Business Plan

Best Business Ideas in Small scale Industries in India

The Indian market consists of small scale industries in large numbers. It contributes almost a significant portion of the GDP in the Indian economy. Globally, product production is a thriving industry. It is among the most lucrative and revenue-generating industries. Starting a company often requires an upfront capital expenditure, machinery, equipment, raw materials, labour and marketing are all required for capital investment. Any foreign entity willing to enter the Indian market can invest in the small scale industries and earn a stronghold in the market. The investment in such industries is often less and rewires less manpower. Even the operating cost of such products is kept at low in order to make them marketable in the competitive environment. Also, the abundance of raw materials in the market makes it possible for the new entity to operate in a cost-competitive environment and offer great products to the market. The present article will cover the best business ideas investors can invest in.

Establishing a Small Scale Business

It is often stated that the entity shall state small scale business if the capital required for establishing the entity is less. There are many small manufacturing business ideas that a foreign entity can invest with low investment. Micro, small and medium manufacturing enterprises are in high demand, and their prices are also low, resulting in a long term in the market. To succeed in the long run, a business needs stability and profit. Apart from stability and knowledge, what matter is the knowledge about the industry an investor wants to invest in so that it mitigates the prospective risks that may arise in the future. Moreover, the entity establishing a small scale industries in India can benefit from the following benefits.”

• Low loan interests rate
• Easy access to credit
• Access to government tenders
• Concessions and rebates
• MSME certification
• State and central government incentives

Bets business ideas for Small Scale Industries

The following are some of the best business ideas for small scale industries in which an investor can invest:

1. Paper Manufacturing

The paper manufacturing business is low-cost and is one of the most prospective business ideas for small scale industries. It is a known fact that the paper market has huge potential. Papers are widely used in education, offices, industries, packaging, publishing etc. Irrespective of the increase in digital mediums, the demand for paper has been increasing over the previous years, which in turn is increasing the investments in the paper and printing industry. Paper manufacturing is one of the major industries in India, providing employment to many people in the country.

Further, the Paper industry contributes almost 1-2% of the total paper production in India. The availability of raw materials in abundance and cost-effective manpower in the country makes it the most significant in the global paper industry. Moreover, the ban on plastic has forced industries to switch to paper products, increasing the demand for paper products in the country. The investment required for establishing a paper manufacturing business almost varies from 5 to 20 lakh. Henceforth, the investor can invest in the paper manufacturing industry as small scale industries with low capital and sustain itself in the long run.

2. Automobile Parts Manufacturing

India is emerging as a global hub for outsourcing auto parts and a bets category under small scale industries. The auto components industry accounts for almost 7% of India’s GDP. The automobile components industry contributes 25.6% to the manufacturing sector in the GDP^[1] and 3.8% to the national GDP. The growing working population and expanding middle class are expected to be key demand drivers. The growth of global original equipment manufacturers (OEMs) sourcing from India and the increased indigenization of global OEMs is turning the country into a preferred place for designing and manufacturing bases. The Indian automobile industry is witnessing growth in the global market and is close to many competitors in the global market. The Indian automobile industry is almost inviting 100% FDI from foreign investors to invest in the automobile industry. India’s great demand for automobile parts makes this manufacturing business best for investors with a good capital margin requirement. In terms of investment required for establishing automobile parts manufacturing industries, it almost varies from 10 to 30 lakhs. Therefore, the automobile manufacturing industry will be best suited for the foreign entity who wants to enter in the small scale industries and offer their auto parts at a reasonable rate.

3. Aluminium Waste Recycling

The aluminium is considered as the most recycled metal in the world. The usage of it in India is almost in every product, from cans to utensils. The recycling of aluminium cans and other aluminium products is viewed as a thriving business under the category of small scale industries as it can be used over again. The demand for the aluminium product is increasing at a stellar speed and is expected to grow in manifolds to come. The higher the manufacturing, the higher the waste and the higher the recycling. Moreover, the very nature of the aluminium allows the entity to shape it to any shape and sell it to other manufacturing businesses. The installation charges of opening the aluminium are very low compared to other recycling plants that recycle metal scraps. Further, recycling only requires a little space, a 100Sq. Feet space is enough to establish the recycling plant. After taking the NOC from the concerned authorities, the entity can start its recycling business. The basic requirement for starting the business is machinery, which can either be rented or purchased by the entity. The investment required for establishing aluminium waste recycling almost varies from 10 to 50 lakhs. Henceforth, the aluminium waste recycling industry is best suited for the investor if it wants to enter into the small scale industries.

