Factory Setup Cost in India: What You Really Need to Spend

When you think about starting a factory, a physical space where goods are manufactured using equipment and labor. Also known as a manufacturing unit, it’s more than just a building—it’s a system of machines, workers, permits, and logistics that turns raw materials into products. The big question isn’t just ‘Can I do it?’ It’s ‘How much will it actually cost?’ Most people guess wildly—some think ₹50 lakhs, others assume ₹2 crores. The truth? It depends on what you’re making, where you’re putting it, and how big you want to start.

Let’s break it down. The biggest chunk of factory setup cost, the total investment needed to launch a manufacturing operation in India isn’t the machines. It’s the land, the physical plot where the factory is built, subject to zoning laws and regional pricing. In Tier-2 cities like Coimbatore or Indore, you might get 1 acre for ₹20-40 lakhs. In Gujarat or Tamil Nadu industrial zones, it could hit ₹1 crore. Then there’s construction—basic shed structure? ₹1,500-₹2,500 per sq.ft. Add electricity connections, water supply, drainage, and safety systems, and you’re looking at another ₹30-70 lakhs.

Now, the machines. A small textile unit with 5 sewing machines and a cutter? Maybe ₹15 lakhs. A food processing line with packaging and sterilization? That’s ₹50 lakhs minimum. And don’t forget government clearances, official approvals required to legally operate a factory in India, including environmental and labor compliance. From MSME registration to pollution control board permits, these aren’t optional. Skipping them saves money now but can shut you down later. Labor costs vary by state, but you’ll need at least 5-10 workers to start. Add training, uniforms, and basic facilities, and that’s another ₹5-10 lakhs a year.

There’s no one-size-fits-all number. A tiny bakery factory in Pune? ₹80 lakhs. A medium-scale electronics assembly unit in Noida? ₹1.5 crores. A full-scale pharmaceutical plant? That’s a ₹10 crore+ project. What’s consistent? The people who succeed don’t just buy equipment—they plan for permits, power backups, and scalability. They know the hidden costs: diesel for generators, waste disposal fees, insurance, and maintenance that eats 10-15% of your budget every year.

Below, you’ll find real breakdowns from people who’ve done this—what they spent, where they cut corners, and what they wish they’d known before signing the lease. No fluff. Just what matters when you’re building something that has to last.