{"id":34630,"date":"2026-06-22T23:36:16","date_gmt":"2026-06-22T18:06:16","guid":{"rendered":"https:\/\/www.niir.org\/blog\/?p=34630"},"modified":"2026-06-22T23:06:38","modified_gmt":"2026-06-22T17:36:38","slug":"best-states-for-setting-up","status":"publish","type":"post","link":"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/","title":{"rendered":"Best States for Setting Up a Manufacturing Unit in India: A Comparison"},"content":{"rendered":"<p><em>Best States for Setting Up a Manufacturing Unit in India<\/em><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-white ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#The_Number_Nobody_Tells_You_First\" >The Number Nobody Tells You First<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Where_Indias_Manufacturing_Gap_Actually_Lives\" >Where India&#8217;s Manufacturing Gap Actually Lives<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Related_Article_Industrial_Investment_Opportunities_in_Uttar_Pradesh_MSME_Clusters\" >Related Article: Industrial Investment Opportunities in Uttar Pradesh: MSME Clusters<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#TABLE_1_State-wise_MSME_Density_Key_Sectors_Industrial_Competitiveness\" >TABLE 1: State-wise MSME Density, Key Sectors &amp; Industrial Competitiveness<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Why_the_Timing_Is_Right_%E2%80%94_and_Wont_Stay_That_Way\" >Why the Timing Is Right \u2014 and Won&#8217;t Stay That Way<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Get_Detailed_Insights_from_This_Book_Modern_Technology_of_Agro_Processing_Agricultural_Waste_Products\" >Get Detailed Insights from This Book: Modern Technology of Agro Processing &amp; Agricultural Waste Products<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#How_to_Set_Up_a_Manufacturing_Unit_State_by_State\" >How to Set Up a Manufacturing Unit: State by State<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Step_1_Choose_Your_State_Based_on_Sector_Not_Comfort\" >Step 1: Choose Your State Based on Sector, Not Comfort<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Step_2_Land_Space_Minimum_Investment\" >Step 2: Land, Space &amp; Minimum Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Step_3_Licences_Regulatory_Approvals\" >Step 3: Licences &amp; Regulatory Approvals<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Step_4_Machinery_Raw_Material_Team\" >Step 4: Machinery, Raw Material &amp; Team<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Typical_Timeline_Registration_to_First_Production\" >Typical Timeline: Registration to First Production<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Get_Detailed_Project_Report_DPR_Best_Business_Opportunities_in_Uttar_Pradesh\" >Get Detailed Project Report (DPR): Best Business Opportunities in Uttar Pradesh<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#TABLE_2_State-wise_Setup_Cost_Comparison_for_a_Small_Manufacturing_Unit_5000_sq_ft\" >TABLE 2: State-wise Setup Cost Comparison for a Small Manufacturing Unit (5,000 sq ft)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#ENTREPRENEUR_SPOTLIGHT\" >ENTREPRENEUR SPOTLIGHT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Financial_Snapshot_What_the_Numbers_Look_Like\" >Financial Snapshot: What the Numbers Look Like<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#TABLE_3_Central_Government_Schemes_for_Manufacturing_MSMEs_%E2%80%94_Eligibility_Benefits\" >TABLE 3: Central Government Schemes for Manufacturing MSMEs \u2014 Eligibility &amp; Benefits<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Smart_entrepreneurs_start_here%E2%80%94find_your_perfect_venture\" >Smart entrepreneurs start here\u2014find your perfect venture<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Need_a_Detailed_Project_Report_Heres_a_Resource\" >Need a Detailed Project Report? Here&#8217;s a Resource<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#The_Decision_in_Front_of_You\" >The Decision in Front of You<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q1_What_is_the_minimum_investment_to_start_a_manufacturing_unit_in_India\" >Q1. What is the minimum investment to start a manufacturing unit in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q2_Which_licences_are_mandatory_before_starting_production\" >Q2. Which licences are mandatory before starting production?