By Manu Rao | Updated March 2026
The Scenario
A consumer electronics company based in Seoul, South Korea, manufactures smart home devices — connected air purifiers, water purifiers, and home security cameras. With annual revenue of KRW 120 billion (approximately Rs 750 crore) and strong market share in South Korea and Southeast Asia, they are now targeting India. Their CEO has identified Greater Noida as the location for an assembly plant and distribution hub, close to the existing Samsung and LG facilities in the region. The plan is to assemble products in India using imported components, selling through both online marketplaces and offline retail chains.
The investment for Phase 1 is KRW 5 billion (about Rs 30 crore), covering a leased factory unit, assembly lines, warehousing, and a team of 150 people including factory workers, engineers, and sales staff.
Why India?
India's consumer electronics market is valued at $12-15 billion annually and growing at 8-10%. Smart home devices are a fast-growing category — air purifier sales crossed 1 million units in 2025, driven by pollution concerns in Delhi-NCR, and the water purifier market is over Rs 8,000 crore. India has 300 million households, and smart home penetration is still below 5%, compared to 35%+ in South Korea.
The government's Production Linked Incentive (PLI) scheme for white goods and electronic components incentivizes domestic manufacturing. The phased manufacturing program and rising import duties on finished electronics make local assembly the only viable long-term strategy for market entry.
South Korean companies already have a strong brand in India. Samsung is India's second-largest smartphone brand, LG dominates home appliances, and Hyundai is the second-largest car manufacturer. Korean brands are trusted by Indian consumers. This existing goodwill is an asset for a new Korean entrant.
Entity Choice
A Private Limited Company (Wholly Owned Subsidiary) is the correct structure for a manufacturing and distribution operation. The subsidiary will handle product assembly, distribution, sales, after-sales service, and eventually R&D for India-specific product variants.
There is no viable alternative at this scale. A Branch Office cannot manufacture. A Liaison Office cannot sell. An LLP would face challenges in getting industrial land allocation and factory finance from banks.
The Korean parent will be the sole shareholder. The board will include the Korean CEO (or a nominee), one or two senior Korean executives posted to India, and at least one resident Indian director.
FDI Route and Sector Rules
Manufacturing of electronic goods falls under 100% automatic route FDI. No government approval needed. South Korea is not on the restricted border-country list (Press Note 3 of 2020).
Sector-specific incentives available:
- PLI Scheme for White Goods (ACs and LEDs) — If the company's products qualify under this scheme, it can earn 4-6% of incremental sales as incentives over 5 years
- PLI Scheme for IT Hardware — If smart home devices are classified as IT hardware (e.g., cameras, connected devices), a separate PLI scheme applies
- SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) — 25% capital subsidy on eligible investments in electronic components manufacturing
- Uttar Pradesh Electronics Manufacturing Policy — State-level incentives including capital subsidy, stamp duty exemption, and land at concessional rates in the Yamuna Expressway Industrial Development Authority (YEIDA) area
South Korea is a Hague Apostille Convention member. Documents are apostilled through the Korean Ministry of Foreign Affairs. Korean corporate documents (company registry extracts from DART — Data Analysis, Retrieval and Transfer System) must be translated into English by a certified translator.
Registration Process
- Board Resolution (Korea) — The Korean parent's board approves the Indian subsidiary setup with specified capital and directors.
- Apostille and Translation — Korean corporate documents apostilled through MOFA Seoul, then translated into English by a certified translator.
- DSC and DIN — For the appointed directors.
- SPICe+ Filing — Name reservation and incorporation.
- Post-Incorporation Manufacturing Registrations:
- Factory License — Under the Factories Act 1948, from the Uttar Pradesh Directorate of Industrial Safety and Health
- Pollution Control Board consent — Consent to Establish and Consent to Operate from UPPCB
- BIS Registration — Compulsory for most electronic products sold in India under the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order. Each product model requires separate BIS registration.
