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The process of establishing a Yarn/textile processing unit in India

20 Oct, 2022
Yarn/textile processing unit

India is known across the world for its textile industry. Being the second largest textile-producing country with high quality, it has a lot of exporters who import textiles from India. According to recent statistics on the market overview of the Yarn/Textile Processing Unit in 2021, the Indian textile industry is worth 223 billion dollars. It is also the largest producer of cotton and jute and the second largest producer of silk.

This blog will comprehensively explain establishing a Yarn/textile processing unit.

Overview of the Textile Processing Industry in India

Largest Textile Producing Countries











United States















South Korea








Machines used In Textile Processing Industry

Proper equipment and machines must be set up for a textile processing unit. The list includes –

  • Woollen Mill Machines
  • Thread Winding Machines
  • Bleaching/Dyeing Machines
  • Scutching Machines
  • Carding Machines
  • Spinning Machines
  • Yarn Gassing Machines

Different types of textile processing units in India

The Yarn/textile processing unit in India are divided into four types: –

  • Cotton Textile Industry
  • Woollen Textile Industry
  • Silk Textile Industry
  • Jute Textile Industry

Market Overview Yarn/textile processing unit

India’s Yarn/textile processing unit employs around 4.5 crore labourers/ workers, comprising 35.22 lakh handloom employees across the country. Further, the Indian textile and apparel business is anticipated to increase at a 10 per cent Compound Annual Growth Rate(CAGR) from 2019-20 to reach 190 billion US Dollars by 2025-26.

Moreover, India is the world’s leading producer of cotton. The projected manufacture of cotton for the year 2021-22stood at 362.18 lakh bales during the cotton season. Domestic utilisation for the 2021-22 cotton season is expected to be at 338 lakh bales. The manufacture of fibre in India reached 2.40 million tonnes in Financial Year (FY) 2021, while for yarn, the manufacture stood at 4,762 million kgs during the same period.

India’s yarn and textile exports (as well as handicrafts) are worth around 44.4 billion US Dollars in Financial Year 2022. This is more than 41 per cent from the previous financial year. Apart from this, exports of readymade garments, comprising cotton accessories, stood at 6.19 billion US Dollars in Financial Year 2022.

Textile Manufacturing Process





Source Fibre

The manufacturing process at the yarn/textiles processing unit begins with collecting raw materials.


Yarn Manufacturing

The fibres are then washed, organised, and mixed to create yarn.


Fabric Manufacturing

After the yarn is manufactured, it is made into fabric by lacing or interweaving it on a loom.


Wet Processing

Fabric is then cut into smaller pieces for use in sewing projects and dyed in different colours and patterns.


Garments Manufacturing

At last, the parts of the fabrics are sewn together and then checked for Quality Inspection and shipment.

An authorisation process to establish a Yarn/textile processing unit in India

Consent Certificates

CTE (Consent to Establish) is attained by the owner of the Yarn/textile processing unit before the business is set up. CTO (Consent to Operate) is attained by the owner after the business is instituted before starting the operation.

Under the registration process for getting the Yarn/textile processing unit authorised under the Water and Air(Prevention and Control of Pollution) Acts, the owner has to acquire Consent Certificates (CTE and CTO). The acquisition process for both is similar. To do so, the registration form is uploaded on the online portal of the Pollution Control Committee/the State Pollution Control Board with the essential documents. An evaluation of the form follows this. Once the form and documents are examined, in the case of Consent to Operate, a government official of state authorities does a site inspection and frames the report according to his findings. Upon inspection report, the Consent certificate is granted.

Documents required for Consent to Establish

According to the Air and Water (Prevention and Control of Pollution) Acts, for acquiring CTE from the SPCB/PCC for a Yarn/textile processing unit in India, the business owner has to submit the following documents: –

  1. Land attainment documents, including sale deed or registration/lease
  2. The detailed project report is a must and must have the following particulars: –
    1. A financial dissection related to Pollution Control Measures
    2. Industrial process
    3. Flow chart of the procedure
    4. Control Equipment relating to Air Pollution
    5. Information regarding ETP and Solid Waste Management, Production of Wastewater 
  3. Layout/site plan
  4. GST certificate
  5. A photocopy of the self-declaration form for the Restriction of Hazardous Substances
  6. Aadhar card

Documents required for Consent to Operate

According to the Air and Water (Prevention and Control of Pollution) Acts, for obtaining CTO from the SPCB/PCC for Yarn/textile processing unit, the owner has to upload the following documents –

  1. Rule 14 of the Environmental (Protection) Act stipulated Form V
  2. Water bill
  3. Electricity bill
  4. Proof of ownership, including rent agreement/lease agreement
  5. Site plan/layout
  6. Proof of registration of unit under Companies Act/LLP Act
  7. Aadhaar card
  8. Municipality/Industry license for trading business
  9. PAN Card
  10. Consent to Establish a certificate
  11. Authorisation letter
  12. Health Trade License
  13. Goods and Services Tax certificate
  14. CA letter on the financial breakup
  15. Factory or Trade License

Additional Licenses

Hazardous Waste Authorisation for Yarn/textile processing unit

The registration relating to establishing the hazardous waste unit, including the Yarn/textile processing unit, is mandated under The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2016. For hazardous waste registration, the owner must apply under Form 1 to the concerned SPCB to obtain the authorisation.