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q3_Which_state_is_cheapest_for_setting_up_a_manufacturing_unit\" >Q3. Which state is cheapest for setting up a manufacturing unit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q4_How_long_does_it_take_to_get_all_clearances_and_start_production\" >Q4. How long does it take to get all clearances and start production?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q5_What_government_schemes_are_most_useful_for_a_first-time_manufacturing_entrepreneur\" >Q5. What government schemes are most useful for a first-time manufacturing entrepreneur?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/www.niir.org\/blog\/best-states-for-setting-up\/#Q6_Where_can_I_get_a_detailed_project_report_for_my_manufacturing_unit\" >Q6. Where can I get a detailed project report for my manufacturing unit?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_Number_Nobody_Tells_You_First\"><\/span><strong>The Number Nobody Tells You First<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The India&#8217;s <a href=\"https:\/\/udyamregistration.gov.in\">Udyam Registration Portal<\/a> has successfully registered over 7.16 crore MSMEs till now. That number is always referred to in every budget speech. What&#8217;s mentioned much less: among that number of companies, very few of the crores actually produce anything of any meaningful quantity. The others sell or offer services. In most of the interior states of India, the actual factory floor \u2014 where raw material becomes margin \u2014 is shockingly under-occupied.<\/p>\n<p>That is not a concern. It&#8217;s an opening.<\/p>\n<p>India&#8217;s manufacturing sector accounts for approximately 17% of GDP as compared to a government target of 25% with the initiative <a href=\"https:\/\/www.makeinindia.com\">Make in India<\/a>. Those two numbers are the opportunity that this article is about! Not all states have the same chance, however. However, not all states have the same chance. Land prices, electricity rates, man power availability, clearance time, state subsidy on capital, etc. are so different that if the wrong state is selected, a potential unit may not be viable before the first machine is turned on.<\/p>\n<p>The return on the same investment of \u20b91 crore is completely different if made in a different state. That&#8217;s what the numbers tell.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Where_Indias_Manufacturing_Gap_Actually_Lives\"><\/span><strong>Where India&#8217;s Manufacturing Gap Actually Lives<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Manufactured goods&#8217; price worth of India imports is over \u20b945 lakh crore per year. The electronics, chemicals, machinery, components, and specialty textiles industries, where domestically produced volumes did not grow to meet demand. As per the <a href=\"https:\/\/www.ibef.org\/industry\/msme-presentation\">IBEF data<\/a>, MSMEs contribute 44% of the exports from India, however, the exports are skewed \u2013 export value of MSMEs of Maharashtra, Tamilnadu, Gujarat and Karnataka contribute to over 55% of the total. That means a combined fraction of 22 other states have no structural imbalance to count on policy to correct, let alone one that the entrepreneurs can make happen.<\/p>\n<p>The supply deficit is most pronounced in the agro-processing sector, where India loses an estimated 30-40% of the produce because of poor processing capability, precision engineering components (which are largely imported from China and Taiwan), specialty chemicals, food-grade packaging and EV components. Despite having abundant raw materials and cheap labour, states like Uttar Pradesh, Madhya Pradesh, Bihar, and Odisha remain under-industrialised because businessmen choose comfort over profitability.<\/p>\n<p>The DPIIT Business Reform Action Plan (BRAP) ratings have a stark message: Andhra Pradesh and Telangana are consistently faster than Maharashtra and Tamil Nadu across regulatory speed, even though the latter two boast deeper industrial base. Compare how long it takes to get clearances to start a business for a first gen founder in Telangana today with the 30-60 days in older industrial states.A first gen founder setting up in Telangana today can get clearances in 15 working days as compared to 30-60 days in older industrial states. The six-week lead time will build up throughout each month of the ramp-up period.