India permits the establishment of bonded manufacturing facilities where various operations, including manufacturing, can be conducted.
As part of the Indian government's ongoing efforts to position India as a global manufacturing hub and improve ease of doing business, the Central Board of Indirect Taxes (CBIC) has introduced a new initiative. This initiative allows for the import of raw materials and capital goods into bonded manufacturing facilities without the need for immediate payment of import duty, which is deferred. If these imported inputs are used for manufacturing goods that are subsequently exported, the deferred duty is exempted. Import duty on the imported raw materials used in the production is only required to be paid when the finished goods are cleared for the domestic market. Similarly, import duty on capital goods is to be paid only when the capital goods are cleared for the domestic market.