Transfer pricing for manufacturers
Where a factory buys from or sells to an associated enterprise, the price is later tested against what the plant actually does. We prepare the functional analysis, benchmarking, documentation and accountant's report for manufacturing groups with overseas associates and covered domestic transactions.
Last reviewed 3 October 2026
A manufacturing group with overseas associates, or with covered domestic flows, is assessed on whether its documentation matches how the plant buys, makes and sells. A study copied from an earlier year, or drafted without visiting the plant, is difficult to defend when an officer questions the margin. From our Nashik office we build the transaction list, the functional analysis, the benchmarking and the accountant's report. The current tax year falls under the Income-tax Act, 2025, and earlier years under the Income-tax Act, 1961.
Transfer pricing on a manufacturing group
Some factories sell to or buy from associated enterprises abroad. Others move goods and services across Indian associates where the law applies. If the transaction list is incomplete, or the functional analysis describes a plant that does not exist, an adjustment in assessment is the usual result. Our work starts with the list and with the plant itself. The notes below are general and reflect the law as at 1 October 2026.
Exports and imports with associates
Finished goods, components, tooling amortisation, quality claims and demurrage all belong on the transaction matrix when the counterparty is an associated enterprise. A missed line is a common reason for a report to fail in assessment.
Contract manufacturing and loan-licence models
The tested party and the method are decided by who owns the material, who bears yield loss and who holds the marketing intangibles. In pharmaceutical and engineering contract arrangements for API batches, formulations or machined assemblies, the contract is read against the actual functions of the plant.
Domestic group flows
Job work, management charges, guarantees and interest between Indian associated enterprises can fall within the framework where the statutory conditions are met. The first step is to map the manufacturing company against the selling, holding and service entities.
Functional facts at the plant
Design responsibility, steel buying, inventory risk, warranty and capacity utilisation are established through discussions with staff on the shop floor and in dispatch, in addition to a reading of the inter-company agreement. The pricing method follows from that analysis.
Documentation and return calendar
Local documentation and the accountant's report have dates tied to the tax return. A group with a March year-end should plan the matrix and the comparable search before the return is drafted. For the tax year beginning 1 April 2026, provisions are read under the Income-tax Act, 2025, with 1961 section numbers noted where helpful.
Related reading
Full transfer pricing scope: transfer pricing. Sector context: manufacturing. Domestic groups: transfer pricing for Indian group companies. To discuss a group, contact the firm.
Common questions
Does every manufacturer who exports need transfer pricing documentation?
No. Documentation and the accountant's report apply when you have international transactions with associated enterprises (and certain domestic transactions) above the thresholds in the law. Exports to unrelated customers fall outside that framework.
Our overseas parent supplies free tooling. Does that matter?
Free or subsidised tooling can be a separate international transaction, or it can affect the pricing of the parts. It should appear in the functional analysis and, where required, on the transaction list before benchmarking begins.
Can plant interviews happen at the factory?
Yes. Functional interviews are often clearer on site. The study, benchmarking and report are completed from the Nashik office.
What if we also have GST valuation questions on the same supplies?
GST related-party valuation and income-tax transfer pricing are separate regimes with different tests and thresholds. The same facts should still be described consistently in both files, and we keep the two narratives aligned.
Manufacturing, Transfer pricing. See also: Transfer pricing, Taxation, Manufacturing finance
Contact the firm
About Transfer pricing for manufacturers, or any related matter. A phone number or an email address is enough for us to reply.
- Office
- Office at Plot 08, Eden Complex, Gangapur Road, Nashik 422222
- Hours
- 9:30 AM to 8:00 PM; other times by appointment