<\/p>\n<h3 class=\"wp-block-heading has-text-align-center\" style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Related_Article_Industrial_Investment_Opportunities_in_Uttar_Pradesh_MSME_Clusters\"><\/span>Related Article: <a href=\"https:\/\/www.entrepreneurindia.co\/blogs\/uttar-pradesh-msme-investment\/\">Industrial Investment Opportunities in Uttar Pradesh: MSME Clusters<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"TABLE_1_State-wise_MSME_Density_Key_Sectors_Industrial_Competitiveness\"><\/span><strong>TABLE 1: State-wise MSME Density, Key Sectors &amp; Industrial Competitiveness<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><em>Sources: Udyam Registration Portal \/ IBEF \/ DPIIT BRAP Rankings \/ State Industrial Development Corporations<\/em><\/p>\n<table>\n<thead>\n<tr>\n<td><strong>State<\/strong><\/td>\n<td><strong>MSME Count (lakh)<\/strong><\/td>\n<td><strong>Key Sectors<\/strong><\/td>\n<td><strong>Major Industrial Clusters<\/strong><\/td>\n<td><strong>BRAP Rank<\/strong><\/td>\n<td><strong>Key Advantage<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Maharashtra<\/strong><\/td>\n<td>37.1<\/td>\n<td>Textiles, Engineering, Pharma, Auto<\/td>\n<td>Pune, Nashik, Aurangabad, MIDC clusters<\/td>\n<td>Top 5<\/td>\n<td>Largest port network; deep MSME supply chain<\/td>\n<\/tr>\n<tr>\n<td><strong>Gujarat<\/strong><\/td>\n<td>15.5<\/td>\n<td>Petrochemicals, Textiles, Ceramics, Diamonds<\/td>\n<td>Surat, Rajkot, Ahmedabad, Dholera SIR<\/td>\n<td>Top 3<\/td>\n<td>Low power cost; 30+ GIDC industrial estates<\/td>\n<\/tr>\n<tr>\n<td><strong>Tamil Nadu<\/strong><\/td>\n<td>21.7<\/td>\n<td>Auto Components, Textiles, Leather, Electronics<\/td>\n<td>Chennai, Coimbatore, Hosur, Sipcot parks<\/td>\n<td>Top 5<\/td>\n<td>Single Window Portal 2.0; best power supply<\/td>\n<\/tr>\n<tr>\n<td><strong>Uttar Pradesh<\/strong><\/td>\n<td>20.3<\/td>\n<td>Agri-processing, Leather, Handicrafts, Defence<\/td>\n<td>Noida, Kanpur, Agra, Varanasi, Lucknow<\/td>\n<td>2nd<\/td>\n<td>Lowest land cost; 25 crore consumer base<\/td>\n<\/tr>\n<tr>\n<td><strong>Telangana<\/strong><\/td>\n<td>8.4<\/td>\n<td>Pharma, Biotech, Defence, IT Hardware<\/td>\n<td>Hyderabad, Genome Valley, Fab City<\/td>\n<td>3rd<\/td>\n<td>TS-iPASS clearances in 15 days; T-Hub support<\/td>\n<\/tr>\n<tr>\n<td><strong>Karnataka<\/strong><\/td>\n<td>12.0<\/td>\n<td>Aerospace, Machine Tools, Electronics, Silk<\/td>\n<td>Bengaluru, Hubli-Dharwad, Tumkur<\/td>\n<td>Top 7<\/td>\n<td>No. 1 FDI state; strong R&amp;D base<\/td>\n<\/tr>\n<tr>\n<td><strong>Rajasthan<\/strong><\/td>\n<td>15.6<\/td>\n<td>Cement, Gems, Textiles, Agro-processing<\/td>\n<td>Jaipur, Jodhpur, Bhilwara, Neemrana Corridor<\/td>\n<td>Top 8<\/td>\n<td>Japan-India Industrial Corridor; low real estate<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Why_the_Timing_Is_Right_%E2%80%94_and_Wont_Stay_That_Way\"><\/span><strong>Why the Timing Is Right \u2014 and Won&#8217;t Stay That Way<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Three forces are coming together. The government introduced the Production Linked Incentive (PLI) Scheme with a total outlay of \u20b91.97 lakh crore across 14 sectors, creating an ecosystem that supports and encourages supplier participation. For every large anchor unit which gets PLI, there is a need for component suppliers, package units and sub-assemblies, out of which, almost all of them will be MSMEs. The PLI investments already made by the government to the tune of \u20b91.46 lakh crore are in the form of a pipeline of procurement contracts awaiting domestic manufacturers.<\/p>\n<p>Secondly, the China+1 sourcing model is proving to be a reality for the Indian manufacturers of electronics, chemicals and precision components. Indian suppliers are in high demand across Europe, the US and Southeast Asia, with buyers actively looking to qualify suppliers, and the <a href=\"https:\/\/indiaindustriallandbank.gov.in\/login1\">India Industrial Land Bank (IILB)<\/a> that maps more than 4,500 industrial parks in India makes it easier than ever to find plug-and-play shed space in any state.<\/p>\n<p>Thirdly, competition among states for manufacturing investment has grown more intense. Gujarat has more than 30 industrial estates in GIDC. The One District One Product (ODOP) brand and export support is offered to the 75 districts through UP scheme. Auto ancillary manufacturers are showing interest in the Japan\u2013India Industrial Corridor near Neemrana, Rajasthan, due to its direct road connectivity to the ports in the Delhi-NCR region.