How to Set Up a Composite Woollen Mill in India: Licenses, Process & Investment Guide

Have you ever worn a warm woollen sweater on a cold winter morning and wondered where it came from?


That cozy sweater starts its journey in a woollen mill — a place where raw wool is turned into beautiful yarn, fabric, and clothes.

In India, the textile sector is one of the oldest industries. It gives jobs to millions and plays a big role in our economy. Among all textile types, composite woollen mills are special because they handle everything under one roof — from cleaning raw wool to making finished fabric.

If you are planning to start your own Textile Business set up, a composite woollen mill set up can be a smart and profitable idea. Let’s learn how you can start this business, what licenses you’ll need, how much it costs, and the process step by step.

What Is a Composite Woollen Mill?

A composite woollen mill is a large factory that performs multiple steps in wool processing — such as:

  • Scouring: Cleaning the raw wool.

  • Carding: Brushing the wool into thin layers.

  • Spinning: Turning the fibres into yarn.

  • Weaving or Knitting: Making cloth from yarn.

  • Finishing: Dyeing, washing, and pressing the fabric.

In short, it combines all production stages of wool textiles in one place — that’s why it’s called composite.

Why Start a Woollen Mill in India?

India has a rich tradition of wool and textiles. Starting a composite woollen mill can be a great business because:

  1. Huge Demand: Woollen clothes, blankets, and fabrics are always in demand, especially in northern and hilly states.

  2. Government Support: The government promotes the textile sector through subsidies, training, and policies.

  3. Export Opportunities: Indian woollen products are exported to Europe, the Middle East, and Asia.

  4. Job Creation: A mill provides employment for spinners, weavers, dyers, and other workers.

  5. Local Raw Material: India produces high-quality wool in states like Rajasthan, Himachal Pradesh, and Jammu & Kashmir.

Step-by-Step Guide to Set Up a Composite Woollen Mill

Let’s break down the composite woollen mill set up process in simple steps:

Step 1: Business Planning

Start with a clear business plan. Decide:

  • The type of wool product you want to make (blankets, shawls, fabrics, etc.)

  • The size of your mill (small, medium, or large)

  • The budget and funding source

  • The location (near wool-producing regions is best)

Also, research your competitors and market demand.

Step 2: Choose the Right Location

A good location is the heart of your mill.
 Choose a place that has:

  • Easy access to raw wool

  • Good transportation

  • Electricity and water supply

  • Enough space for machines and storage

Many woollen mills are located in Punjab, Himachal Pradesh, Rajasthan, and Uttar Pradesh because these areas have easy access to wool and labour.

Step 3: Get Licenses and Permissions

Before you start production, you’ll need several licenses and authorizations to follow Indian law. Here’s what you need:

License / Permission

Why It’s Needed

Where to Apply

Company Registration

To legally start your business

Ministry of Corporate Affairs (MCA)

Udyam/MSME Registration

To get small industry benefits

Udyam Portal

Factory License

To run an industrial setup

State Factory Department

Pollution Control Board Consent (CTE/CTO)

Because mills use dyes, chemicals, and water

State Pollution Control Board

Boiler & Machinery Approval

For safety compliance

Chief Inspector of Boilers

Electricity Connection

For power supply

State Electricity Board

Labour License

If you employ workers

Labour Department

If you partner with a compliance expert like Enterclimate, they can help you manage all these legal steps easily.

Step 4: Install Machines and Equipment

The machinery you choose depends on your production scale. A composite woollen mill usually includes:

  • Wool scouring machines

  • Carding and combing machines

  • Spinning machines

  • Weaving looms or knitting machines

  • Dyeing and finishing units

  • Packaging machines

Always buy energy-efficient and pollution-controlled equipment to meet modern environmental standards.

Step 5: Hire Skilled Workers

Your workers will include:

  • Technicians for machine operation

  • Quality checkers

  • Dyeing experts

  • Packaging and dispatch team

  • Supervisors and managers

You can also train local workers through government textile training programs.

Step 6: Production and Quality Control

Once your mill is set up, start small-scale production and test your products.
 Ensure that:

  • The wool quality is soft and durable.

  • Colours and dyes are safe and non-toxic.

  • Fabrics meet BIS (Bureau of Indian Standards) norms.

Good quality control builds your brand reputation.

Step 7: Investment and Cost Estimation

The total cost depends on your mill’s size. Here’s a rough estimate:

Scale

Area Required

Investment Range

Small-scale

5,000 – 10,000 sq. ft.

₹50 lakh – ₹1 crore

Medium-scale

20,000 sq. ft.

₹2 – ₹5 crore

Large-scale

50,000+ sq. ft.

₹10 crore and above

Tip: You can also apply for MSME loans, Mudra loans, or textile sector subsidies to reduce your financial burden.

Step 8: Marketing and Distribution

Once your woollen fabric is ready, you can sell it:

  • To garment manufacturers

  • In local markets and online stores

  • Through exports (after getting an Import-Export Code)

Build your brand identity through social media, trade fairs, and textile exhibitions.

Sustainable Practices to Follow

Today’s textile industry focuses on eco-friendly production. Here’s what you can do:

  • Use organic dyes and recycled water

  • Install Effluent Treatment Plants (ETPs)

  • Follow Zero Liquid Discharge (ZLD) standards

  • Reduce waste and energy consumption

This will help you meet environmental rules and improve your business image.

Related Industrial Setups You Can Explore

If you’re interested in industrial ventures similar to a woollen mill, here are some related options:

  1. Textile Business set up: Start a unit for cotton, jute, or silk fabrics.

  2. Small Pulp and Paper Plant set up: Make paper products using recycled paper or bamboo pulp.

  3. Fertilizer manufacturing plant set up: Produce organic or chemical fertilizers for agriculture.

All these industries are growing and supported by government schemes.

FAQs About Setting Up a Composite Woollen Mill

Q1. What is the difference between a woollen mill and a composite woollen mill?
 A woollen mill may handle only part of the process (like spinning or weaving), while a composite woollen mill does everything — from raw wool to finished fabric.

Q2. How much land is needed for a composite woollen mill set up?
 A small-scale unit can start with about 5,000–10,000 square feet, while large-scale mills need 50,000 square feet or more.

Q3. Is pollution control approval mandatory for textile mills?
 Yes. Since wool processing uses dyes and chemicals, you must get Consent to Establish and Consent to Operate from your State Pollution Control Board.

Q4. What is the profit margin in a woollen mill business?
 It depends on production and sales, but generally, 20–30% profit margins are possible with good-quality products.

Q5. Can I get government support for this business?
 Yes! Under the Integrated Wool Development Programme (IWDP) and MSME schemes, you can get loans, training, and subsidies.

Author Profile

Author: Upendra Sharma

 Upendra is an environmental and business compliance content writer with expertise in industrial setup guides, pollution board licensing, and sustainable manufacturing practices. He writes for Enterclimate — a platform that helps entrepreneurs start and manage eco-friendly businesses in India.
 His aim is to make complex business setup information simple and understandable for everyone.

#TextileBusinessSetUp #CompositeWoollenMillSetUp #SmallPulpAndPaperPlantSetUp #FertilizerManufacturingPlantSetUp #Enterclimate #BusinessSetupIndia #WoolIndustry #EcoFriendlyManufacturing

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Location: B-78/Sec-60, Enterclimate, 78, B Block, Sector 60, Noida, Uttar Pradesh 201307, India

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