How to Start a Tax-free Retail Fabric Shop Business in India

Fabric industry is one of the profitable sectors in India. It may take a little bit of amount and lots of effort and manpower but also have the capability to yield huge returns on your investments. This sector needs creativity and ability to research on the upcoming trends to get success. The other advantage of this sector is, fabric products are free of tax while doing business.

Retail Fabric Store

To Start a Retail Fabric Store Business – You Don’t Need a VAT License Number

In India, VAT is not applied on the fabrics/un-stitched materials. Hence to start a fabric shop, one need not have a VAT registration or License number. But it is always better to get registered and be on safe side. However, VAT rules change from state to state. So, confirm with the local CA’s/sellers where you are planning to start the business.

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Choosing a Good Brand Name for Your Business

Before starting any business, it is important to see that the name of the brand and logo is chosen smartly. One has to register their business using that brand name. Being creative industry, an attractive, unique name stands out in the market. Choosing a name also plays a huge role in attracting customers. Hence, select a name which is unique, simple yet creative and meaning full.


Minimum Investment You Need to Opening a Fabric Store in India

To start a fabric store, you need to invest 1 Lakh to 3 Lakh initially depending on the scale at which you want to start. It also includes operational costs until your business starts generating profits. The initial investment depends on many factors like rents, raw material, the hiring of workers, equipment for a shop, interior setup, furniture, etc. This figure is purely an indicative one as it may rise or fall based on your scale. It varies depending upon the stock you would like to buy initially, the area you choose to open, rent of the shop, etc.



The major costs involved in starting the business are listed below. The figures mentioned are just for reference the original costs may rise or cut down.


Security payment for shop:  Rs.60,000 – Rs 100,000

This is the one-time payment for the shop where you would like to set up the business. One needs to select a shop which is spacious enough for customers to wander and look at various fabrics and buy. In general, the owner asks six months of rent as advance refundable payment as a security deposit. This varies from place to place depending upon the rents in particular area.


Shop rent – Rs 10,000 to Rs 20,000

The monthly rent should also be calculated during the cost estimation as till the time business break in and starts earning profits; you have to bear it on you. Hence this should also be including while estimating the cost.


Material – variable

For a fabric shop buying the material pre-hand and keeping sufficient amount of stock ready is very important. Hence the initial purchase of the material comes under investment costs only. The owner should take care that the stock is not too full or too empty. One should start with limited amounts of stocks to avoid losses. Once the business gains customers, likewise you can increase your stocks too. Hence pricing of the materials depends upon the wholesaler deals you make and the amount of material you purchase.


Salary of employees: variable

In the starting stages of the business, one employee is sufficient to help you maintain the shop. Hiring too many people at a time and paying them less may provoke them to search for another job or disloyal towards you. Hence hire only one person and pay them a decent amount of salary. This encourages them to be loyal and truthful towards you and your business. According to the place and work, you can either rise or cut the salary margin mentioned here.


Equipment and other needs: variable

For a fabric shop, it is a must to have cupboards to place all the fabric neatly, and shop must be well-lit to make it easy for customers to identify the right shades of the fabric. Apart from these two, based on your interest one can arrange other things like tables, floor mats, etc. to make the shop more presentable.



Margin fixing plays a key role in earning profits. Many times, setting the wrong margin may lead to failure of the business. Before setting a margin for the goods, collect all the information of your competitors present in the local region. Inquire about their margins, growth, and investments. Also, consider the global trends of the market. Set a margin in such a way that the price is reasonable yet yields decent profits for you.



Returns on Investment are what decide growth of the business. It depends on factors likes sales, purchases, etc.  Returns can vary depending upon the investment and income you make. Fabric business is capable of making up to 50% of profits considering the growth of the industry.

You can calculate ROI by yourself by using the formula

ROI= Profit made- investments/investments.


Create a List of Fabric Products You are Planning to Sell

Retail Fabric Shop

One needs to have a clear idea about the products they want to sell including the types of fabrics. This list will help you to calculate the total expenditure required to buy materials and also to search the suppliers who supply those materials. This list also helps in the marketing phase to explain to customers what all you have in your shop. While creating a list, bear in mind what your competitors are offering and add such elements that make your shop stand out in the crowd.


Find Suppliers and Visit Manufacturer and Make a Deal

After creating the list, now it’s time to search for the reliable and the best suppliers present in the market to get the quality goods for reasonable prices. Before deciding to proceed further enquire about all the possible options, visit manufacturers and talk to them personally. Make a deal in a way that it reduces your expenditure and also contains good quality material.


Equipment You Need to Start a Fabric Shop Business in India

Start a Retail Fabric Shop Business

After choosing the manufacturer and the list of items you are going to sell, it’s time to list out the equipment you need to start a fabric shop. The basic equipment required for a fabric store is cupboards, measuring tapes, table, mirror, etc. Apart from this other equipment like sewing materials, patches, design books, template books, etc. are also needed based on the goods you plan to sell. Also, make sure that the shop is fully illuminated so that customer can recognize the shades of the color without difficulty.


Find the Perfect Location

Once all the things are finalized, one should think about the location to start the business. The location is very important for a business to grow. Select a location where there is a genuine need of fabric materials very often like near tailor shops, boutiques, or home based handicraft industries are located.


Keep an Eye on Your Competitors

Once the location is decided, search for the competitors existing in that area. Carry out research on their business.  Check out the quality, prices, varieties and other things their offer of the customers. This often helps you to plan your strategy wisely.


Hire Employees

Employees contribute a lot to the success of your business. It is important to hire people who have knowledge of fabrics and colors. Apart from that, having a good choice in the selection of materials would be an added advantage.



Retail Marketing

Marketing plays the most important role in business development. Even if you have all the things set perfectly but fail to market it properly, then your product would never reach customers. Hence choosing an attractive and effective marketing strategy is the key to success. Attracting customers in the initial stages is quite a task. To attract them put on some discount offers, low prices may help to attract in the initial stages. To increase your business quality and price are two main things. If you provide high quality for fare rates, then the publicity will automatically increase and thus the business too.


Things to Remember

While doing the business one should keep in mind about the main aim to start this business which includes:

  • Quality of the product
  • Customer satisfaction
  • Latest trends
  • Varieties in the products
  • Take care of the expenditure of the shop and the returns



Starting a fabric shop helps you gain profits but one need to be patient and creative to shine in this business. Time to time updating themselves about the trends and changes in fabric and its usage helps the person to grow their business. Hence to shine in this field play and experiment with colors, textures, and types of fabrics and gain knowledge about them. Overall if carried with interest and dedication one can achieve good heights in this industry.

Originally posted 2017-05-11 06:51:00.


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