Several metro cities have prohibited plastic bags because they pollute the environment. It is safe to assume that this projection will gradually spread to smaller towns and villages. Paper carry bags, on the other hand, are economical. They are biodegradable, and they contribute to a cleaner environment.
Every other company now uses paper bags to transport its goods. The realisation of the drawbacks regarding plastic bags could be a logical reason for this. The need for paper bags is increasing all the time.
In addition, the government has implemented a soft spot for environmentally friendly items with an MSME loan.
Business opportunities for paper bags
Paper bags are used in almost every area of society, albeit their application or purpose varies. Even medical supplies get packed in paper bags. While production, you will need to verify product quality and sanitation. The same rule applies to paper bags used to pack food.
The usage of toxic chemicals may result in unfavourable outcomes. As a result, select the appropriate manufacturing procedures and conduct regular bag quality checks.
When it comes to specialisation, you can produce paper bags for various uses or make them for specific industries. There are numerous business options to choose from before applying for an MSME loan. Here is a list of sectors in which you can participate:
- Food industry
- Pharmaceutical use
- Shopping bags
- General purposes
How to start a paper bag business in India?
#1. Market study
Make sure your study is impressive before you set up for MSME registration and launch a paper bag business. A strong business plan gets aided by thorough research. It informs you about the current state of the market and your competition.
#2. Build a plan
A company plan is more significant than it appears. A paper bag business requires the creation of a business strategy just like any other company. It is the blueprint for a company’s strategy, actions and will aid you in persuading investors.
The next stage is to obtain funding. Without investment, you will not be able to move forward. You must seek the most suitable funding source for your company. If you need a loan for MSME from a private entity or bank, you should apply as soon as feasible. After you’ve completed your business plan, start looking for funding.
#4. Machinery and equipment
Your company becomes operational once you have obtained the necessary machinery loan and registrations. Begin acquiring capital assets now. By capital assets, we imply the machinery needed to run a paper bag company.
Print equipment, pressing machines, punching machines, bag cutting machines, and other types of machines are required. Purchase your equipment from a reputable dealer.
After you’ve set up your business funds, the following step is to choose an appropriate site for your company. Locate an industrial area where you can start your paper bag business.
It is not a wise option to establish a paper bag company in the centre of a marketplace. It can help lower production costs because rent is less expensive in such places. In addition, you can receive labour and electricity at a lesser price in these places.
#6. License and documentation
Following the selection of a location, the following step is to secure the required permits and registrations. Make sure you follow all legal requirements before beginning your business.
A trade licence, BIS certificate, and GST registration are among the licences required to operate a paper bag business.
Necessary compliance factors for a paper bag industry
The following are the registrations and permits required for a new paper bag manufacturing business:-
- Company registration – the list of official documentation that is necessary based on the type of business plan, include:
- Bylaws for corporations
- Business plan document
- Memorandum of Understanding (MoU)
- Share Purchase Agreement (when the company has a partner or an investor)
- Confidentiality agreement
- Intellectual property agreement
- Technology assignment deed
- Invention assignment deed
- Employment agreement
- Non-compete deed
These are examples of licencing agreements between partners for the possession and maintenance of corporate assets.
- Trade license from respective municipal administrations.
- Udyog Aadhaar MSME or SSI Registration – The government of India has streamlined the application process for businesses, allowing them to benefit from government schemes. The advantages include: giving an MSME loan without a promise of security, a fast and easy loan process, and a low-interest rate. Furthermore, the government gives financial assistance to enterprises incorporated under this Act regularly.
- GST registration – For all businesses with annual revenue of Rs. 20 lakh or more, this is a legal requirement. However, regardless of annual revenue, GST registration is required for certain businesses. The company gets a GSTIN number once the GST registration gets completed. If they evade paying taxes on purpose, the punishment for not registering under GST is 100% of the tax balance payable, and if they have made short instalments, the penalty is 10% of the tax balance payable.
- BIS Certificate – The Bureau of Indian Standards provides third-party assurance of the good product, safety procedure, and reliability for customer use. From the standpoint of public health, specific products must hold this certification. The ISI mark must be present on the product for it to be certified. All samples get subjected to independent testing, and products that pass the test get a licence from BIS.
You can start this business with a modest MSME registration at first, but if you want to advance to a large-scale industry value proposition, you must follow the above certifications and license requirements for the paper bag industry.
The paper bag industry is now more in demand than it has ever been. This industry witnessed a spike, especially in the past decade, with more environmental customers approaching sustainable means.
Investing in this business is a sure-shot profit when you get the correct MSME loan from a reliable entity.
Ziploan offers business loans for MSME that often struggle to find a reliable loan option to meet the smallest of their needs. Start from as low as 1 lakh depending on your needs with minimal documentation and easy eligibility.
Frequently Asked Questions
Yes, the paper bag making business is profitable in India but in the longer run. For example, A paper bag with 18cm x 25cm will cost around Rs 3.40 inclusive of labour and material cost. And the market price will be 3.50 rupees, hence, the profit per paper bag in India is 0.10 Paise.
A paper bag costs 4 or 5 cents per bag to produce. There are plastic bags that are compostable, but the cost rises to between 8 to 10 cents. Spending one penny per bag or one dime per bag is the answer as to why so many stores still use traditional plastic bags.
Yes, selling paper bags is a profitable business in India.
Following are the ways to sell paper bags:
1) Talk to local business owners
2) Locate craft shows as a venue to show off your handmade bags
3) Sell your bags online
4) Talk to other people who create goods for sale, and find out if there’s an opportunity to join forces with them
5) Think outside the box