such as Gujarat’s 100% ECMS top-up, are paid annually in proportion to what the centre releases, so a delay in the central claim delays the state payment too.
Investment dates decide state eligibility
In Uttar Pradesh, phased projects must apply before the first phase starts commercial operations, and most capital investment must follow the policy’s effective date: at least 80% of capital investment must be made after that date to count. Other state policies set their own validity periods and eligibility dates; see state incentives.
Central scheme windows open and close
Several central windows have already closed or narrowed. The ECMS window for components and sub-assemblies has closed; only supply-chain and capital-equipment applications are taken, to April 2027. The textile PLI window ended on 31 March 2026, and bids for the rare earth magnets scheme closed on 12 August 2026. Semicon 2.0 is open for three years from 31 August 2026. Applications should be filed before capital is committed. See central incentives.
Budget schemes need guidelines
The schemes announced in Budget 2026-27 on 1 February 2026 (containers, construction and infrastructure equipment, chemical parks, legacy clusters, rare earth corridors and the integrated textile programme) depend on scheme guidelines for eligibility and timing. Check whether guidelines have been issued before planning around them.
Defence equity changes need declarations
In a company not seeking a new licence, or already approved for defence FDI, new foreign investment up to 49% must be declared to the Ministry of Defence within 30 days; above 49% needs approval. Defence FDI is automatic only up to 74%; above that it is on the Government route.
Bonded duty is deferred, not waived
Goods cleared from a MOOWR unit to the domestic market pay the deferred import duty and GST. Duty on imported inputs is remitted only on export. Plan the split between exports and domestic sales. See tax and zones.
Quality Control Orders before sale
Products covered by a Quality Control Order need BIS certification before they can be sold in India. Check whether an order covers your product early, because certification is a pre-sale condition.
Factory safety under the new Labour Code
Factory safety now falls under the Occupational Safety, Health and Working Conditions Code 2020, in force from 21 November 2025. Existing rules continue during the transition, so the factory licence and safety compliance should be checked against both. See Labour Codes.
The 15% manufacturing tax regime is closed
Only companies that began manufacturing or production by 31 March 2024 qualify for the 15% regime (s.201). Budget 2026-27 added no replacement, so a new manufacturer compares the 25.168% concessional regime (s.200) with the normal regime and MAT.
SEZ domestic-sales relief awaits notification
The one-time measure allowing eligible SEZ manufacturing units to sell into the domestic tariff area at concessional duty, limited to a prescribed proportion of their exports, was announced in Budget 2026-27. Check that the rule change has been notified before relying on it.
What to check next
- Trace beneficial ownership through every layer of the investor group against the PMLA definition before filing.
- Build ECMS and state incentive receipts into the cash-flow plan at their verified, staggered timing rather than at approval values.
- Record the effective date of the chosen state policy and make sure qualifying capital is spent after it.
- Check whether a Quality Control Order covers each product before the launch date is fixed.
- Confirm current scheme guidelines and notifications with the relevant authority before committing capital.