4. Dairy Products Production 

India has ranked 1^st among the world’s milk-producing nations since 1998. Dairying has become an important secondary source of income for millions of rural families. Out of the total milk produced in India, almost 48% of milk is consumed at the producer level and sold to non-producers in rural areas. The balance of 52% of the milk is a marketable surplus available for sale to consumers in urban areas. Out of the total marketable surplus, it is estimated that the organised sector handles about 40 % of the milk sold. The packaging of milk and manufacturing of its by-products, such as probiotic drinks, curd and other processed milk items, can be sold in urban and rural areas. Even the prospectus of dairy production is less and requires minimal compliance requirements in India. Henceforth, the entity willing to invest in dairy product production can do so with fewer efforts. Even the demand for milk in India is always ongoing, making it the most appropriate business structure to invest in. The setting up of the dairy products production unit is relatively less, estimated at under Rs 10 lakhs in India. Therefore, dairy products production is one of India’s best manufacturing business ideas under the category of small scale industries.

5. Production of Leather related items

India’s leather industry accounts for almost 13% of the world’s leather production. The leather-related items production industry consistently has high export earnings and is among the country’s top 10 foreign exchange earners. In terms of volume, India’s ability to produce leather-related items will be almost 3 billion dollars units by 2024. On the other hand, the footwear leather and accessories have the potential to grow to 80 billion dollars, making it the 2^nd largest footwear producer. The country further stands as the 2^nd in exporter of leather garments worldwide and 5^th in leather goods and accessories worldwide. Further, the demand for the product makes the leather industry most lucrative, as the youth of India has a higher focus on the branded consumption of premium footwear. Moreover, any entity willing to invest in this sector can benefit from the trained and skilled man force. Therefore, the investor can establish a production unit for manufacturing leather goods, saddlers, footwear, and garments and enjoy the benefit of abundant raw materials. Henceforth, the foreign investor willing to invest in the production of leather-related items under the category of small-scale industries can do so without any approval from the government, as 100% FDI is allowed under the automatic route.

6. Surgical Cotton Production

Another business idea for small scale industries includes a string surgical cotton business. The Indian surgical cotton industry is expected to see a rise in sales due to high domestic and interact market demand. Since India is among the many countries that can produce a large volume of pharmaceutical products at a reasonable rate, the country is most suitable for the global market needs. The demand for surgical cotton in India is estimated to be around 170 kg annually. It is subsequently increasing as many people are getting access to health care, and the number of people who can afford premium facilities has increased in the country. The progressive growth in the health amenities offered by the government and the opening of new hospitals and healthcare centres by private players in the small towns are contributing to the growth of the absorbent cotton industry. Hence, the investors can establish surgical cotton production units under the category of small scale industries with low investment, estimating up to 20 to 60 lakhs. Therefore, the prospectus of investing in the production of surgical cotton is suitable for the investor who wants to step into the medical sector.

7. Packaged Drinking water Business

The packaged drinking water is a flourishing business in India. It can be constituted of mountain water, normal water or spring water. There is a gradual increase in flavoured drinking water in packaged drinking water, and it has become people’s favourite. Packaged drinking water includes purifying water, bottling them to make its consumption ready and eventually selling it to the end consumers. The entity willing to start packaged drinking water business must obtain the FSSAI license and the BIS certification. The set-up cost of the packaged drinking water plant with reasonable investment estimating from 15 lakhs to 75 lakhs. Moreover, the handling cost of manufacturing packaged drinking water is low as the major investment required is only at the beginning of the business, and after recovering the cost, the return on investment in this business is high.

Conclusion

The small scale industries are the best way of entering into the market by any investor and finding the best business ideas to start a small manufacturing business can be difficult if you don’t realise its potential. The small investors can invest in the small business and earn more profits. Moreover, this sector’s regulatory requirements are comparatively easy compared to the other industries. The capital requirement is comparatively low, and the return on investment is high. Therefore, the investor willing to invest in the small scale industries must have a business plan, conduct market research and then opt for the best business ideas stated above.

Read Our Article: Business Plan for Investing In Small Scale Industry in India as a Foreigner