Factory Setup Services In India

Factory Setup in India is one of the most popular ways to start your business. Every product business has its roots in a factory that manufactures and supplies the products to vendors. The Indian Government’s policies to ease the business establishment led to increasing numbers of domestic and foreign investors who are willing to provide funds for such establishments. And being the country with the most number of youth, India has a golden opportunity to grow in these times. Entrepreneurs are taking an interest in establishing factories as they can generate high-margin profits and for the same reason, new factory setup services in India are also rising to assist them in their establishment.

Who can set up a Factory?

The Indian laws regarding the setup of a factory are very welcoming for Indians as well as foreign nationals. As long as you are an adult, and have the legal ability to sign and give consent. You can obtain the requisite documents for your factory from the authorities. Indians as well as foreigners, who have attained the age of eighteen years can register a company under the Companies Act of 2013 and operate any business in India under the name of that company. Foreign nationals may need to fulfil extra steps as prescribed by the Act. There are also other options if you don’t want to establish a company, you can operate the business as a sole proprietorship or in partnership.

Factories provide many benefits to entrepreneurs. Along with the personal benefits, it also provides benefits to the country at the national and social levels. These factories, manufacturing plants, and processing units have the following benefits-

• Profit Generation

Until a person is hugely motivated with a zeal towards social service, he will not get into a business that does not generate profits. But yes, factories can generate profits with huge margins as mostly they start from the very first stage of buying raw materials and produce the final product that is sold to the consumers through a distributor.

• Self-Employment

It provides self-employment to young entrepreneurs. Instead of working as a subordinate, they take their decisions themselves. In such an environment they experience business growth as well as personal growth comparatively faster.

• National Economy

Factory Setup in India will boost the gross domestic product of the country. If we promote such a trend all over the country then more entrepreneurs will take interest in this business opportunity and contribute to the growth of the national economy.

• Business Culture

When more factories are established in India, the number of successful factory businesses will also increase. Their success stories will reach the general public which will motivate the adolescent population of the country to explore this career option and in future, we will see more entrepreneurs setting up factories. It will develop a business culture overall in society.

• Job Creations

New factories will create new jobs which also minimise the problem of unemployment in the country to an extent. Along with the factories, the factory setup services will provide employment. The population is not equally skilled and they find jobs in various roles. A factory requires the workforce for various roles including both skilled and unskilled workers. If factories are established on a big scale, a large chunk of unemployed people will get jobs.

Various Options to Set up a Factory

A factory, manufacturing plant, or production plant is an industrial establishment, frequently a compound comprising multiple structures equipped with machinery. Within these facilities, workers engage in the production of goods, utilizing machines to transform raw materials into finished products. We can divide factories into different types based on two classifications. One is purpose-wise and the other is industry-wise. Based on both classifications, the types of a factory are as follows-

Purpose-Wise Types of a Factory

The purpose of a factory means the kind of work they are invested in. Because a factory can be dealing with the manufacturing of a consumer product from raw materials, processing raw materials to make different kinds of raw materials, processing waste consumer products to make useful raw materials or processing waste consumer products to refurbish and make useful consumer products. In this manner, we can divide factories into four types-

• Manufacturer
• Processor
• Recycler
• Refurbishers

Industry-Wise Types of Factory

Unlike the previous classification, we do not see the process when classifying the factories into different industries instead we see the category, to which the involved product of raw material belongs. In this manner, we can divide factories into the following major types-

• Agricultural
• Automobile
• Chemical
• Pharmaceutical
• Construction
• Electrical and Electronics
• Foods and Beverages
• Glass and Ceramics
• Furniture
• Metal

How to Plan a Factory Setup in India?

The planning of a factory setup in India includes various stages and you need to consider many things to finally take steps for the establishment. These stages are as follows-

• Choose a Domain:- You first need to identify the domain you want to work in. You should preferably choose one, in which you have some basic knowledge and experience.
• Identify the Market:- You then need to assess the market for that particular domain. At this stage, you should study the trends and find out whether the market is profitable for that particular product you wish to manufacture.
• Consumer Base:- Then you should also study the consumer base for that product. It may be narrow or broad. The competition should also be considered for your target audience. Accordingly, you should plan your business.
• Business Model:- Now you should move on to the business model and plan a system that will generate profits based on the above-mentioned factors.
• Name of the Business:- The brand name is the most important thing when it comes to the marketing of your business. You should choose it very carefully. It should be unique and catchy but at the same time, it should also reflect the mission and vision of your business.
• Technical Procedure:- You should also consider the technicalities involved in your business including the manufacturing and packaging process and accordingly, arrangements should be made to mitigate any possible difficulties that may arise in future.
• Location of Business:- You should choose the location of your business after considering all related factors like transportation, logistics, workforce availability etc. If the location of your business aligns with the location of your targeted consumers then it will be convenient as well as affordable to deliver the final products.
• Finances:- Finally, you should consider the pricing of your products, estimated sales and the taxes to be paid to the government. Only after considering these financial factors, you should calculate estimated profit and take decisions accordingly.
• Factory Setup Services:- Factory setup services provide the necessary assistance to entrepreneurs. It works in cooperation with the machine suppliers and you can get the machines installed at your location with their assistance.

Requirement for a Factory Setup

After the planning is done, you need to arrange the requisite resources for the factory. It includes-

• Funds
• Machinery
• Land

All these resources should be acquired as per the applicable laws. The land must be in an area classified as Industrial. The factories are not allowed to be set up near residential areas because of the pollution they emit and the harmful effects they have on human beings. Machinery should be acquired as per the scale and requirements of the business. Factory setup services can explain which machine will suit your needs. Their cost also differs based on their capacity.