- WPC License — Wireless Planning and Coordination (WPC) approval for any product with wireless connectivity (Wi-Fi, Bluetooth, Zigbee)
- IEC — Import Export Code for importing components
- GST Registration
Timeline: Company incorporation takes 3-4 weeks. Factory licensing takes 2-3 months. BIS registration can take 3-6 months per product model. WPC approval takes 4-8 weeks. Plan for 6-9 months from start to first product reaching Indian shelves. The 3.5-hour time difference (KST is ahead of IST) is manageable.
Tax Structure
The India-South Korea DTAA has been in force since 1985 (amended 2015). Key rates:
| Income Type | DTAA Rate | Domestic Rate |
|---|---|---|
| Dividends | 15% | 20% |
| Interest | 10% (15% in some cases) | 20% |
| Royalties | 10% | 20% |
| FTS | 10% | 20% |
The Indian subsidiary can opt for the 15% concessional tax rate under Section 115BAB if it is a new manufacturing company commencing operations before the deadline (check for current extensions of the March 2024 original deadline). This is a significant benefit — 15% vs 25% corporate tax.
Customs duties on electronic components range from 0% to 20% depending on the HS code. Finished smart home devices attract higher duties (15-20%), which is exactly why local assembly makes sense. Components imported for assembly under the Manufacturing Advance Authorization scheme may qualify for duty-free import if the finished goods are exported.
Technical fees and royalties paid to the Korean parent for product designs and software attract 10% withholding under the DTAA. Transfer pricing documentation is required for all inter-company transactions — component imports, technical fees, management charges, and brand royalties.
Ongoing Compliance
- MCA filings — Board meetings, AGM, MGT-7A, AOC-4
- Tax — Corporate tax, advance tax, TDS returns, transfer pricing report
- GST — Monthly GSTR-1 and GSTR-3B; electronics attract 18% GST on most items (28% on some appliances)
- Customs — Import documentation for components, customs valuation, duty payment
- BIS compliance — Annual surveillance audits for registered products, renewal of registrations
- Factory compliance — Annual license renewal, safety audits, pollution board returns
- Employment — EPF, ESI, minimum wages (Uttar Pradesh rates), bonus, gratuity
- PLI reporting — If enrolled in PLI scheme, periodic reporting of production and sales data to the nodal ministry
- RBI FLA Return — Annual filing
Common Pitfalls
- BIS certification delays blocking market launch — BIS testing and registration can take 3-6 months, and the Indian testing labs sometimes have backlogs. Start the BIS process immediately after finalizing the product specifications for the Indian market. Do not wait until the factory is ready.
- Customs valuation disputes on inter-company imports — When the Indian subsidiary imports components from the Korean parent at transfer prices, Indian customs may add 1-2% as a "special valuation branch" loading. Maintain detailed transfer pricing documentation that also satisfies customs valuation requirements (Rule 3-9 of Customs Valuation Rules).
- Ignoring India-specific product adaptations — Indian consumers have different preferences than Korean consumers. Voltage is 230V/50Hz vs Korea's 220V/60Hz. ISI marking may be required. Air purifiers need to handle AQI levels above 500 (not common in Korea). Water purifiers need to handle Indian water hardness levels (TDS 200-2000+ ppm). Invest in India-specific R&D from the start.
- Not planning for after-sales service infrastructure — Indian consumers expect service centers in their city. A Korean company selling premium products needs at minimum 10-15 authorized service centers across Tier 1 and Tier 2 cities from launch. Many Korean brands fail on this in their first year.
How Beacon Filing Helps
Beacon Filing handles subsidiary incorporation and the complex web of post-incorporation licenses required for electronics manufacturing in India. We coordinate with BIS testing labs, WPC consultants, and pollution control consultants to run multiple registrations in parallel and cut the setup timeline.
Our compliance packages for manufacturing subsidiaries cover MCA, tax, GST, customs, labor law, and environmental filings — with reporting formatted for Korean parent company standards.