Textile and Apparel Unit Setup: Step-by-Step Business Guide

The textile and apparel industry is a vital sector for the economy of India. It contributes about 2.3% to GDP and employs 45 million people. The potential of the textile and apparel industry is reflected in its projected market size increasing to USD 350 billion by 2030 from almost USD 150 billion, with a compound annual growth rate (CAGR) of 10%. Textile and apparel offer enormous scope for entrepreneurship. Events of recent months, with advantages such as a well-trained workforce, government initiatives, and increased global demand have led to the opportunity for those looking to start a textile or apparel unit in 2025. This guide provides a complete step-by-step process to setting up your textile and apparel business and incorporates both new developments that are emerging in the industry.

Understanding the Textile and Apparel Industry in India

Textiles and apparel mean the production and conversion of raw fibres into fabrics (textiles) and finished garments and accessories (apparel). India’s textile and apparel industry includes spinning, weaving, dyeing, garment making, and technical textiles. It is the second-largest employer after agriculture, accounting for 13% of industrial production and 12% of industrial exports.

India is the second largest textile producer in the world and sixth largest exporter with exports valued at USD 35.9 billion in FY24. The major markets for these products are the US, EU and UAE. The textile industry itself is plentiful and has traditional handlooms, power looms, and modern technical textiles used in healthcare, defence and construction respectively.

Why Start a Textile and Apparel Unit in 2025?

• Government Support: Government-led initiatives, including the Production-Linked Incentive (PLI) Scheme and PM MITRA Parks, offer generous subsidies and state–of-the-art infrastructure.
• Global Demand: The burgeoning demand for sustainable and technical textiles opens a myriad of export avenues to over 100 countries.
• Market Growth: The domestic market continues to grow because of rising disposable income and a burgeoning, youthful population, with a median age of 28.
• Sustainability Trends: New sustainability trends and innovations, including fabrics dyed with bacteria, are on the rise.

Step-by-Step Guide to Setting Up a Textile and Apparel Unit

Step 1: Market Research and Niche Selection

Before you begin, you need to do proper market research, identifying trends, customer tastes, and gaps in the market. Popular niches to think about include sustainable fashion, athleisure, ethnic wear, or technical textiles like medical gowns. Understanding your target market—are they retail shoppers, designers, or B2B?—will help frame your offerings.

For example, athleisure is one category that works all–year round, while ethnic wear can vary regionally depending on festive seasons. A small production unit can produce on a very low MOQ (Minimum Order Quantity) model to service small digital fashion labels.

Action Points:

• Analysis competitors and the demand for products such as cotton garments or technical fabrics. 
• Identify export markets, such as the Middle East, Europe, and North America.
• Use resources, such as Google Trends, or industry reports from the IBEF, to find high-demand products.

Step 2: Create a Business Plan

Having a strong business plan is essential for your textile and apparel unit. Your business plan should clearly identify your vision, target market, financial projections, and marketing plan. You also need to decide whether you will be B2B (selling to brands) or B2C/D2C (selling to customers).

Key Components of a Business Plan:

Step 3: Legal Setup and Registrations

To operate legally, you should register your business and obtain the proper licenses. The textile industry in India also permits 100% FDI (foreign direct investment) under the automatic route, so entrepreneurs don’t have to go through lengthy regulations. 

Required Registrations:

• Business Registration: You will have to decide on the structure of the business—sole proprietorship, partnership, or private limited company.
• GST registration: This is required for businesses with turnover more than ₹40 lakhs (₹20 lakhs in some states).
• Udyam Registration: This is required if you want to get benefits from being a MSME like subsidies and loans at lower interest rates.
• Licenses Specific to Textile Industry: A Trade License, Pollution Control Board, Factory License if you are planning to open a manufacturing unit.

Engage a legal expert to streamline this process and ensure compliance.

Step 4: Choose the Right Location

Location is very important for operational efficiency. Think about where you are in relation to suppliers of raw materials, where skilled labour is nearby, and close to transport links. India’s largest textile clusters are Surat (Gujarat), Tirupur (Tamil Nadu) and Ludhiana (Punjab).

Location: 

•  Infrastructure: you should look for industrial areas; you can also look at PM MITRA Parks where you get plug-and-play options roles.
• Access to market: you also want to make sure that you are in an area that has close access to port for exporting.
• Cost: consider not just land and operational costs but consider access as part of the cost.

For example, a sustainable textile factory in Odisha recently received location assessment assistance from Invest India.

Step 5: Procure Machinery and Raw Materials

Invest in machinery based on your product focus—spinning, weaving, or garment manufacturing. For a small-scale unit, basic equipment includes power looms, sewing machines, and cutting tables.

