In India, a budget of ₹5 lakh opens up real opportunities for starting a scalable micro or small business. Whether you're entering product manufacturing, local services, or digital ventures, this capital can fund better equipment, raw materials, initial inventory, store setup, or a full-fledged digital presence. Who this is for:
First-time entrepreneurs
MSME founders looking to scale
Homemakers, job switchers, or laid-off professionals starting afresh
What This Guide Covers
10 product-based and 10 service-based business ideas under ₹5 lakh
Setup cost breakdowns and growth potential
Suitable sales channels: offline, online, or both
Digital tools and licensing essentials
Government schemes for MSMEs
Table of Content
Product-Based Business Ideas
1. Small-Scale Food Processing (Namkeens, Pickles, Spices)
Setup: ₹2.5–₹3.5 lakh (processing unit, packaging, FSSAI license)
Sales Channels: Kiranas, local supermarkets, Amazon, Flipkart
Tip: Start with 1 product line and add variants later
2. Personalized Gift & Merchandise Store
Setup: ₹2–₹3 lakh (heat press, printer, raw material, online store)
Sales: Instagram, Meesho, Amazon Seller Central, Flipkart
Edge: Festivals, birthdays, weddings = repeat sales
3. Modular Furniture Manufacturing
Setup: ₹3.5–4.5 lakh (tools, labor, workspace)
Sales: Local carpentry outlets, apartment builders, D2C website
Growth: Expand into rentals or e-commerce kits
4. Eco-Friendly Packaging (Paper Bags, Wraps)
Setup: ₹2.5–3 lakh (cutting machines, material stock)
Sales: Local food outlets, handicraft sellers, B2B to e-commerce sellers
Tip: Focus on B2B contracts for volume
5. Organic Skincare & Soaps
Setup: ₹2.5–4 lakh (ingredients, labelling, branding)
Sales: D2C via Instagram, local wellness stores, Amazon
Edge: High demand for natural, chemical-free products
6. Paper Product Manufacturing (Plates, Bowls, Cups)
Setup: ₹2.5–3.5 lakh (machine, die molds)
Sales: Caterers, event vendors, wholesalers
Growth: Bulk supply for festivals & weddings
7. T-shirt Printing Business
Setup: ₹2.5–₹3 lakh (heat press, vinyl cutter, blank stock)
Sales: Instagram, Meesho, offline events
Tip: Offer team tees for colleges and NGOs
8. Mini Cold-Pressed Oil Unit
Setup: ₹2–₹2.5 lakh (oil expeller, FSSAI, packaging)
Sales: WhatsApp, apartment communities, organic stores
Edge: High margins if marketed well
9. LED Bulb Assembly Unit
Setup: ₹2.5–₹3.5 lakh (training, components, soldering tools)
Sales: Electrical shops, e-commerce platforms, govt tenders
Scale Tip: Partner with solar installers
10. Khakhra or Snack Unit
Setup: ₹2.5–₹3 lakh (machines, packaging, raw materials)
Sales: Gujarati stores, tea shops, online health snack sites
Bonus: Export demand possible
Service-Based Business Ideas
1. Event Planning & Decor Services
Setup: ₹2.5–₹3 lakh (branding, sample portfolio, vendor tie-ups)
Clients: Weddings, baby showers, corporate launches
Sales: Instagram, WedMeGood, JustDial
2. Boutique Laundry & Dry Cleaning
Setup: ₹3.5–4.5 lakh (washing machines, press station, branding)
Sales: WhatsApp orders, Google Business Profile, Swiggy Genie
Edge: Add doorstep delivery for working professionals
3. Mobile Car Wash Service
Setup: ₹1.5–₹2 lakh (equipment, branding, scooter)
Sales: Apartment tie-ups, housing societies, corporate parks
Tip: Offer monthly plans or 6-wash packs
4. Shared Office Space / Co-Working Setup
Setup: ₹4–5 lakh (furniture, rent, marketing)
Sales: Freelancers, startups, tuition teachers
Edge: Monetize through desk rentals & event space
5. Online Skill Training Business
Setup: ₹3–4 lakh (website, video equipment, course material)
Topics: Spoken English, Excel, Canva, freelancing
Sales: Instagram reels, LinkedIn, YouTube
6. Home-Based Digital Marketing Agency
Setup: ₹2.5–₹3.5 lakh (laptop, tools, branding)
Services: SEO, ads, content for local businesses
Sales: LinkedIn, referrals, WhatsApp groups
7. Digital Printing + Local Branding Services
Setup: ₹2–₹3 lakh (printer or vendor tie-up, design software)
Clients: Political parties, schools, shops
Deliverables: Flex boards, t-shirts, visiting cards
8. Local Courier or Hyperlocal Delivery Service
Setup: ₹2–₹3 lakh (bike, delivery app tie-up, uniform, staff)
Clients: Kiranas, local e-commerce sellers
Sales: WhatsApp Business, poster campaigns
9. Cloud Kitchen Focused on 1 Cuisine
Setup: ₹2.5–3.5 lakh (kitchen tools, licensing, Swiggy / Zomato listing)
Niches: Momos, biryani, millet meals, snacks
Sales: Zomato, Google, repeat customers
10. Tuition + Skill Classes (Home/Online)
Setup: ₹1.5–₹2.5 lakh (whiteboard, projector, online setup)
Topics: Govt exam prep, drawing, computer basics
Sales: Posters, school tie-ups, WhatsApp
Licensing, Tax & Registrations
Udyam Registration: Free, for MSME status
FSSAI License: For any food business (Basic: ₹1k–₹2k)
GST Registration: Required for turnover ≥ ₹40 lakh (service) or ₹50 lakh (product)
Trade License: Issued by local municipal body
To know more about Legal Compliances for running a business in India, read here.Government Schemes to Leverage
Mudra Loans (Shishu /Kishor/ Tarun): Collateral-free loan up to ₹10 lakh
PMEGP: Subsidies for manufacturing/service businesses
Stand-Up India Scheme: Upto ₹1 crore loan for SC/ST/women entrepreneurs
Startup India Benefits: Tax rebates and funding access
To know more about Government of India Funding Schemes, read here.Digital Tools to Run Your Business
Inventory & Billing: myBillBook, Vyapar, Zoho Inventory
Marketing: Canva, Meta Ads, Google My Business, WhatsApp Catalog
Online Selling: Shopify, Meesho, Amazon Seller, Instamojo
Operations: Trello, Google Sheets, Razorpay, Zoho CRM
Action Plan
Research your local demand – Pick businesses with regional relevance (food products, services for tech professionals, etc.)
Budget effectively – Split the budget into equipment, marketing, inventory, and working capital
Build a local presence – Use social media, local networks, and word-of-mouth
Focus on customer retention – After a successful launch, invest in repeat business & customer loyalty
Reinvest – Scale with profits, consider adding new products or services as demand grows
Ready to take the first step towards building your Business? Learn how to build a business from Idea to Launch!
Disclaimer
The business ideas and budget estimates provided in this guide are intended as general guidelines. The actual costs of starting and running a business may vary based on various factors such as location, local market conditions, government regulations, resource availability, and other on-ground challenges. It is recommended to conduct thorough market research and consult with industry experts or financial advisors before making any investments.