Planning to set up your manufacturing unit?

Your factory’s location and setup decisions will make or break your business — not just operationally, but financially and legally too. This guide will help Indian MSMEs choose wisely, especially in today’s fast-changing industrial ecosystem.

1. What Makes a Location “Right” for Manufacturing?

Here’s what to consider when finalizing a location:

🔍 Pro Tip: Research state-wise MSME incentives or visit your District Industries Centre (DIC).

2. Industrial Land vs Non-Industrial Land: Know the Difference

Avoid buying or leasing land just because it’s cheap. It must be zoned for industrial use. Here’s why:

✅ Ensure you check land use certificate (CLU) and verify with local municipal/industrial office before buying.

3. Factory Layout & Infrastructure Planning

Once land is final, focus on a layout that optimizes space, movement, and safety.

🏗️ A basic layout includes:

• Raw material storage

• Production floor with machinery layout

• Quality control & packaging area

• Finished goods warehouse

• Office, utilities, worker rest area

• Emergency exits & fire safety plan

Consult an industrial architect or factory layout expert. Even a ₹10 lakh unit deserves a structured plan.

4. Power, Water & Waste Disposal

These are non-negotiables for daily functioning:

🔌 Power:

• Check load requirements based on machinery

• Apply for industrial power connection

• If in remote area, budget for transformer installation (₹1–5 lakh+)

💧 Water:

• Source availability (borewell vs municipal vs tanker)

• Quality and pressure

• Need for filtration or RO systems for production use

♻️ Waste Disposal:

• Compliance with Pollution Control Board (PCB)

• Hazardous waste? You may need specialized disposal agencies

• STP (Sewage Treatment Plant) or ETP (Effluent Treatment Plant) if water waste is significant

5. Machinery Installation: What You Must Know Before Buying

• Spacing & clearance: Leave 1–2 feet around heavy machines for safety and repairs

• Vibration & noise insulation: Ensure the floor can handle machine load and vibration

• Power points: Match machinery voltage with power supply

• Safety measures: Use guards, emergency switches, and fire extinguishers

💡 Pro Tip: Check if your machinery qualifies for subsidy under government schemes like CLCSS or PMEGP.

6. Factory License, Building Plan & Statutory Approvals

Before operations begin, apply for:

• Factory License (under Factories Act)

• Building Plan Approval (with industrial zoning proof)

• NOC from Pollution Control Board (PCB)

• Fire Department NOC

• Labour Department Registration

• Shops & Establishment License (sometimes required at state level)

📂 Keep digital and physical copies ready. Many approvals take 2–4 weeks if documentation is complete.

7. Don’t Ignore Safety & Worker Facilities

Indian MSMEs often ignore this at their own risk. Here’s what to implement:

8. Smart Cost Tips When Setting Up

• 💸 Lease instead of buying land in early stages

• 🧱 Use pre-fab structures or tin sheds to save costs

• 🔧 Buy used machines from OLX, Indiamart, or local auctions

• 📦 Use vertical storage racks to save floor space

🎯 Initial setup cost can be kept under ₹10–15 lakh for small-scale industries with smart planning.

📌 Key Takeaways

• Don’t buy land without proper due diligence — confirm zoning, infra, legal status

• Choose a location based on supply chain logic, not emotional bias

• Plan for basic utilities and waste disposal from Day 1

• Apply for all relevant licenses before starting operations

• Prioritize safety, spacing, and future scalability

🗨️ What is the biggest concern you have — land, power, machines, or approvals? Drop your questions below or start a thread at Manthan.