How to Start a Gunny Bag Manufacturing Unit in India
Contents 9 sections
- How much does a gunny bag manufacturing unit cost?
- Is a gunny bag business profitable? What the PMEGP profile shows
- Stitching unit or jute mill: which gunny bag route should you pick?
- How is a gunny bag made, and which machines do the work?
- Do you need a BIS licence to sell gunny bags?
- Who buys gunny bags, and does the jute packaging reservation help a new unit?
- What drives the price of your cloth: raw jute and the new trader rule
- What should you do before you buy the first machine?
- Frequently asked questions about gunny bag manufacturing
Gunny bag manufacturing starts one of two ways, and the choice sets your budget, your risks and your approvals. The small route is a stitching unit: you buy woven jute sacking or hessian cloth from a mill, then cut, sew and print it into bags. The government's project profile for a gunny bag unit under the Prime Minister's Employment Generation Programme (PMEGP) puts this route at ₹24.05 lakh in total, including ₹14.75 lakh of machinery and ₹8.8 lakh of working capital. The big route is a jute mill that spins and weaves its own cloth from raw jute, a far bigger project. Start with stitching unless you can finance a mill.
Two things catch new owners out. The common gunny bag types sold in India need a Bureau of Indian Standards (BIS) licence unless they are made for export, and the margin is thin because raw material takes most of the selling price.
How much does a gunny bag manufacturing unit cost?
The PMEGP profile sets the total at ₹24.05 lakh, and working capital is more than a third of it.
| Item | Amount (₹ lakh) |
|---|---|
| Gunny bag making machine (1) | 4.30 |
| Printing machine (1) | 10.00 |
| Sewing machine (1) | 0.45 |
| Furniture and fixtures | 0.50 |
| Working capital | 8.80 |
| Total capital investment | 24.05 |
The printing machine alone is ₹10 lakh of the ₹14.75 lakh machinery budget. If your first buyers take plain bags, that is the line to defer. The profile assumes a rented or owned shed of 1,500 to 2,000 sq ft, 30 HP of power and a capacity of 1,500 bags a day, and it leaves land out of the cost. Staffing is 11 people, from machine operators to a salesperson.
The profile funds it with ₹2.41 lakh of your own money, a ₹13.73 lakh term loan at 11% and a ₹7.92 lakh working capital limit. It carries no price date, so collect current machine quotes before you borrow.
Is a gunny bag business profitable? What the PMEGP profile shows
It is profitable but thin: the profile shows a profit before tax of 5.6% of sales in year one and 7.0% in year five.
| Measure (₹ lakh) | Year 1 | Year 5 |
|---|---|---|
| Sales | 96.19 | 185.82 |
| Raw material (raw jute and stitching thread) | 67.50 | 121.77 |
| Gross profit | 14.22 (14.79%) | 30.95 (16.66%) |
| Profit before tax | 5.34 (5.6%) | 13.05 (7.0%) |
| Profit after tax | 5.14 | 10.93 |
Raw material takes about 70% of year-one sales and 66% in year five, which makes your input price the number to watch. A rise of 8% in material cost, with bag prices unchanged, would wipe out the year-one profit before tax (₹5.34 lakh on ₹67.50 lakh of material). The profile puts break-even at 24% of capacity and payback at five years.
Stitching unit or jute mill: which gunny bag route should you pick?
Pick the stitching unit unless you can finance a full mill and have a way to win bag orders from the agencies that buy under the jute packaging reservation.
| Stitching unit | Jute mill | |
|---|---|---|
| Starts from | Woven sacking or hessian cloth bought from a mill | Raw jute, spun and woven in-house |
| Machines | Cutting table, bag making, sewing, printing | Those, plus preparation, spinning and weaving departments |
| Money | ₹24.05 lakh on the PMEGP profile | A textile-mill project, far above the profile |
| Main risk | Cloth price and mill supply | Raw jute price, power cost, labour-law compliance |
| Approvals | BIS licence for covered bag types | BIS licence, plus buying raw jute only from registered traders from 1 April 2026 |
Compare neighbouring products on our packaging business ideas page before you commit.
