Starting a business in India involves a series of legal and regulatory steps—and the process can vary depending on the nature of the business. Two of the most common types of businesses in India are manufacturing companies and software (IT) companies. While both may follow similar procedures for basic registration, there are several differences in terms of legal structure, licensing, tax benefits, and compliances.
In this blog, we’ll explore the key differences between manufacturing and software companies when it comes to registration in India.
1. Nature of Business
Manufacturing Company: Involves production or processing of goods in a factory or plant. It requires physical infrastructure and machinery.
Software Company: Primarily deals with development, maintenance, and sale of software products or services. It often operates virtually or from office spaces with minimal infrastructure.
2. Company Registration Process (Similar for Both)
Both manufacturing and software companies can be registered under any of the following structures:
Private Limited Company
Limited Liability Partnership (LLP)
One Person Company (OPC)
Partnership Firm or Sole Proprietorship
Common Steps:
Apply for Digital Signature Certificate (DSC) and Director Identification Number (DIN).
Name reservation through the RUN (Reserve Unique Name) service on the MCA portal.
Filing Incorporation Forms (SPICe+).
PAN and TAN application.
GST registration (if applicable).
While the structure and steps are largely the same, the business activity code and object clause in the Memorandum of Association (MoA) will differ.
3. Industry-Specific Licenses & Approvals
Manufacturing Company:
Factory License (under Factories Act, 1948) – mandatory if the number of workers or power usage exceeds the legal threshold.
Pollution Control Board Clearance – especially for industries dealing with hazardous materials.
Udyam Registration (MSME) – for small-scale manufacturers.
Shops & Establishment License – for office and factory premises.
Import Export Code (IEC) – if raw materials or machines are imported/exported.
Environmental Clearances – for certain types of manufacturing.
Software Company:
Udyam Registration (for IT services) – helps avail MSME benefits.
Shops & Establishment License – for office premises.
STPI Registration – for companies exporting software and IT services.
Import Export Code (IEC) – required if exporting software.
GST Registration – especially if providing services across states or internationally.
4. Location and Infrastructure Requirements
Manufacturing Company: Needs physical infrastructure such as land, plant & machinery, warehousing, and logistics. Zoning laws and industrial area approvals may apply.
Software Company: Can be started from a small office or even a home office. No factory or physical manufacturing space is needed.
5. Taxation and Incentives
Manufacturing:
Eligible for Production Linked Incentives (PLI) and Make in India schemes.
Special depreciation benefits on machinery.
Power subsidy, land allotment benefits in industrial zones (in some states).
Software:
Can claim benefits under Startup India and Digital India initiatives.
STPI units enjoy income tax exemptions (subject to eligibility).
R&D deductions for product development.
6. Labour Law Compliance
Manufacturing Companies usually employ more blue-collar workers and need to comply with:
ESI, EPF, Labour Welfare Fund
The Factories Act
Safety and hygiene regulations
Software Companies usually employ white-collar workers and must comply with:
Shops & Establishments Act
PF, ESI (if applicable)
IT/ITES-specific employee welfare norms (in some states)
7. Compliances Post Registration
Conclusion
While the basic registration process under the Companies Act is similar for both manufacturing and software companies, the key differences lie in licensing, infrastructure requirements, industry-specific compliances, and tax incentives.
Understanding these distinctions can help you prepare better, reduce compliance risks, and make informed decisions when starting your business in India.
Need help registering your company?
We offer expert assistance for manufacturing and software company registrations, from choosing the right business structure to managing compliance.
Contact us today for consultation!