<\/p>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Get_Detailed_Insights_from_This_Book_Modern_Technology_of_Agro_Processing_Agricultural_Waste_Products\"><\/span>Get Detailed Insights from This Book: <a href=\"https:\/\/www.niir.org\/books\/book\/modern-technology-agro-processing-agricultural-waste-products\/isbn-8186623493\/zb,,b,a,0,0,a\/index.html\">Modern Technology of Agro Processing &amp; Agricultural Waste Products<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>These key central schemes include PMEGP (subsidy of 15-35% for manufacturing units up to \u20b950 lakh), CGTMSE (collateral free credit of up to \u20b95 crore), MUDRA Tarun (loans up to \u20b910 lakh for micro units), and Udyam Registration (free registration in the formal ecosystem, providing access to bank credit, government tenders and state subsidies). Now, registration under Udyam is the minimum requirement for every scheme \u2014 Register first, everything else follows.<\/p>\n<figure id=\"attachment_34632\" aria-describedby=\"caption-attachment-34632\" style=\"width: 1200px\" class=\"wp-caption alignnone\"><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-34632\" src=\"https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817.jpg\" alt=\"Best States for Setting Up a Manufacturing Unit in India comparing Gujarat, Telangana, Uttar Pradesh, Maharashtra and Tamil Nadu\" width=\"1200\" height=\"1800\" srcset=\"https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817.jpg 1200w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-200x300.jpg 200w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-683x1024.jpg 683w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-768x1152.jpg 768w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-1024x1536.jpg 1024w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-512x768.jpg 512w, https:\/\/www.niir.org\/blog\/wp-content\/uploads\/2026\/06\/Untitled-design-2026-06-22T225646.817-920x1380.jpg 920w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-34632\" class=\"wp-caption-text\">State-wise comparison of manufacturing opportunities in India based on setup costs, subsidies, industrial infrastructure and MSME support.<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Set_Up_a_Manufacturing_Unit_State_by_State\"><\/span><strong>How to Set Up a Manufacturing Unit: State by State<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Step_1_Choose_Your_State_Based_on_Sector_Not_Comfort\"><\/span><strong>Step 1: Choose Your State Based on Sector, Not Comfort<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A map of your raw material before site selection. In agro-processing, locate operations near crop-growing regions\u2014wheat and rice in Punjab and Haryana; soybeans and cotton in Maharashtra; and aquaculture hubs in Andhra Pradesh. For the engineering and auto components industry, the Tamil Nadu Hosur \u2013 Chennai corridor, Pune \u2013 MIDC belt and Rajasthan \u2013 Neemrana zone provide instant access to the buyer ecosystem. Gujarat is the natural destination for chemical industries, as Ankleshwar and Vapi offer specialized chemical-zone infrastructure that no other region in the country can match. The two major viable options for defence and aerospace sub-assembly are the Karnataka and Lucknow-Kanpur corridor in UP.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_2_Land_Space_Minimum_Investment\"><\/span><strong>Step 2: Land, Space &amp; Minimum Investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In an average state industrial estate, a 10,000 sq ft plot with a standard small manufacturing unit (5,000 sq ft covered shed) will cost:<\/p>\n<ul>\n<li>Gujarat\/Rajasthan = Plot + shed at GIDC\/RIICO rate, land at \u20b9180\u2013350\/sq ft<\/li>\n<li>Maharashtra\/Tamil Nadu: \u20b980\u20131.4 crore (MIDC\/SIPCOT; \u20b9600\u20131,200\/sq ft in prime zones)<\/li>\n<li>UP\/Telangana\/MP: \u20b930\u201355 lakh (UPSIDC\/TS-iPASS zones; \u20b9120\u2013400\/sq ft)<\/li>\n<\/ul>\n<p>This is lowered by 40-60% by leasing from existing MSME parks and highly recommended for first time operators.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_3_Licences_Regulatory_Approvals\"><\/span><strong>Step 3: Licences &amp; Regulatory Approvals<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Udyam Registration: Free, online \u2013 make on Day 1 at udyamregistration.gov.in<\/li>\n<li>GST Registration is compulsory in case of turnover is above \u20b940 lakh (manufacturing)<\/li>\n<li>Factory Licence: (required) issued by state Labour Dept with power and 10+ employees.<\/li>\n<li>Apply prior to construction for a Pollution NOC (Consent to Establish) from the State Pollution Control Board<\/li>\n<li>BIS\/FSSAI: Sector-specific \u2014 compulsory for food, electronics, packaged goods.