Manufacturing Agreement Format (Job Work / Contract Manufacturing)
Have products made by a third-party manufacturer, either on job work using your materials or on a contract manufacturing basis.
What it is
A manufacturing agreement is between a brand owner or OEM (the principal) and a manufacturer who makes products for it. In job work, the principal supplies raw materials and the manufacturer processes them for a charge. In contract manufacturing, the manufacturer may also buy the materials. The agreement sets the specifications and quality standards, acceptable rejection and wastage, processing charges, who owns the designs and moulds, inspection, confidentiality and liability for defects.
When it is used
- Brands outsourcing production to a contract manufacturer.
- Sending goods to a job worker for processing such as printing, plating or assembly.
- Private-label manufacturing.
What the template covers
- Principal and manufacturer details and GSTINs
- Type of arrangement and product description
- HSN code, specifications and quality standards
- Rejection and wastage limits
- Processing charge and payment terms
- IP and design ownership, job work return period, term and jurisdiction
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Agreement
Agreement Date; Place
Principal
Principal (Brand Owner / OEM) Name; Address; GSTIN
Manufacturer
Manufacturer Name; Factory Address; Manufacturer GSTIN
Arrangement
Type
Product
Product Description; HSN Code of Finished Goods; Quality Standards / Specifications; Acceptable Rejection / Wastage Rate (%)
Commercial
Processing Charge per Unit (₹); Payment Terms
IP
IP / Design Ownership
GST / Compliance
Job Work Return Period (CGST Sec 143)
Term
Initial Term (months); Governing Jurisdiction
Stamp duty, registration and filing
Under Section 143 of the CGST Act, a registered principal can send inputs to a job worker without paying tax, but inputs must be brought back within one year and capital goods within three years, failing which they are treated as supplied. Movements are reported in Form ITC-04. The job worker charges GST on the processing charge. TDS may apply on payments for work. Stamp duty depends on the State.
Generate the Manufacturing Agreement (Job Work / Contract Manufacturing)
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows? Contact SKAG and Associates
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Frequently asked questions
What happens if job work goods are not returned within one year?
They are deemed to have been supplied by the principal on the day they were sent, and GST with interest becomes payable.
Who files Form ITC-04?
The principal, for goods sent to and received from job workers, on the GST portal.
Who owns moulds and designs?
Whoever the agreement says. Usually the principal owns designs and moulds it pays for, and the manufacturer must return them on termination.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.