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Legal and Statutory Compliance Required to Start Textile Manufacturing Industry in India


Introduction: Textile Manufacturing Industry

Relations between India and the textile manufacturing industry are not new as it goes back hundreds of years when textile crafts of the country used to be famous all around the world for their finest quality. Even today the significance of the textile industry cannot be underestimated as it stands second only to agriculture in the list of the largest employment-generating sectors in the country, employing over 4.5 crore people directly and another 6 crores through associated business activities. Not only is the textile manufacturing industry highly labor intensive but also known for employing unskilled and semi-skilled labor force at scale and is an important source of employment for women, hence contributing to their empowerment. If we take this from the perspective of India's economy, it accounts for more than two percent of the total GDP (Gross Domestic Product) and more than twelve percent of the manufacturing sector. All these make starting the textile manufacturing industry in India a lucrative business idea that can generate high returns on investment. Let’s talk about it now in a detailed manner.

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Reasons to Set Up Textile Manufacturing Industry in India

  • Growing Domestic Demand

Even if we take into account major global players including Japan and the USA, the domestic textile market of India has been dominating almost everyone in terms of consumption and demand. With the rising urban population and the living standards of the rural population, the Indian textile manufacturing industry is expected to account for USD 220 billion by the end of 2025. All these will help the domestic textile industry to thrive irrespective of the uncertainties that are and will be there in the global market. 

  • Availability of Raw Materials in Abundance

Being a tropical country, India has no dearth of natural fibers including cotton, jute, silk, and synthetic fibers such as polyester filament fiber. And, this makes the country perfect for setting up the textile manufacturing industry. Unlike the foreign textile giants that depend on imports of raw materials, the Indian textile businesses are sort of self-sufficient and can easily get all they need in the country.

  • Availability of Skilled and Unskilled Labor

While the world is getting older with time, India is still young and all the credit goes to its demographic dividend. More than half of India’s people are below the age of 25 years. In fact, the average age of an Indian citizen was around only 29 years as of 2020. Whereas, if we take a look at the age of an individual in China and Japan, it is 37 and 48 years respectively. With this young workforce, India has an edge over its competitors in terms of the availability of human resources. To make them skilled enough for the industry, the government of India has also launched many initiatives, including the Skill India program.

  • Government’s Policy Support

Last but not least is the support that the Indian government has been showing to the textile industry. Recently, it has allowed 100 percent FDI (foreign direct investment) to attract foreign investments in the sector. Besides this, it has also launched several export promotion policies to increase foreign exports from the country. Let’s go through other major government initiatives as well.

Government Initiatives to Promote Textile Manufacturing Industry

  • SAMARTH (Scheme for Capacity Building In Textile Sector)

The textile industry is labor intensive and the requirement of unskilled labor that it presents easily gets filled by the people of the country, especially from rural regions. Labor supply gaps come into the picture during the requirement of skilled manpower. To address this situation, the Indian government has launched SAMARTH under the “Skill India” initiative to provide people with the required skilled programs. 

  • National Technical Textile Mission

With an outlay of over INR 1480 crore, the central government has launched the National Technical Textiles Mission for 2020-21 to 2023-24. This mission aims to increase the usage of technical textiles in various flagship missions, and programs of India including strategic sectors.

  • Production Linked Incentive (PLI) Scheme

Recently, the PLI Scheme has been launched by the central government with an approved outlay of Rs 10,683 crore to raise the production of MMF (Man-Made Fibre) apparel, MMF fabrics, and products of Technical Textiles in India to push the textiles industry to achieve size and scale and to get an edge over its foreign competitors. This scheme is expected to create over 7.5 lakh new job opportunities.

  • PM-MITRA (Mega Integrated Textile Region and Apparel)

With an outlay of INR 4445 crore, the Indian government has launched the PM-MITRA scheme to run the textile industry of India at par with global standards. Under this scheme, it has recently announced the setup of seven mega textile parks with world-class infrastructure including the plug-and-play facility.

  • Scheme for Integrated Textile Parks (SITP)

Launched in 2005, the Scheme for Integrated Textile Parks (SITP) works towards creating world-leading textile infrastructure with the state of the art technologies for setting up more textile units.

Compliances Required to Start Textile Manufacturing Business

  • Memorandum and Articles of Association (AoA)

Issued by the Registrar of Companies, MoA is mandatory to fill for every company during the registration process. It contains all the basic information about the company and the purpose behind its incorporation. Whereas, an AoA is a document that contains the guidelines on which the company will run its operations.

  • Certificate of Incorporation

A certificate of Incorporation is a legal document, granted by the Ministry of Corporate Affairs, that establishes the legal status of your business. It’s mandatory for the formation of a corporation as it allows the business owners to run their work operations as a separate and legal entity. 


Starting a textile manufacturing business also requires people to get pollution clearances from their respective State Pollution Control Boards. It involves two categories of consent. First is CTE (Consent to Establish), which is mandatory before establishing the business and the second is CTO (Consent to Operate), which is required for commencing the work operations.

  • Fire NOC

No objection certificate from the fire department is also mandatory to prove compliance with the fire safety rules and norms prescribed under the regulatory frameworks. To obtain it, the applicant company may be required to submit documents, including building plans, building models, and a certificate from the architect. 

  • Factory License

As per the Factory Act 1948, every factory owner is bound to get registered their facilities with the local authorities before running their business. It serves as a document of approval given by government authorities to carry out manufacturing activities.

  • Trademark Registration

Even though Trademark registration is not a must requirement, getting it done can be crucial for the safety of the IPRs (Intellectual Property Rights) of a business. Because what’s the benefit of putting so much effort into building a brand, which can easily become a victim of Brand Piracy, right?

  • Import-Export Code

The Import-Export Code issued by the Directorate General of Foreign Trade is mandatory for every business entity indulging in exporting or importing goods in India.

  • GST Registration

Registration under GST (Goods and Services Tax) is essential for every business whose annual turnover crosses the limits prescribed under the rules, which is INR 40 lakhs for the normal states and INR 20 lakhs for the states of special category.


Given the growing demand and investment, starting a textile manufacturing industry in India can be quite beneficial, especially when there are advantages available such as sufficient raw materials, infrastructure, and crucial government support. True, complying with the compliance requirements can be complicated at first, but that’s not something to worry about as the experts of India’s leading business consultation service provider, Corpseed ITES, are available to help you at every step. For more information, you can freely contact Corpseed.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


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