<\/li>\n<li><strong>Fire NOC &amp; Local Body Approval: <\/strong>Municipal\/panchayat clearance depending on zone<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Step_4_Machinery_Raw_Material_Team\"><\/span><strong>Step 4: Machinery, Raw Material &amp; Team<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The three clusters where sourcing of machinery is easy are in Rajkot (Gujarat) for the light engineering &amp; pumps sector, Coimbatore (Tamil Nadu) for textile and food processing machinery sector, and Ludhiana (Punjab) for agri-processing and metal fabrication sector. The prices of Chinese machinery are 25\u201335% lower but spares and service networks are not uniform, so buy Indian for mission-critical machinery.<\/p>\n<p>The minimum number of workers in a micro unit is 4-8 workers (1 supervisor, 2-4 skilled operators, 1-2 helpers, and 1 worker to process dispatch and accounts). Avoid over-hiring in month one \u2013 variable labour contracts and daily-wage structures minimise fixed costs during ramp-up.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Typical_Timeline_Registration_to_First_Production\"><\/span><strong>Typical Timeline: Registration to First Production<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Month 3\u20135: Registration and licensing process, bank loan sanction, and site acquisition<\/li>\n<li>Month 5\u20136: Foundation and fencing construction, concrete works, painting, and other work<\/li>\n<li>The machinery is installed, a trial production is undertaken and the initial quality test is carried out at Month 4-6.<\/li>\n<li>The plants will be ready for commercial production from Month 6\u20138 and an initial invoice will be issued at this stage.<\/li>\n<\/ul>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Get_Detailed_Project_Report_DPR_Best_Business_Opportunities_in_Uttar_Pradesh\"><\/span>Get Detailed Project Report (DPR): <a href=\"https:\/\/www.niir.org\/profile-projects-reports\/profiles\/best-business-opportunities-in-uttar-pradesh-identification-selection-right-project-thrust-areas-for-investment-industry-startup-entrepreneurship-projects\/z,,94,0,a\/index.html\">Best Business Opportunities in Uttar Pradesh<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"TABLE_2_State-wise_Setup_Cost_Comparison_for_a_Small_Manufacturing_Unit_5000_sq_ft\"><\/span><strong>TABLE 2: State-wise Setup Cost Comparison for a Small Manufacturing Unit (5,000 sq ft)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><em>Sources: GIDC, MIDC, SIPCOT, UPSIDC published rates; industry estimates<\/em><\/p>\n<table>\n<thead>\n<tr>\n<td><strong>Cost Head<\/strong><\/td>\n<td><strong>Gujarat \/ Raj.<\/strong><\/td>\n<td><strong>Maharashtra \/ TN<\/strong><\/td>\n<td><strong>UP \/ Telangana<\/strong><\/td>\n<td><strong>Notes<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>Industrial Plot (per sq ft)<\/strong><\/td>\n<td>\u20b9180\u2013350<\/td>\n<td>\u20b9600\u20131,200<\/td>\n<td>\u20b9120\u2013400<\/td>\n<td>MIDC\/GIDC\/UPSIDC rates; varies by zone<\/td>\n<\/tr>\n<tr>\n<td><strong>Shed\/Civil Work (5,000 sq ft)<\/strong><\/td>\n<td>\u20b935\u201350 lakh<\/td>\n<td>\u20b950\u201380 lakh<\/td>\n<td>\u20b925\u201345 lakh<\/td>\n<td>Pre-fabricated sheds reduce cost 30%<\/td>\n<\/tr>\n<tr>\n<td><strong>Electricity Connection (100 kW)<\/strong><\/td>\n<td>\u20b93\u20135 lakh<\/td>\n<td>\u20b95\u20138 lakh<\/td>\n<td>\u20b93\u20136 lakh<\/td>\n<td>Industrial tariff: \u20b95\u20138\/unit avg.<\/td>\n<\/tr>\n<tr>\n<td><strong>Skilled Labour (monthly, per worker)<\/strong><\/td>\n<td>\u20b912,000\u201318,000<\/td>\n<td>\u20b918,000\u201328,000<\/td>\n<td>\u20b910,000\u201316,000<\/td>\n<td>UP\/Telangana offer meaningful labour savings<\/td>\n<\/tr>\n<tr>\n<td><strong>Capital Subsidy Available<\/strong><\/td>\n<td>Up to 25% (GIDC)<\/td>\n<td>Up to 20% (MIDC)<\/td>\n<td>25\u201335% (ODOP\/TS)<\/td>\n<td>Subject to DPR approval and sector eligibility<\/td>\n<\/tr>\n<tr>\n<td><strong>Avg. Days to First Clearance<\/strong><\/td>\n<td>15\u201330 days<\/td>\n<td>30\u201360 days<\/td>\n<td>15\u201345 days<\/td>\n<td>Single window systems vary by state efficiency<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"ENTREPRENEUR_SPOTLIGHT\"><\/span><strong>ENTREPRENEUR SPOTLIGHT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>Mr. Savita Kumari | Director of Agro-Processing Unit, Muzaffarpur, Bihar<\/strong><\/p>\n<p>With a subsidy of \u20b98.5 lakh from PMEGP and a bank loan of \u20b917 lakh, Savita began her small litchi pulp processing plant in Muzaffarpur, the largest litchi production area of the country. This unit processes 4MTD in the season for supplying to the Beverage Companies of Patna &amp; Delhi today. Annual turnover: \u20b958 lakh. Net margin: 21%. Her bottom line: &#8220;Go where the raw material is, not where the industry is, that&#8217;s where the margin is.