To set up a factory you will require the following documents-

• ID and Address Proof:- You need your Aadhar Card or any other Photo and Address ID issued by the government to obtain other company-related documents.
• PAN Card:- You also need to have a PAN Card. It is used mainly to file the Income Tax Returns.
• CIN of the Company:- CIN is the identity card of your company. It stands for Corporate Identification Number. You receive the CIN of your company after the factory registration at the Registrar of Companies.
• PAN Card of the Company:- After incorporation, the company becomes a legal entity and should hold its own PAN Card. It is used to track the financial status of your company and tax liabilities.
• MoA & AoA:- MoA and AoA are drafted at the time of incorporation of the company. They are often asked by the officials when applying for the requisite documents.
• Partnership Deed:- It is only applicable when you are doing business in partnership and not through a company. It also works as a business identity.
• GST Registration:- GST Registration is mandatory for any business whose annual turnover is more than Rs. 20 lakhs. It is used for tax purposes.
• Lease or Rent Deed:- This document is required when you do not own the land, on which you are establishing the factory. If you rented the land, you must have a valid proof of possession and in case of ownership, you must have the proof of ownership. This document defines the address of your company for all other documents.
• MSME Registration:- If your business qualifies for the MSME registration, you should register for the same as the government provides some support to new budding entrepreneurs through various schemes and this factory registration is mandatory to claim any such benefit. It is also known as SSI, SME, Udyam Registration and Udyog Aadhaar.
• NOCs from Local Administration:- You should get the No Objection Certificate (NOC) from local authorities including Fire Department, Municipal Department etc. When a factory a being established, it should be only after the permission of the local authority because there may be issues with fire management and town planning later.
• Factory Licence:- You should also have a factory licence. It ensures that you follow all the factory-related rules when the operations are going on. Some of the major factory rules are related to labour rights, working hours, wages, leaves etc.
• Other Documents:- Apart from the above-mentioned documents, you may need to obtain some other licences based on the industry you are dealing in. It can be a drug licence if you are in the pharmaceutical industry, a food licence if you are operating a food factory, or an EPR registration if you are processing any kind of notified waste. Get in touch with Corpseed and receive consultation regarding the licences that your business requires.

The following process should be followed to start the operations of your factory-

• You should get into an agreement with the suppliers of raw materials. It will ensure the supplies and the operations won’t be affected by the lack of raw materials. The raw materials should be of high quality which will ensure the production of high-quality products.
• You should make a prototype, and assess its quality. Start producing at full capacity after you start getting the results as intended.
• If an Indian Standard is published for the product you are manufacturing then you should obtain the Standard Mark for that product after complying with the published quality standard. It will generate the trust of the masses in your product.
• Once you are ready for distribution, you can start the marketing campaign which will create demand for your product.
• Arrange logistics for the transportation of your goods. If you chose the location strategically then the cost of transportation will be minimal.
• Distribution is the final stage when you can start supplying the products to the vendors.

Things to Remember When Operating a Factory

Once your factory is up and running, you need to comply with the rules and regulations as prescribed for the operations and specific compliances for the industry your factory belongs to. The major points that you need to take care of are as follows-

• You should follow all the provisions of the factory act and other laws regulating the factories and industrial establishments.
• To ensure the health of workers, you must implement prescribed measures relating to cleanliness, ventilation, temperature, humidification, lighting etc.
• There should be proper disposal of waste and effluents, if necessary, treatment plants should be there.
• There should be necessary safety precautions wherever necessary.
• Dangerous machinery should be fenced properly.
• Women and young people shall not be allowed to work on dangerous machines.
• No person shall be employed to lift and carry excessive weights.
• Safety measures should be applied to manage dangerous fumes, gases, and hazardous materials. An effluent treatment system should be installed to treat the generated waste.
• You should take care of the welfare facilities available to the people employed by you.
• You should perform building maintenance whenever necessary to avoid potential loss of life and property.
• You should ensure compliance with other rules and regulations relating to working hours, wages and leaves.
• If you deal with any kind of e-waste, plastic waste, battery waste, or tyre waste or generate such waste then you also need to comply with EPR provisions as prescribed in the waste management rules.
• Labour Law provisions should also be kept in mind and the labour should not be deprived of their rights.

The Factory Setup Cost in India varies depending on the industry and the scale of your unit. A small-scale factory can cost tens of lakhs while the cost of a big-scale factory which requires multiple pieces of machinery can go in crores. The overall cost includes the machinery, land, wages, utility bills, and documentation. You can also consider the fee paid for the consultation with any legal consultancy or factory setup services in India, towards the cost of the overall Factory Setup in India. Factory Licence cost varies from state to state. It is Rs. 100 to 20000 in Delhi while in Uttar Pradesh it costs from Rs. 150 to 35000.

Validity and Renewal of Documents Relating to Factory

Mostly the documents required for a factory come with validity and their renewal is necessary after the end of the validity period. The validity of a factory licence depends on the state you are setting up the factory in because the state government has prescribed the laws for their jurisdiction separately. In Uttar Pradesh, the licence is valid till 31st December of the same year. While in Delhi the factory occupier can get a licence for one, five or ten years. Licence Renewal cost varies from Rs. 150 to Rs. 35000 in Uttar Pradesh according to the horsepower installed in the factory and the number of persons employed.

When it comes to running a business and ensuring its growth, it's crucial to not only focus on infrastructure and capital but also on complying with the rules and regulations of the country. Non-compliance can lead to legal issues that can negatively impact your business. That's where Corpseed can help. With our years of experience and in-depth knowledge of the business regulations in India, our dedicated team at Corpseed understands the complexities involved in the Factory Setup Process. We provide comprehensive assistance to our clients, conducting thorough desk-based research, handling documentation, and facilitating coordination to ensure compliance with the rules applicable to the factories and businesses. Corpseed is your all-in-one solution for meeting your business needs.