Machinery Costs:

Source reliable raw materials like cotton, polyester, or sustainable fibres. Partner with suppliers in Surat or Coimbatore for cost-effective fabrics.

Latest Development: The Kasturi Cotton initiative promotes high-quality Indian cotton with traceability, boosting its global appeal.

Step 6: Build a Skilled Team

Your labour force is the foundation of your unit.  Look for skilled tailors, machine operators, and quality control staff. The Samarth Scheme provides training courses to upskill workers and ensure quality is maintained at a cost that suits your demands. 

Tip for Hiring: 

• Hire from local textile centres to find more original experienced workers.
• Training may be available so that your workers can meet international standards such as ISO and SA 8000.
• Focus on women centric employment, as 70% of workers in an apparel hub are women. 

Step 7: Implement Quality Control and Technology

Quality control (QC) is essential to limit returns and develop a reputation. Create quality control at the stage of raw material inspection, production, and final quality checking.

Digital Integration:

• Get the deployment of ERP instruments such as Gofrugal to account for inventory and sales.
• Integrate sustainability technology such as enzyme-based recycling of polyester fabrics.
• Investigate Industry 4.0 automation solutions for the sector.

For insights on leveraging technology, visit Growthinfy’s blog on business automation.

Step 8: Marketing and Sales Strategy

Proper marketing is essential for reaching customers. In a B2B context, go to trade fairs such as Bharat Tex  and meet face-to-face with global buyers from Japan, UAE, US, etc. If you are in a B2C space, find e-commerce avenues with channels such as Amazon, Myntra, your own web site, etc. Marketing strategies to consider:

• Digital Marketing: Take advantage of websites, SEO, social media, and influencers to build your brand. Explore our detailed guide on digital marketing for startups in India.
• Export: Make use of India‘s trade agreements with the UK and UAE for duty-free access to the UK and UAE. 
• Sustainability: Promote your eco-friendly practices to appeal to conscious consumers

Step 9: Leverage Government Schemes

Apply for these schemes through the Ministry of Textiles portal (texmin.nic.in).

The Indian government runs a number of schemes for textile entrepreneurs:

• The PLI Scheme: Provides financial incentives for MMF production and technical textiles; ₹10,683 crore outlay.
• PM MITRA Parks: Seven mega parks with ₹4,445 crore for infrastructure.
• Amended TUFS: Reimburse capital expenditure for upgrades of machinery to modernize operations.

• RoSCTL Scheme: Refund of taxes on exports to make exports more competitive.

To apply for these schemes, go to the Ministry of Textiles portal (texmin.nic.in).

Step 10: Scale and Diversify

After you have established your unit, you can focus on scaling. Invest in further machinery, grow into accessories or home textiles, or expand your markets. The Middle East and Europe are high-demand regions for Indian garments. 

Scaling Tips: 

•  Scale production capacity with profits.
•  Implement sustainability processes to align with global trends.
•  Receive relevant industry updates and participate at Gartex Texprocess (May 2025, Mumbai) to connect with the industry.

Latest Developments in the Textile and Apparel Industry (2025)

The sector is undergoing a revolution: 

• Bharat Tex 2025: An international platform for showcasing India‘s textile ecosystem, the event will bring business buyers from over 110 countries.
• Sustainable Innovation: Companies like Carbios and Teijin are developing textile recycling with enzyme-based technologies.
• Cotton Production : 100 lakh bales of cotton were purchased by the Cotton Corporation of India in 2024-25, ensuring supply and supporting farmers.
• Exports Growth: Tamil Nadu garment exporters expect to see revenue growth of 8-10% in FY25 as demand comes back globally.

Challenges to Anticipate

The industry enjoys opportunities and must cope with obstacles, including

• High Prices: A polyester and viscose fibres are now about 33-36% and 14-16% higher, respectively, than made in China.
• Fragmented Supply Chain: Dispersed production results in significant logistics costs.
• Competition: Bangladesh‘s duty-free exports will impact India in capturing the market share.
• Tariff Pressure: High U.S. tariffs will limit revenues and slow the growth of the RMG industry to 3-5% per annum.

Solutions:

• Utilize PM MITRA Parks to integrate supply chains.
• Utilize government subsidies to alleviate raw material prices.
• Target value-added products (i.e., technical textiles).

Explore our detailed guide on establishing a makhana processing unit with latest trends and analysis.

Conclusion

Starting a textile and apparel operation in India in 2025 is a solid opportunity in light of government assistance, a global demand for textile products, and the growth in the domestic market. By utilizing this outlined process—market research, business plan, legal registration, and technology—you can develop a successful company. Follow trends in the industry, including sustainability and technical textiles, to keep your business competitive.