Transfer Pricing for Manufacturing & Engineering
Contract manufacturing, technical know-how royalties and cross-border component trading are the backbone of India's manufacturing transfer pricing exposure. We benchmark and document all of it.
India as a global manufacturing base
Whether toll-manufacturing for a group principal, licensing foreign technology, or trading components with related suppliers and customers, manufacturing entities carry some of the largest transaction values — and correspondingly large TP adjustment risk.
Typical structure
An Indian plant manufactures on a contract or toll basis for a group principal, pays technical know-how royalty, and imports raw materials or exports finished goods to related entities.
Where Transfer Pricing applies in Manufacturing
Contract / Toll Manufacturing
Manufacturing for a group principal on a cost-plus or toll fee basis.
Technical Know-How Royalty
Licence fees for manufacturing processes, designs or patents from the parent.
Raw Material & Component Imports
Purchasing inputs from related overseas suppliers.
Export of Finished Goods
Selling finished products to group distribution entities abroad.
Machinery & Tooling Transfers
Intra-group transfer or leasing of manufacturing equipment.
Engineering Design Services
Cross-border engineering and design support charged between group entities.
How these transactions are benchmarked
TNMM / CPM
Manufacturing margin benchmarking against comparable contract manufacturers.
CUP
Raw material import pricing and royalty rate benchmarking.
PSM
Profit split for integrated manufacturing-cum-R&D operations.
Safe Harbour (where applicable)
Pre-agreed margins for eligible manufacturing categories.
Margins and royalties that reflect real functions performed
We build a functional and asset profile that accurately reflects manufacturing complexity, benchmark margins against genuinely comparable manufacturers, and test royalty rates against real licensing market data.
Manufacturing Benchmarking
Comparable company margin analysis by sub-sector.
Royalty Defensibility
Technology and know-how licensing rate justification.
Import Pricing Analysis
CUP-based raw material and component pricing review.
Litigation Support
Defence of manufacturing margin positions on appeal.
Our Manufacturing Transfer Pricing services
Benchmarking Study
Sub-sector-specific comparable manufacturer analysis.
TP Documentation & 3CEB
Local File and Accountant's Report covering all transaction categories.
Safe Harbour Advisory
Eligibility assessment where sector-specific rules apply.
Audit & Litigation Support
Representation before the TPO, DRP, CIT(A) and ITAT.
Manufacturing for or with a group company?
Get your margin and royalty structure reviewed, free.