Can I Register My New Manufacturing Business as LLP in India?

Last Updated at: Jul 06, 2021
New Manufacturing Business
The MCA has recently launched the “LLP Settlement Scheme, 2020” to provide relief to the LLPs troubled by the COVID-19 outbreak. This scheme grants the LLPs a one-time waiver of penalties against the delayed filing of certain compliance requirements. Also, various timelines for filing statutory requirements have been extended so that these entities can make a ‘fresh start’.


Do you own a Manufacturing Business? You have a reason to smile now!

We have received a lot of questions such as ‘can LLP do manufacturing business?’  ‘can a manufacturing business do LLP incorporation’ and many more. Go through this blog. We will clear all your doubts regarding this.

To start with, let’s discuss what a limited liability partnership (LLP) is.

What is an LLP? Why are the benefits of registering as an LLP?

An LLP is a kind of business formation in India. This form of business widely prefers by aspiring startups who want to take their businesses to the next higher level with funds. The concept of LLP was introduced in India in 2008 by introducing the Limited Liability Partnership Act. Likewise, Section 2(1) (e) of the Act defined LLP as a business that included every trade, service, profession, and occupation.

Many regular partnership firms prefer to register themselves as LLPs because of their attractive features and additional benefits such as-

  • Protection of limited liability available to the partners, with the flexibility for organizing the internal company structure as a partnership
  • Protection of business name
  • Ease of business listing with the RoC ( Registrar of Companies)
  • An LLP enjoys a better professional recognition among the clients, with the comparison on a partnership firm
  • Recognition under the flagship “Startup India – Standup India scheme” of the Central Government

Register Your Business Now

Strong MCA move impacted manufacturing business

 The MCA (Ministry of Corporate Affairs) imposed certain restrictions on the manufacturing businesses vide their memo on CRC/LLP/e-Forms dated 06.03.2019.  The memo stated that-

  • Manufacturing activities do not satisfy the definition of ‘Business’ mentioned in the Limited Liability Partnership Act, 2008.
  • Similarly, on this ground, businesses that mention manufacturing and allied activity as their main activity will bar from LLP Registration

This memo raised doubts about the status of more than 12000 active LLPs that were already into the manufacturing sector.

Widespread criticism by ICSI

The MCA was heavily criticized for this move. The ICSI (Institute of Company Secretaries of India) raised strong objections against this restriction and submitted a representation on 8th April 2019. In the representation, it said- “It has been noticed that in recent times the manufacturing businesses are being restricted from incorporating as LLP on the ground that manufacturing activities do not fall under the definition of `Business’ as per the Limited Liability Partnership Act, 2008. Similarly, the conversion of private and unlit companies into LLP has restrictions now on the same grounds.

Withdrawal of the MCA memo

Considering the Strong objection raised by the ICSI and the media, the MCA decided to withdraw the controversial memorandum with effect from 17th April. The MCA said in a message posted on its official site- “Manufacturing & allied activities were restricted in LLPs vide OM (Office Memorandum)… dated 06.03.2019. This OM invoking the restriction regarding manufacturing & allied activities has been withdrawn with immediate effect

Therefore, the businesses with manufacturing and allied activities can now be registered as a limited liability partnership as per the provisions of the Limited Liability Partnership Act, 2008.

However, there was one apprehension in the industry spheres. A section raised doubt if a manufacturing business having LLP incorporation would still be allowed to operate as an LLP if it scaled up its operations on a later date. Moreover, the MCA soon came up with a clarification. It announced that it would fix a threshold limit of annual turnover or share capital for a manufacturing unit intending to do LLP registration. Further, these guidelines are expected to be similar to those issued for OPCs (One Time Companies) and other such small companies.

Good news for manufacturing Business!

The withdrawal of the MCA memorandum dated  06.03.2019 meant that manufacturing businesses can now register as limited liability partnerships.  

Additionally, if you have a business related to manufacturing and allied activities and you wish to incorporate it as an LLP, team Vakilsearch can help you through the LLP incorporation process.

With Vakilsearch, you can do LLP registration online with a few simple steps. Our dedicated representatives will be in constant touch with you right from the word go. Further, they will collect from you all the documents required. We will help you pick the LLP name of your choice and will also get 2 DSCs with 2 years’ validity. Finally, we will draft, execute, and file the LLP agreement on your behalf. Additionally, post the submission; we would be doing the necessary coordination with the authority for expediting your application. Meanwhile, you can check the status of your application on the Vakilsearch online portal. Therefore, you just need to sit back & relax! We will ensure you receive your registration certificate in just a couple of days.