Starting a manufacturing company in India makes a lot of sense presently. Setting up a manufacturing business post-coronavirus pandemic can fetch you big returns.
For the last few decades, the manufacturing industry in India had a free fall. The primary reason was the availability of cheap Chinese products. But, the post-COVID Chinese economy is under severe stress. Most companies putting extreme pressure on China and looking to shift their manufacturing location to other countries. India is a great option not only for foreign companies but also for domestic ones.
If you are the one who wants to reap the benefits of making money out of manufacturing products but doesn’t have the experience to do so, this article can be a great help.
Here are the 10 Steps to Start a Manufacturing Company in India:
1. Find the Right Product
The very first step is to find a product that has a good demand in the local market. One other factor that must be explored before finalizing the product. And that is your own experience and expertise. If you have knowledge regarding a certain product, and you have the feeling to run it successfully, go ahead.
Research the local market as much as possible and gather as much information as possible regarding the selected product’s trends, demand, and competition.
Some promising manufacturing sectors in India include:
- Textiles and Garments
- Automobile Parts
- Electronics and Electricals
- Food Processing
- Pharmaceuticals
- Chemicals and Fertilizers
If the feedback is positive, take the next step of creating the business plan. You can also use market analysis tools and reports from sources like the Ministry of Commerce and Industry, NITI Aayog, and various industry associations.
2. Create a Business Project Plan
A business project plan is the single most important document while starting a manufacturing business. It is recommended to hire a professional to create the project document.
This business plan is a critical document if you are looking for funds from investors. Every investor will ask for this document before investing in your business.
Your business plan should include:
- Executive Summary: Overview of your business idea, mission, and vision.
- Market Analysis: Detailed research on market demand, target audience, and competitors.
- Product Line: Description of the products you plan to manufacture.
- Marketing Strategy: Plans for promoting and selling your products.
- Operational Plan: Outline of the manufacturing process, machinery, and raw materials.
- Financial Projections: Estimated costs, revenue, and profitability.
3. Arrange Finance
Capital is an important aspect of a manufacturing business. You need both fixed capital and working capital to run it successfully. Check your bank balance and other funding resources before jumping into manufacturing products. Check with the business plan and figure out how much investment you need.
Approach financial institutions, and investors with the business plan and pitch your funding requirements. Unless you are sure of meeting your financial requirements, it is better to postpone the project for the time being.
4. Business Registration
You must register your manufacturing company as a legal entity. The common forms of business registration in India are the following:
- Sole Proprietorship
- Partnership Firm
- Limited Liability Partnership (LLP)
- Private Limited Company
- Public Limited Company
Read: How to Register a Company in India
5. Get the Necessary Permissions and Licenses
The number of licenses and permits needed to start and run a manufacturing business largely depends on the nature and type of the product you are going to manufacture. In general, a manufacturing business requires more licenses than other kinds of businesses.
Every state demands different kinds of licenses to permit to run a manufacturing business. Other than general licenses, check health, safety, and environmental regulations, if required.
Some of most common licenses required are listed below:
- Factory License
- GST Registration
- Pollution Control Clearance
- Fire Safety Certificate
- Trade License
In addition. ensure compliance with labour laws. It includes the Employees’ Provident Fund (EPF), Employees’ State Insurance (ESI), and various other labour regulations.
6. Find a Factory Location, Build a Plant, Buy and Install Machinery
Factory location plays a key role in the ultimate profitability of a manufacturing business. Find a location which is not far away from the marketplace. Also, take into consideration the cost of transportation of manufactured products. Many a time it is found the transportation overhead eats a considerable portion of the profit.
Also consider factors such as the availability of skilled labour, and infrastructure. Industrial zones and Special Economic Zones (SEZs) are often ideal locations.
After finalizing the business location, it is time to build your plant. Talk to the machine manufacturer and a consultant and as per their advice set up the plant infrastructure. You can also hire project consultants from online platforms like IndiaMART.
7. Procurement of Raw Materials
Another critical step towards establishing a manufacturing plant is to establish relationships with reliable suppliers for raw materials. You must ensure a consistent supply chain to avoid production delays.
Furthermore, implement stringent quality control measures to ensure that the raw materials meet your production standards. This will help in maintaining the quality of the final product.
8. Hire Manpower for Your Manufacturing Company
You will need both skilled and unskilled employees to run your factory smoothly. Chalk out a manpower requirement plan and recruit them. You can get help from a professional recruitment agency in hiring the right people.
9. Trial Production
The final stage in the process of starting manufacturing the product commercially is a must to go for a trial run. At least run this trial production for a week before launching the product for commercial purposes. Set up standing order procedures for a smooth manufacturing cycle including quality control, defective checks, Alan processes, and many more.
10. Developing a Marketing Plan
Finally, create a comprehensive marketing plan to promote your products. Utilize various marketing channels such as online advertising, social media, trade shows, and partnerships with distributors.
In addition, establish a robust sales network to reach your target audience. This can include setting up a distribution network, partnering with retailers, and leveraging e-commerce platforms.
The scope of a small manufacturing business in India is on the rise at present. If you have the conviction, dedication, and a proper business plan, manufacturing business comes with high returns like none other business.
Frequently Asked Questions
What are the key factors to consider when starting a manufacturing company in India?
Key factors include market research, business planning, location selection, legal compliance, technology adoption, and effective marketing strategies.
How much initial investment is required to start a manufacturing plant in India?
The initial investment varies depending on the scale of the business, industry, and location. It typically includes costs for land, machinery, labour, and working capital.
What are some government schemes that support manufacturing companies in India?
Government schemes such as Make in India, Start-Up India, and the MSME (Micro, Small, and Medium Enterprises) initiatives provide financial support, subsidies, and incentives to manufacturing businesses.
How can I ensure quality control in my manufacturing business?
Implement stringent quality control measures, establish relationships with reliable suppliers, and invest in employee training and technology to maintain high product quality.
What are the common challenges faced by manufacturing businesses in India?
Common challenges include regulatory compliance, supply chain management, competition, and fluctuating raw material prices. Effective planning and management can help mitigate these challenges.
How can technology and automation benefit my manufacturing business?
Technology and automation can streamline production processes, reduce costs, improve efficiency, and enhance product quality, leading to increased competitiveness in the market.
Hello, I’m Rupak Chakrabarty, a passionate advocate for small and medium enterprises (SMEs) and the driving force behind MUVSI Consulting, where I serve as a dedicated small business coach. With years of experience in the entrepreneurial world and a deep-rooted commitment to helping SMEs thrive, I bring a wealth of knowledge, expertise, and guidance to aspiring and established business owners alike.