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Compliances Needed To Start A Wood Products Manufacturing Business In India


Introduction: Wood Products Manufacturing Business

From Ancient times to the modern, one substance that has proved durable is wood. Wood forms a large part of our lives. The Indian furniture industry is well-known both in India and internationally for its extensive handmade and beautiful traditional art and design. The furniture market has changed over time. Its business has grown to include planned interiors like closets, couches, and other furniture in addition to chairs and tables. From tiny equipment to large doors and furniture, wood has been the top preference of all products for ages. Even though highly profitable and in demand, wood of all types is obtained from trees and each individual hold the responsibility to conserve the forests in the world. To ensure the same, the Government introduced several regulations and restrictions to facilitate the wood business in India. Different types of trees have varied restrictions for being used for commercial purposes. 

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Obtaining a license and registration in respect of starting a business Wood Products Manufacturing Business in India is essential. Rules regarding the same may distinguish as they are established by States individually and naturally. This blog shall further consist of the compliances. 

Is A Wood Products Manufacturing Business In India Profitable?

The industry that produces wood products consists of businesses that work to create goods from wood. This sector employs businesses that create manufactured homes, prefabricated wood structures, wood trusses, plywood, veneer, wood containers, and plywood flooring. The sawing, planning, shaping, laminating, and assembly of wood goods into bolts or lumber are all parts of the manufacturing process for wood products. The Indian economy's strong growth is heavily influenced by the wood and wood-based industries. This industry is ready for consistent expansion and has the real potential to multiply from its current levels. Given that India is one of the biggest consumers of wood, the Wood Industry is one of the important industries with enormous potential to benefit from these advances. The need for wood in India's furniture industry has increased due to the growing popularity of traditional furniture. As more people have begun using wood for decorating, outfitting cabinets, and other functions, the use of wooden goods in homes has grown during the past few years.

What Are The Different Types Of Wood And Their Products?

Wooden furniture is timeless, despite the frequent changes in interior design trends. Compared to other materials, furniture made in India from the best wood is robust, durable, and needs little upkeep. However, several types of wood are employed to create furniture and several other products in India. Wood exists as hardwood and softwood and the following are their types-

  • Hardwood

These trees produce wood that is often harder than softwoods, as their name implies. Hardwoods grow more slowly than softwoods due to their more complicated structural makeup. The presence of pores or vessels distinguishes hardwoods from softwoods as its key characteristic. Hardwoods are used for a wide variety of things, including floors, building materials, boats, furniture, musical instruments, flooring, cooking, barrels, and charcoal production. Solid hardwood is typically more expensive than softwood as they are highly durable owing to its strength. 

  • Softwood

Softwoods are less expensive and more manageable than hardwoods. As a result, they account for the majority of the wood that is utilized globally, with softwoods making up around 80% of all timber. Softwoods are used in a variety of products, including furniture, Medium-Density Fibreboard (MDF), paper, Christmas trees, and building materials like windows and doors. One of the most widely utilized softwoods is Pine.

What Are The Licenses And Permissions Required For A Wood Manufacturing Business In India?

Even though individual States have been granted the power to issue licenses for the wood-based industry and its businesses, there are a few compliances that are common throughout and they are as follows-

  • Register the Business

A manufacturer must register their company in India in compliance with the regulations set forth by the Ministry of Corporate Affairs before producing any items there. The first and most crucial step is this one. A company may be incorporated as a One-Person Company, Private Limited, or Limited Liability Partnership (LLP). A business must also be incorporated in compliance with the 2013 Companies Act before it may start operating. Through incorporation, a company obtains a legal identity.

  • GST Registration

Any business organization that registers under the GST Law must obtain a special identification number from the relevant tax authorities in order to collect taxes on behalf of the government and claim input tax credits for taxes paid on inward supplies. A person or a firm cannot use an input tax credit for taxes that they have previously paid on their own behalf without first registering. Therefore, it is legitimate for a business to offer goods and services if it has registered for GST.

  • Obtain a Factory Licence

The Factories Act of 1948 mandates that any industry with a manufacturing facility obtains a factory license. To safeguard employee safety and be eligible for registration and renewal incentives, a factory must have a license. A factory license must be obtained from a state agency if the company has more than 10 employees; if it has less than 10, the local authority can give the required license.

  • Shop Establishment Certificate

As per the provisions of the respective States, every store and business establishment is required by the Act to register, and for that reason, these establishments must provide the statement in the required format and the associated fees.

