How to Set up a Paper Bag Making Business

Narendra Kumar

17 Oct, 2019

There are reasons why the paper bag making business is in demand these days. Plastic bags are now banned in most of the metro cities because they choke the environment. This ban is expected to slowly move to smaller cities and rural areas too. Paper carry bags, on the other hand, are affordable, low priced and inexpensive; they are recyclable and help keep the environment clean. Small businesses like confectioners. Grocery stores, cloth and textile merchants, dry cleaners, bookstores, vegetable shops, meat, and fish shops use this item extensively these days.

Finally, the paper bag is a good way of creating branding for an organization.

What are the Important Parameters in Setting up the Paper Bag Manufacturing Business?

• First and foremost, choosing the apt location for setting up the unit. It should be close to the source of the easy availability of raw materials. The manufacturing^[1] unit requires water for washing the film and drinking purposes, electricity to run the machinery, labor, and adequate space for loading and unloading trucks and close proximity to a market where the product will sell.
• Choosing the right paper bag making the machine. There are different machines that are available depending on the motor speed available at different price ranges
• Availability of raw material that is the rolls of paper close to the manufacturing unit; printing ink, glue, and

What are Industry Trends?

Globally paper bags are witnessing a CAGR growth of 4.4% and in 2017-18 the projected value of this industry on a global range of $ 4500 million. The largest consumer of paper bag making business worldwide is the retail sector followed by Food & Beverage and agriculture industries.

The Indian paper industry is a meager 1.6 % of the world’s total production of paper. The size of the industry currently stands at $ 5.95 billion. The demand for paper in the domestic market is around 8%. Today, Indian paper manufacturers export paper products worth Rs. 400 crores per annum to developed nations.

It is estimated that by 2020, the demand for paper in the Indian market will rise to 20 million tonnes. It has been reported that currently India’s per capita paper consumption stands at 9 kg against 42 kg in China or a global average of 58 kg.

What are the Necessary Compliance Factors?

A startup paper bag making business unit needs the following registrations and licenses:-

1. Registration of the business either as a sole proprietor or LLP registration of Company registration – the list of legal documents that are required depending upon the type of business model including Bylaws for companies, a business plan document, a Memorandum of Understanding (MoU), the Share Purchase Agreement when there is a partner or an investor in the company, Licensing Agreement between partners for possession and maintaining of business assets, confidentiality agreement, intellectual property agreement, technology assignment deed, invention assignment deed, employment agreement, and non-compete deed.
2. Trade license from municipal authorities
3. Udyog Aadhaar MSME or SSI Registration is available online. The government of India has simplified the process of registration for entrepreneurs so that they are eligible for receiving government scheme benefits. The benefits are: – providing a loan without collateral guarantee; quick and fast loan process and low rate of interest. Additionally, the government also provides financial support from time to time to the companies registered under this Act to participate in exhibitions in international markets.
4. GST Registration is compulsory for all the business entity that earn Rs. 20 lakh and above annually. However, for certain companies, GST Registration is mandatory whatever the annual turnover be. Once the GST registration is done, the company is provided with a GSTIN number. The penalty for not registering under GST is 100% of the tax amount when he evades paying taxes deliberately and 10% of the tax amount due as a penalty in case he has made short payments.
5. BIS Certification offered by the Bureau of Indian Standards is a third-party guarantee of quality product, safety process and reliability of the product for use by consumers. It is mandatory for certain products to have this certification from the view of public health. With certification, the product needs to bear the ISI mark. All samples undergo an independent testing and on passing the test, are the products given the license by BIS.