Start a Factory: How to Launch a Manufacturing Business in India

When you start a factory, a physical operation that turns raw materials into finished goods for sale. Also known as manufacturing setup, it’s not just about buying machines—it’s about building a system that runs profitably, complies with rules, and scales without burning out. Most people think you need millions to begin. But in India, thousands are starting small factories with under ₹5 lakh, making things like custom metal tags, polymer parts, or textile accessories that sell online and to local businesses.

Where you set up matters more than you think. Gujarat, India’s top chemical and polymer manufacturing state. Also known as India’s industrial heartland, it’s home to over 44% of the country’s chemical output and major polymer hubs like Dahej and Jamnagar. If you’re making plastics, dyes, or packaging, being near these clusters cuts logistics costs and gives you access to skilled labor and bulk suppliers. Then there’s the money side: PLI scheme, a government incentive that pays manufacturers for increasing production. Also known as Production Linked Incentive, it’s open to electronics, pharma, and textiles—but also applies to polymer-based products if you hit volume targets. Combine that with PMEGP, a loan subsidy program for micro-enterprises. Also known as Prime Minister’s Employment Generation Programme, it gives up to 35% subsidy on equipment costs for small factories. These aren’t theoretical perks—people are using them right now to launch polymer molding units, textile printing shops, and metal fabrication lines.

What you make determines your profit. The most successful small factories aren’t making generic goods—they’re solving niche problems. Think engraved pet ID tags, custom polymer containers for pharmacies, or recycled plastic furniture for rural homes. These have 10x margins because they’re not mass-produced. You don’t need a huge plant. You need one good machine, a reliable supplier, and a clear customer. The posts below show exactly how others did it—from choosing the right location to applying for government help, from picking high-margin products to avoiding the traps that kill 80% of new factories in the first year. You’ll see real examples, real numbers, and real steps—no fluff, no theory. Just what works when you’re starting from scratch in India.