  • Trade Licence

A trade license is a license or certification that enables any business to open a shop in a specific area in the country. It makes sure that all safety standards specified by the State Municipal Corporation are followed when conducting business or engaging in commerce. It safeguards locals from any health risks.

  • MSME Registration

The Micro, Small, and Medium (MSME) sectors are able to take advantage of a range of government initiatives aimed at promoting their expansion thanks to MSME Registration. India is a developing nation whose economy depends heavily on the MSME industry. Along with the nation's economy, these sectors grow. These companies are also referred to as small businesses.

  • BIS Registration

The hallmark of product testing is the Indian Standards Institute. The ISI seal or logo on the wood product assures everyone that the product is secure for usage. The ISI mark is the most widely recognized certification mark on the Indian subcontinent. The BIS (Bureau of Indian Standards), India's National Certification Organization, is in charge of developing the ISI mark.

  • ISO Certification

Acquiring an ISO quality management accreditation can help a business tremendously by boosting output, efficiency, and customer satisfaction. However, the benefits of ISO go far beyond your operations to all aspects of your business, including sales and marketing, long-term planning, and employee engagement. An organization that has achieved ISO Certification has been given the thumbs-up for complying to one of the international standards developed and published by the ISO.

  • FSC Certification

The Forest Stewardship Council (FSC) gives the public assurance that timber products from a forest are managed responsibly and sustainably, which is something that is becoming increasingly important and is known as a Forest Management Certification.

  • Certifications for Harvesters

Indian traditional agricultural methods have always included growing trees on farmlands. The farm owners may be planting the trees as boundary planting, block plantations, windbreaks, and shelterbelts. 

  1. Working Plan: - The Working Plan is a document that describes how a territorial division will manage its woods, including resource harvesting, animal management, and forest protection and conservation. Every ten years, the working plan is periodically revised. Government forests cannot be managed in any way without a working plan that has been approved, and no forest can be harvested without a working plan that has been approved.
  2. Land rights: - By contacting the revenue officer, land ownership for private lands can be confirmed. In order to secure the harvesting permits, evidence of land tenure and usage rights is required. Each state in India has unique laws governing land ownership and usage rights for agricultural fields.
  3. Permits for harvest: - The procedure and standards for granting harvest licenses are laid forth in the relevant state harvesting laws, which are then implemented by the relevant State Forest Departments.
  4. Private Plantations: - A harvest permit must be obtained from government forest officers (Divisional Forest Officers or Deputy Conservators of Forests) or locally elected officials (panchayat) for common lands in order to harvest defined or non-exempted species.
  • Transit Permit

States have the authority to pass laws governing the transportation of forest products, particularly timber, within their borders. Notably, states have established their own transit regulations for the movement of lumber, and these regulations vary from State to State. The respective State Forest Division shall issue such a pass to the applicant. Depending on the locality, intended use, and species, different states in the nation have varied limits on cutting down trees, which are subject to state-specific laws, rules, and regulations.

  • Third-party Certification

The Export Promotion Council for Handicrafts (EPCH) was designated by the Ministry of Commerce and Industry as the nodal organization for the certificate of reasonable care adopted by exporters when trading wood. The Standard is named “Vriksh” and is a standard intended for organizations that want to precisely track and make claims about the legal origin and transport of their products. It enables businesses to avoid trading in illegally harvested wood and to verify the legality and legal origin of wood and wood products.

  • Network for Certification and Conservation of Forest (NCCF)

The NCCF is an internationally recognized National Forest Management Certification Standard. The major worldwide certification body, the PEFC, has validated NCCF's creation of the first-ever Indian Certification Standard for Forest Management, granting it international significance. Many states utilize this system for their forest certification.

Prohibited Kinds of Wood

  • Unprocessed log export is prohibited in India.
  • Sandalwood timber exports are prohibited by India.
  • The Indian Forest Act prohibits the export of sawn and log Indian rosewood.
  • Sandalwood imports are Restricted and have a cap for each licensing year. Only imports authorized by an import authorization granted after consultation with the MoEF & CC will be allowed. The MoEF & CC will keep an eye on the Sandalwood ceiling for each fiscal year to make sure it is not surpassed. A year will pass from the date of issuance until the license expires. Such authorization may not be renewed in the future.
  • Red Sanders cannot be imported.

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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A Post Graduate in the field of Corporate and Commercial Laws. I  have worked as a freelance content writer for several Legal topics for over 5 years. I aspire to learn and grow in this field along with being able to portray my Legal skill...

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