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Financial_Snapshot_What_the_Numbers_Look_Like\"><\/span><strong>Financial Snapshot: What the Numbers Look Like<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For a representative small manufacturing unit with total investment of \u20b975 lakh, shed area of 5,000 sq ft, six workers, single shift working in an industrial town of Tier-2:<\/p>\n<ul>\n<li>Capital Expenditure: \u20b950 \u2013 90 lakhs including (Machinery &#8211; \u20b930 \u2013 55 lakh, Civil &amp; Electrical &#8211; \u20b915 \u2013 25 lakhs, Working capital margin &#8211; \u20b95 \u2013 10 lakh)<\/li>\n<li>Monthly Operating Cost: \u20b93.5\u20135.5 lakh (labour \u20b91\u20131.8 lakh, raw material \u20b91.8\u20133 lakh, power \u20b940\u201370K, misc \u20b930\u201350K)<\/li>\n<li>Revenue at 60% Capacity: \u20b97\u201310 lakh\/month (annualised \u20b984\u20131.2 crore)<\/li>\n<li>Revenue at 100% Capacity: \u20b912\u201318 lakh\/month (annualised \u20b91.4\u20132.2 crore)<\/li>\n<li>Gross Margin: 34-44% (dependent on the sector industry, food processing and specialty chemicals have higher Gross Margin)<\/li>\n<li>Net Margin: 16\u201324% at 100% capacity (including interest, depreciation and overheads)<\/li>\n<li>Payback Period: 3.5 to 5 years at 70-80% utilisation<\/li>\n<\/ul>\n<p>Payback can be lowered by 12-18 months for states having capital subsidies (Gujarat, UP, Telangana). The first factor is the cost of power, which is the costliest part: If electricity costs are \u20b95.50\/unit in Gujarat and \u20b97.80\/unit in Tamil Nadu, it means that the savings are \u20b92.5 to 4 lakh per year over the same amount of electricity.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"TABLE_3_Central_Government_Schemes_for_Manufacturing_MSMEs_%E2%80%94_Eligibility_Benefits\"><\/span><strong>TABLE 3: Central Government Schemes for Manufacturing MSMEs \u2014 Eligibility &amp; Benefits<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><em>Sources: Ministry of MSME \/ DPIIT \/ SIDBI \/ KVIC official portals<\/em><\/p>\n<table>\n<thead>\n<tr>\n<td><strong>Scheme<\/strong><\/td>\n<td><strong>Nodal Body<\/strong><\/td>\n<td><strong>Benefit<\/strong><\/td>\n<td><strong>Eligibility<\/strong><\/td>\n<td><strong>Best For<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong>PLI Scheme (14 sectors)<\/strong><\/td>\n<td>DPIIT \/ MoCI<\/td>\n<td>4\u20136% incentive on incremental sales over 5 years<\/td>\n<td>\u20b91.97 lakh crore outlay; sector-specific thresholds<\/td>\n<td>Mid to large MSME manufacturers<\/td>\n<\/tr>\n<tr>\n<td><strong>PMEGP<\/strong><\/td>\n<td>KVIC \/ MSME Ministry<\/td>\n<td>Subsidy 15\u201335% of project cost (up to \u20b925 lakh)<\/td>\n<td>First-gen entrepreneurs; project cost up to \u20b950 lakh (mfg)<\/td>\n<td>Micro units, rural manufacturing<\/td>\n<\/tr>\n<tr>\n<td><strong>CGTMSE<\/strong><\/td>\n<td>SIDBI \/ MSME Ministry<\/td>\n<td>Collateral-free credit up to \u20b95 crore<\/td>\n<td>Micro &amp; small enterprises; Udyam registered<\/td>\n<td>Working capital, machinery loans<\/td>\n<\/tr>\n<tr>\n<td><strong>MUDRA Yojana<\/strong><\/td>\n<td>PMMY \/ Bank network<\/td>\n<td>Loans \u20b950K\u2013\u20b910 lakh (Shishu\/Kishor\/Tarun)<\/td>\n<td>Non-corporate, non-farm micro businesses<\/td>\n<td>Micro mfg startups<\/td>\n<\/tr>\n<tr>\n<td><strong>Udyam Registration<\/strong><\/td>\n<td>MoMSME<\/td>\n<td>Free; unlocks bank credit, subsidy, tendering rights<\/td>\n<td>Any manufacturing or service enterprise<\/td>\n<td>All MSME manufacturers \u2014 mandatory<\/td>\n<\/tr>\n<tr>\n<td><strong>One District One Product (ODOP)<\/strong><\/td>\n<td>DPIIT \/ State Govts<\/td>\n<td>Cluster development, branding, export support<\/td>\n<td>State-specific products; Udyam registered units<\/td>\n<td>Artisan, agro, traditional mfg<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Smart_entrepreneurs_start_here%E2%80%94find_your_perfect_venture\"><\/span><a href=\"https:\/\/www.niir.org\/startup-selector\">Smart entrepreneurs start here\u2014find your