Documents needed for Hazardous Waste Authorisation concerning to Yarn/textile processing unit

The certificates/licenses that are to be submitted necessarily while applying for hazardous waste authorisation are: –

  • Consent to Operate
  • Consent To Establish
  • Certificate of incorporation (CIN)/LLP
  • MOA (Memorandum of Association)
  • Board resolution for appointing an authorised person
  • AOA (Article of Association)
  • Aadhaar card
  • Layout Plans
  • PAN copy
  • GST certificate of business
  • Factory/Trade license
  • Rent/proof of ownership

Company license

Documents required for a company license for establishing the Yarn/textile processing unit

  • PAN card
  • Address proof, such as
    • Passport
    • Election or Voter Identity card
    • Ration card
    • Driving license
    • Electricity bill
    • Telephone bill
    • Aadhaar card
  • Residential proof, such as
    • Bank statement
    • Electricity bill
    • Telephone bill
    • Mobile bill
  • GST Registration Certificate
  • MOA (Memorandum of Association)
  • AOA (Article of Association)

Udyam MSME Registration for Yarn/textile processing unit in India

MSME (Micro, Small and Medium Enterprise) registration requires the Yarn/textile processing unit’s owner to apply through the regulating authority’s online portal. The nodal authority, in this case, is the Ministry of Micro, Small and Medium Enterprises. The owner must then upload the mandated documents. 

Documents needed for Yarn/textile processing unit

  • Applicant’sofficial name
  • Name and type of enterprise
  • Aadhar card
  • PAN card
  • The NIC code
  • Account details
  • The social category of the applicant
  • The business operations of the enterprise
  • Date of Incorporation of a business
  • Details related to employment

Factory license acquired by Yarn/textile processing unit

To establish the business, the Yarn/textile processing unit owner must register under the Factories Act. According to the Act, the owner is mandated to get a Factory license, which the Chief Inspector of the Labour Commissioner Organisation grant after inspection.

Documents needed by the Yarn/textile processing unit

For the Factory license, the Yarn/textile processing unit needs the following document: –

  • Form 1
  • MOA
  • Aadhaar card
  • Layout/site plan
  • List of directors
  • AOA
  • Partnership deed
  • Account details
  • Commencement date
  • Payment receipt
  • Land deeds
  • Consent form from SPCB/PCC
  • Details of hazardous and non-hazardous waste
  • Tax receipt

Import Export Code Registration by the Yarn/textile processing unit

Import and Export Code (IEC) is the personalised ten-digit code granted by the Ministry of Commerce. It is requisite for every single importer and exporter in India. The IEC code is approved by the DGFT (Director-General of Foreign Trade)[1] and doesn’t require renewal.

The application for certification for the IEC (Import Export Code) is submitted online to the ministry’s portal with the legal documents, Digital Signature Certificate (DSC), and bank details. After thorough scrutinising, IEC is authorised in soft copy for import or export by the Yarn/textile processing unit.

Documents Required for Import Export Code registration

The Ministry of Commerce mandates the following documents for an Import Export Code registration –

  • PAN card of the company
  • Applicant’s PAN
  • Address proof
  • Aadhaar card
  • Company Incorporation Certificate or partnership deed
  • Cancelled cheque copy or leaf/banker certificate of the current account in the company’s name

Fire NOC

The Fire NOC (No Objection Certificate) is obligatory for Yarn/textile processing units. The Local Municipality Authority approves the NOC, which state authorities regulate. This includes filing the application for NOC with the mandated documents, which will be forwarded to the Chief Officer (CO) of the Fire Service Department.S/he inspects the manufacturing site and frames a report after that. The report is then presented to the department, which grants a Fire NOC on further scrutiny.

Documents required for fire NOC for Yarn/textile processing unit

  • Site plan
  • Basement floor plan
  • Stilt/Ground floor plan
  • Floor-wise plan
  • Terrace plan
  • Section plan
  • Elevation plan
  • Any other supporting records

GST Certificate

Document required for GST Certificate for establishing Yarn/textile processing unit

  • PAN Card
  • The Ministry of Corporate Affairssanctioned Incorporation Certificate
  • MOA
  • AOA
  • Aadhaar card of the applicant
  • Address proof
  • Bank details

Trade License needed by Yarn/textile processing unit 

Municipal Corporation grants a trade license for the Yarn/textile processing unit. The grant depends on the guidelines and rules set by the state authorities.

Documents required for trade license Yarn/textile processing unit

  • Aadhaar card
  • Address proof (electricity or water bill)
  • PAN card
  • A most recent municipal property tax receipt in case the land of the Yarn/textile processing unit is owned, or the owner’s consent letter or lease document of the property where the industry is registered.
  • Memorandum of Association (MOA)
  • Certification of incorporating (CIN) in case of firms
  • No Objection Certificate (NOC) of the neighbours (those are living nearby)
  • Layout/site plan of the office

Government schemes for Yarn/textile processing units in India

To support the development and growth of Yarn/textile processing unit in India, the government have introduced many schemes: –

  1. SAMARTH (Scheme for Capacity Building in Textile Sector)
  2. National Technical Textile Mission
  3. PM MITRA Scheme
  4. Special Package for the Textile And Apparel industry
  5. Scheme For Integrated Textile Parks (SITP)


In India, despite many government initiatives, Yarn/textile processing units still face some issues. The list includes an increase in the cost of raw materials, a shortage in the supply of raw materials, especially during the lockdown and poor infrastructure. Additionally, environmental problems arise due to the establishment of these industries. Due to these reasons, the government has made it mandatory for unit owners to acquire environmental licenses from the State or Central Pollution Control Board.

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