Most people in India usually step into a business regime without any proper research. Owing to this, several businesses run into the trouble of losing their existence. This write-up will provide you with a solid blueprint of setting up a profitable garment manufacturing unit in India.
Market Analysis of Textile Industry
- Foreign Direct investment in the apparel and textile sector has attained a valuation of $3.75 bn till March 2021
- The Indian apparel industry is projected to grow to $65 bn by 2025-26 with a CAGR of 11%.
- The government is planning to set up seven mega textile parks with an aim to double the industry size to $190 bn by 2025-26
- In 2020, the Indian technical textile market was accounted for $7.1 bn and is expected to attain the valuation of $11.6 bn by 2027 with a CAGR of 7.2 per cent.
- The Indian technical textile market for woven is likely to grow at a CAGR of 7.4% by 2027
These figures imply that setting up a garment manufacturing business is indeed a profitable venture for startups in India.
Read our article:How to Setup Tannery Business (Processing Unit) in India?
Viable Blueprint of Setting up Garment manufacturing business in India
Here is the detailed blueprint of setting up a garment manufacturing business in India
Step 1: Conduct extensive market research
It is vital to conduct extensive research pertaining to each link in the supply chain of the garment business to know about things like;
After conducting research on the above parameters, it is vital to dig down the manufacturing landscape to know the degree of competition.
It is also of paramount importance to research B2B market segmentation to identify what the rivals have to offers and how your business can differ by rendering a USP to the key end-users.
Step 2: Know the market opportunities
To establish the manufacturing facility, you need to get accustomed to the existing market opportunities.
If you opt to step into a saturated market where the degree of competition is significantly higher, then your chances of securing good profit margins will be less. Henceforth, it is advisable to identify a key market that excels in low competition and ensures good growth potential for start-ups. You also need to get familiar with the consumer segmentation that you wish to target. This sustainability trend gets its push from consumers over 40 years of age. Therefore the target consumers, in this case, would be millennials.
Furthermore, many consumers prefer buying a variety of clothes and have great admiration for fast fashion.
Therefore, in such a scenario, the manufacturer will have to establish a facility & focus on changing patterns or design on a weekly basis. Some mainstream brands like Mango and Zara source garments from South Asian nations, so there are viable opportunities to explore the global market after establishing the facility,
Step 4: Finalize the product portfolio
You need to decide the products you wish to produce at your manufacturing facility after your research. You can start with plenty of products and diversify the product range in future.
For example, you can start by producing trendy or staple items that are high in demand.
You can also extend your product profile by adding other popular products such as denim wear, nightwear, men’s shirts, so on and so forth. From a marketing standpoint, it is advisable to start with one specific category that adheres to consistent demand.
Step 5: Identify Key Location for Production Facility
Identifying the apt location is a key step for establishing the Garment manufacturing business. It is advisable to start looking for textile hubs of India like Gujrat, Tamil Nadu, MP, UP, Rajasthan and WB. Textile hubs offer a string of benefits to the manufacturers that aid them to grow more swiftly. There are plenty of factors that one has to take into account while selecting the location. Some of them include;
- Cost of the land availability of workforce
- Raw material sources
- Prevailing Regulations and Laws
Step 6: Figure out the Production Volume
Depending on the investment potential and consumer demand, you can compute the per day production of the facility and then accordingly establish the unit. You want your facility to operate at full potential the gain the most. Thus, it is essential to compute the production requirement aptly after conducting the required research.
Step 7: Procure Required Equipment and Raw material for Production
Based on the production volume, you decide how much equipment you would need to start the manufacturing process.
You need to compute per machine production capacity on a per-day basis and aptly invest in it. Moreover, you need to pinpoint the number of workers you will require to run the plant effectively; you will need to compute the number of direct labour, floor manager, production supervisors needed. After that, connect with the trusted suppliers for the procurement of raw material. You will also need to compute the volume of raw material required on a weekly or monthly basis that will keep your Garment manufacturing business running without an issue
Step 8: Compute Investment requirements and discover funding sources
This step requires creating a financial model encompassing all the fixed and variable cost estimations. This will help you accurately figure out the initial investment needed for setting up the production facility.
This model will serve as a legitimate medium for knowing the amount of investment needed from time to time. You may also need to procure funding to get this investment, as establishing a production facility is expensive. It is vital to opt for suitable funding options that do not pose any risk for your business in future.
Customer acquisition is a tedious task for new companies. One needs to invest a significant amount of time and investment in marketing to build a sustainable presence in the target market. You will have to appoint a marketing team from the start to ensure customers know about your offerings.
You need to underpin a marketing strategy focussing on your USP, create a user-friendly website, and utilize social media marketing for effective consumer targeting, tie up with global brands and so on. All this is considered as the customer acquisition costs.
Step 9: Secure Mandatory Legal Permits and licenses to run the Production Facility
Once you are done with the research and investment work, you can channel your effort toward establishing the plant. Below is the typical legal procedure for setting up a manufacturing plant in India
1: Incorporate your business and open the current account
The company incorporation refers to a legal process used to constitute a corporate entity or an establishment. An incorporated establishment is an autonomous legal entity that is entirely separate from its owners. Choosing an apt business structure is the first and foremost step in the company incorporation process. After that, the applicant is required to file an e-form on the official portal of the Ministry of Corporate Affairs. The e-filing is done through the SPICe+ form, divided into imperative parts, i.e. Part A and Part B.
2: Factory License
As per the norms of the Factory Act, 1948, all factory owners must register their production facility with the local governing authority before commencing the operation. The right of granting Factory license is in the hand of the Labour Commissioner Organisation.
3: Fire NOC
A fire license refers to a legal document granted by the Local Municipal Authority of the respective state. This license ensures that the commercial property is fire-resistant and less likely to damage lives caused by fire accidents. The Deputy Chief Fire Officer or Chief Fire Officer has the required authority for granting this certificate. Fire Department NOC is a legal compulsion for establishments that have a height of more than 15 meters.
4: NOC from SPCB
Under the current pollution control norms, all types of industrial facilities, before establishing, are mandated to secure the NOC from the respective SPCB. To secure this legal consent, the applicant is required to file an online application on the State pollution board portal.
5: BIS certification
The BIS (Bureau of Indian Standards) is a national certification body in India that operates under the Indian Ministry of Consumer Protection, Food & Public Distribution. BIS is the prominent certification body that plays a crucial role in the standardization of the Indian quality standards
6: ISO 9001:2015
ISO 9001 certification indicates that the product offered by the company comply with international standards and indeed are of supreme quality. ISO certification is essential for company’s growth because:
- It serves as proof of activities performed as per the protocol.
- Management of the establishment can examine the ongoing processes and determine the scope of improvement to ensure quality policy.
- To operate in a controlled manner
- It mitigates severe bottlenecks within the processes.
- It ensures seamless coordination between different verticals.
- Creates a framework for implementation and maintenance of a system
- Helps in overcoming errors in actions
The garment manufacturing business is a substantial business model that attracts minimal risks has immense growth potential. If you are looking for business opportunities that stick around a good success rate, then look no further than the garment manufacturing business.
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