perfect venture<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"Need_a_Detailed_Project_Report_Heres_a_Resource\"><\/span><strong>Need a Detailed Project Report? Here&#8217;s a Resource<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Niir Project Consultancy Services (NPCS) at <a href=\"https:\/\/www.niir.org\">niir.org<\/a> has created one of the largest collections of manufacturing project reports in India, designed for entrepreneurs who need more than a \u2018directional\u2019 comparison or a techno-economic feasibility study, plant layout design, or a complete project report with financial projections before they approach a bank. NPCS has more than 5,000 industries to cater to, and offers documents ready for DPR that meet bank and PMEGP\/CGTMSE standards, across a range of sectors, including food processing, agrochemicals, engineering, packaging and more. Their reports include lists of raw materials that they obtain, lists of equipment vendors, layouts of their plants, profitability models, and regulatory checklists for various states. For the manufacturing industry,<a href=\"https:\/\/www.entrepreneurindia.co\"> entrepreneurindia.co<\/a> has comprehensive details of NPCS project profiles, which could be taken as a starting point prior to ordering a customized feasibility study.<\/p>\n<p><iframe  id=\"_ytid_88051\"  width=\"750\" height=\"421\"  data-origwidth=\"750\" data-origheight=\"421\" src=\"https:\/\/www.youtube.com\/embed\/L1ATShxzFXY?enablejsapi=1&#038;autoplay=0&#038;cc_load_policy=0&#038;cc_lang_pref=&#038;iv_load_policy=1&#038;loop=0&#038;rel=1&#038;fs=1&#038;playsinline=0&#038;autohide=2&#038;theme=dark&#038;color=red&#038;controls=1&#038;disablekb=0&#038;\" class=\"__youtube_prefs__  epyt-is-override  no-lazyload\" title=\"YouTube player\"  allow=\"fullscreen; accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen data-no-lazy=\"1\" data-skipgform_ajax_framebjll=\"\"><\/iframe><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Decision_in_Front_of_You\"><\/span><strong>The Decision in Front of You<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Avoid doing any research for the ensuing six months. The information advantage in Indian manufacturing never lasts forever\u2014governments adjust subsidies, developers sell industrial plots, and supplier networks eventually become saturated. It is not a matter of starting or not. So which state has the raw material, the capital and the sector?<\/p>\n<p>If you&#8217;re looking for something priced under \u20b975 lakh, begin your search in Gujarat, UP and Telangana where the land prices are low and there are active subsidy windows, with quick clearances. For exporters or car component makers with a capital investment of \u20b91 crore and above, Tamil Nadu and Maharashtra offer the best access to the buyer. If the business is raw-material based, whether it&#8217;s agro, mineral or forest produce, move to the place where the raw materials are plentiful, not the industry cluster.<\/p>\n<p>Your next step is specific \u2013 you need to identify your product, shortlist two states, visit one industrial estate in each state and get a quote from the local Industrial Development Corporation within 30 days. That visit will tell you more than any report will.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span><strong>Frequently Asked Questions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Q1_What_is_the_minimum_investment_to_start_a_manufacturing_unit_in_India\"><\/span><strong>Q1. What is the minimum investment to start a manufacturing unit in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A real launch budget for a micro manufacturing venture would be about 15-30 lakh, taking care of a rented shed, some initial tools and two months of working capital. The PMEGP scheme extends to all schemes above 50 lakhs (for manufacturing) up to 15-35% subsidy from the government. You can also seek additional working capital and project investment through state-level subsidies from GIDC\/MIDC\/TS-iPASS. The trick is to lease the land rather than purchase it so that your upfront investment can be minimal.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Q2_Which_licences_are_mandatory_before_starting_production\"><\/span><strong>Q2. Which licences are mandatory before starting production?