India is one of the world’s largest textile producers, with a deep-rooted heritage and booming global demand.
The Indian textile sector contributes nearly 2.3% to national GDP and over 11% of total exports (Ministry of Textiles). Starting a legal textile business in India opens access to global trade, funding, and government subsidies.
Whether you manufacture garments, yarn, or home textiles, follow these key legal steps to get started right.
Why You Should Register Your Textile Business in India
India has 6.3 crore+ MSMEs, and a significant portion are textile-related (MSME Annual Report 2023). Registering your textile unit gives you legal recognition and unlocks access to formal credit.
It helps you participate in Make in India and PLI schemes, vital for manufacturing success. Most founders choose company registration for textile manufacturers to enjoy limited liability and build brand trust.
The Ministry of Corporate Affairs (MCA) governs the incorporation of all legal business structures.
Process to Start a Textile Manufacturing Unit in India
Step 1: Select a Legal Business Structure
Most textile entrepreneurs register as a Private Limited Company or a Partnership Firm in India. Company registration for textile manufacturers helps protect personal assets and ensures credibility with buyers and government bodies. A registered company can easily open bank accounts, apply for loans, and enter into contracts.
Step 2: Apply for GST Registration
GST is mandatory if your textile business turnover crosses ₹40 lakhs (₹20 lakhs in some states). You must apply for GST registration for textile businesses to sell legally and claim input tax credit. Without GST, you cannot sell to wholesalers, distributors, or e-commerce platforms in India.GST helps streamline tax compliance and improves your credibility with customers and suppliers. As of early 2024, over 1.4 crore businesses in India operate under the GST regime.
Step 3: Register Your Unit Under MSME (Udyam Registration)
Textile businesses should register on the Udyam Portal to get MSME recognition and subsidies. This registration helps in claiming interest subsidies, collateral-free loans, and access to tenders. You need the following documents:
- PAN
- Aadhaar, and
- Basic business information
Once registered, you get a Udyam certificate, essential for applying to central textile schemes.
Step 4: Secure Local Licenses and Clearances
Depending on your setup, you may need the following:
- Factory License under the Factories Act, 1948 (if you employ more than 10 workers with power).
- Consent to Establish (CTE) and Consent to Operate (CTO) from your State Pollution Control Board.
- A Trade License from the local municipal body to legally manufacture and sell in your region.
- Fire Safety Certificate and Building Plan Approval from local departments.
Each state may have specific local laws, so always verify requirements with local authorities.
Step 5: Comply with Labour Laws
If you hire workers, register under key labour laws to avoid penalties and ensure employee benefits:
- EPFO Registration for Provident Fund contributions.
- ESIC Registration for medical insurance and sickness benefits.
- Maintain payroll records, submit monthly returns, and deposit contributions on time.
Labour law compliance boosts employee satisfaction and reduces long-term legal risks.
Step 6: Tap into Government Schemes for Textile Sector
The Indian government offers incentives to modernize textile production and boost global exports.
Key Schemes You Can Avail:
- ATUFS (Amended Technology Upgradation Fund Scheme)
Offers 15–25% capital subsidy on modern machinery for weaving, spinning, or garment units. - SAMARTH Scheme
Provides skill development training for textile workers to meet modern industry demands. - RoDTEP Scheme
Offers duty remission benefits to exporters to enhance competitiveness in global markets.
You can only apply to these schemes if your business is registered and compliant with GST and MSME norms.
Legal registration is the foundation for long-term textile business growth in India. It builds brand trust, attracts investors, and unlocks powerful government incentives and export benefits.
If you haven’t registered your textile unit yet, now is the best time to take action. Partner with RegisterKaro to complete your company and GST registration within days.
