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Compliances Needed To Start An Automobile Manufacturing Company In India


Introduction: Automobile Manufacturing 

A business that may never go out of style or loss is the automobile industry. Be it 20 years back or after, vehicles are a commodity that evolve drastically. Introduction to new software, technology and machines intrigue enthusiasts to purchase vehicles. Apart from it being a personal necessity, they are also used at construction sites, airports, factories etc. With the rising economy and opportunities for the middle class, the demand for two wheelers, three wheelers as well as four wheelers has significantly witnessed a hike. The demand rose and so must did the production of passenger vehicles.

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India is emerging as the leader in the automobile industry by providing opportunities and manufacturing vehicles at a pace. The future of the country is predicted to transform to electric cars which was introduced in order to reduce harmful emissions into the environment. These industries that generate such an exorbitant revenue ought to be established with all compliances in place.  

Read Our Blog: How to Start an Automobile Company

What Are The Benefits Of An Automobile Manufacturing Business?  

Following are the few advantages of setting up an Automobile Manufacturing Business in India-

  • The local market is sizable.
  • The government offers financial support to businesses that manufacture goods.
  • Lower Labour costs
  • An evolving industry
  •  Product innovation and technological advancement are ongoing.
  • Transferring growth to Asian markets
  • A rise in the interest of high-end commercial vehicles
  • Asian countries will host manufacturing sites to reduce costs.

The Government of India has lately established several schemes to promote the business of automobile in the country further encouraged the business. The Indian government announced a PLI scheme for automobiles and auto parts in the month of September 2021.

What Are The Compliances Required To Start An Automobile Manufacturing Company In India?

  • Factory License

Every factory owner is required by the Factory Act of 1948 to register their property with the local government prior to opening a business. A factory license is a legal document that authorizes the manufacturer to conduct manufacturing operations. According to the Factories Act of 1948, a factory's building plan must be approved by the labour and employment department before it can be registered. This Act also requires the registration and renewal of industrial licenses in order to safeguard the workforce's safety.

  • Registration of Company

Before creating any procedure, one of the most crucial tasks is to register a business in India. With the completion of this phase, the business can be legally recognized and assigned the status of a distinct legal entity. There are provisions for this in the Companies Act and the Ministry of Corporate Affairs. A company may be incorporated as a partnership, LLP, proprietorship, or private limited company.

  • MSME Registration

Small enterprises in India are registered through an MSME (Micro Small Medium Enterprises) Registration, making them eligible for all related government benefits. Although obtaining such registration is not required, however they attract several benefits.

  • GST Registration

If their total annual turnover exceeds Rs. 20 lakhs in the majority of states and Rs. 10 lakhs in states that fall under a special category, all types of businesses and individuals are required to register for GST. Additionally, regardless of revenue, GST registration is required for anyone who supplies goods for intrastate supply. In addition to the criteria mentioned above, additional criteria have been made accessible under the GST Act, defining extra standards for GST registration. Within 30 days of starting their business, every entrepreneur should be informed of the regulations and register for GST.

  • Automotive Research Association of India (ARAI) Certification

The vehicle and engine types, which are utilized in both automotive and non-automotive purposes, can be tested and certified by ARAI. The car manufacturers receive assistance from ARAI for export homologation procedures. The international certification bodies of Singapore, the Netherlands, and Australia have recognized ARAI for conducting testing in accordance with their standards and guidelines. Additionally, ARAI is constructing a thorough infrastructure and facilities for the development, testing, and certification of electric and hybrid vehicles.

  • Type Approval Certificate (TAC)

A certificate of conformity for automotive products is known as a TAC, or Type Approval Certificate. A product is awarded TAC Approval or Type Approval Certification if it satisfies all technical, safety, and regulatory standards.

  • Certificate of Road Worthiness

An official document that certifies your car is safe enough to be used on public roads is called a road worthiness certificate. Your vehicle would not be deemed suitable for use on public roads without a roadworthiness certificate.

  • Import- Export Code

In case the manufacturer deals in the trade of automobiles, must ensure to obtain an Import-Export Code that is used by the Directorate General of Foreign Trade (DGFT). 

  • The Bharat Stage Emission Standards

All automobiles must adhere to the Bharat Stage or BS Emission Standards set by the Government in order to be marketed and operated in India. The BS is a standard for how the emission limits in vehicles. Today, BS-VI is the highest standard in India whereas BS-IV vehicles are banned in some parts of the country. Compared to the BS-IV variant, the BS-VI compatible fuel has a fivefold lower sulphur level.

What is The Penalty for Non-Compliance?

Whoever, being a manufacturer of motor vehicles, fails to comply with the provisions of Chapter VII of the Motor Vehicle Act, or the rules and regulations made, shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to one hundred crore rupees or with both. 


The Automotive Industry Trends & Start-ups only touches on a small portion of the automotive trends identified around us today. Numerous factors, including hybrid vehicles, robots, and automotive sensor technology, will alter the current automotive business. Early adoption of new prospects and emerging technology in one’s manufacturing business is necessary to get a competitive advantage.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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A Post Graduate in the field of Corporate and Commercial Laws. I  have worked as a freelance content writer for several Legal topics for over 5 years. I aspire to learn and grow in this field along with being able to portray my Legal skill...

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