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>At minimum: Udyam Registration (free, online), GST registration (if turnover &gt; 40 lakh), Factory Licence (if using power and employing 10+ workers), and Pollution NOC (Consent to Establish) from the State Pollution Control Board. Sector-specific licences &#8211; FSSAI for food, BIS for electronics\/safety products &#8211; come on top. Apply for the Pollution NOC before construction starts, as it is the most time-consuming approval in most states.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Q3_Which_state_is_cheapest_for_setting_up_a_manufacturing_unit\"><\/span><strong>Q3. Which state is cheapest for setting up a manufacturing unit?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The states of Uttar Pradesh, Rajasthan, and Telangana emerge on top in terms of the least total cost of establishment (land cost between \u20b9120-400\/ sq. Ft., labour charges from \u20b910,000 &#8211; 16,000 per month per person, and capital subsidy from 25%-35%). These states coupled with Gujarat (due to low land and power costs and established vendor network) offer significant investment potential. However, Tamil Nadu and Maharashtra, although slightly more expensive in these costs, provide access to excellent logistics networks and markets.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Q4_How_long_does_it_take_to_get_all_clearances_and_start_production\"><\/span><strong>Q4. How long does it take to get all clearances and start production?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>For those states which has functioning single window system \u2013 Telangana (TS-iPASS), Gujarat (GIDC), Andhra Pradesh &#8211; you will see first clearances come in 15-30 working days. For Maharashtra and Tamil Nadu expect anywhere between 30-60 working days. All the way from location identification to the first commercial run for a greenfield project, you may want to build in about 6-8 months \u2013 for a ready shed in an industrial area, about 3-4 months.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Q5_What_government_schemes_are_most_useful_for_a_first-time_manufacturing_entrepreneur\"><\/span><strong>Q5. What government schemes are most useful for a first-time manufacturing entrepreneur?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Start with Udyam Registration &#8211; it is free and unlocks everything else. Then apply under PMEGP for subsidy (15-35% of project cost), CGTMSE for collateral-free credit (up to 5 crore), and your state&#8217;s capital investment subsidy scheme. The PLI scheme is for larger units, but its anchor companies create procurement opportunities for MSMEs in their supply chain &#8211; worth tracking even if direct PLI eligibility is not immediate.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Q6_Where_can_I_get_a_detailed_project_report_for_my_manufacturing_unit\"><\/span><strong>Q6. Where can I get a detailed project report for my manufacturing unit?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Niir Project Consultancy Services (<a href=\"https:\/\/www.niir.org\">niir.org<\/a>) maintains project reports for over 5,000 manufacturing categories. These are particularly useful for preparing loan applications under PMEGP, CGTMSE, or state subsidy schemes, all of which require a DPR. <a href=\"https:\/\/www.entrepreneurindia.co\">Entrepreneur India (entrepreneurindia.co)<\/a> also publishes detailed sector profiles and business opportunity reports that can be used as a first-pass feasibility check before commissioning a full techno-economic study.<\/p>\n","protected":false},"excerpt":{"rendered":"Best States for Setting Up a Manufacturing Unit in India The Number Nobody Tells You First The India&#8217;s&hellip;","protected":false},"author":22,"featured_media":34631,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":10,"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","footnotes":""},"categories":[17384,17376,17377],"tags":[19813,19815,19816,19814,19811,19812],"industry":[],"class_list":["post-34630","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manufacturing-business-ideas","category-msme-small-scale-industries","category-government-schemes-policies","tag-factory-setup-in-india","tag-industrial-investment-india","tag-make-in-india-manufacturing","tag-manufacturing-industry-india","tag-manufacturing-unit-in-india","tag-msme-manufacturing-unit","cs-entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Best States for Setting Up a Manufacturing Unit in India<\/title>\n<meta name=\"description\" content=\"Best States for Setting Up a Manufacturing Unit in India. 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