How is a gunny bag made, and which machines do the work?
A stitching unit follows five steps:
- Inspect the cloth for width, weight and weaving faults.
- Cut the cloth to bag length on a cutting table.
- Fold the cut piece and stitch the side seam and bottom, then hem the mouth.
- Print the brand, weight and, where it applies, the BIS Standard Mark.
- Check dimensions and stitching, count the bags and press them into bales.
A mill adds the stages before step 1: raw jute is softened and batched, carded, drawn, spun into yarn and woven into cloth.
| Machine | What it does | Route |
|---|---|---|
| Cutting table | Measures and cuts cloth to bag size | Stitching and mill |
| Gunny bag making machine | Stitches seams and bottoms | Stitching and mill |
| Sewing machine | Hems and handles odd sizes | Stitching and mill |
| Printing machine | Marks brand, weight and Standard Mark | Stitching and mill |
| Spinning frames and looms | Turn raw jute into yarn and cloth | Mill only |
Do you need a BIS licence to sell gunny bags?
Yes for the common types sold in India. The Ministry of Textiles issued the Jute Bags (Quality Control) Order, 2022, effective 6 June 2022, and BIS lists jute bags as under compulsory certification. Each covered bag must meet its Indian Standard and carry the Standard Mark under a BIS licence. Bags made for export are outside the order.
| Bag type | Indian Standard |
|---|---|
| A-twill jute bags | IS 1943 |
| B-twill jute bags for packing foodgrains | IS 2566 |
| Jute bags for packing 50 kg foodgrains | IS 12650 |
| Jute bags for packing 50 kg sugar | IS 15138 |
| Light weight jute sacking bags for 50 kg foodgrains | IS 16186 |
| Jute bags for packing up to 30 kg foodgrains | IS 16372 |
Decide which standard your first bag must meet before you order machines, because cloth weight, size and stitching follow from it. Confirm the order is still in force when you apply.
Who buys gunny bags, and does the jute packaging reservation help a new unit?
Under the Jute Packaging Materials Act, 1987, the government fixes for each jute year (July to June) how much of a commodity must be packed in jute. The Ministry of Textiles release for 2023-24 set 100% of foodgrains and 20% of sugar, and a Ministry release of December 2025 reports the same shares for 2024-25. West Bengal has asked for the sugar share to double to 40% for 2026-27; no decision had been reported at the time of writing. The same 2023-24 release says jute packaging used about 65% of India's raw jute in 2022-23.
Do not count on government indents as a stitching unit. The 2025 order speaks of procuring agencies and benefiting mills, and it exempts export packing, foodgrain packs of 10 kg or less, sugar packs of 25 kg or less and packs above 100 kg. That leaves the middle sizes, such as the 50 kg bag, as the core of reserved demand, so start by selling to private packers of rice, wheat and sugar and to exporters.
What drives the price of your cloth: raw jute and the new trader rule
Cloth price follows raw jute. The Cabinet set the 2026-27 support price for TD-3 grade raw jute at ₹5,925 per quintal on 24 February 2026, up ₹275 on the year before. From 1 April 2026, mills may buy raw jute only from stockists and traders registered with the Jute Commissioner, and traders handling 500 kg or more in a jute year have to register (Ministry of Textiles order of 24 February 2026). Ask your cloth mill how it will pass these costs on.
What should you do before you buy the first machine?
- Fix the first bag: pack size, cloth weight and the Indian Standard it must meet.
- Get written cloth rates and delivery terms from two or three mills.
- Collect quotes for the machines and check your power connection against the profile's 30 HP.
- Register the unit and apply for GST, and start the BIS licence application if you will sell in India.
- Take your own prices to the bank in its project report format. Our detailed project report guide explains what lenders check.
- Read the current PMEGP guidelines on the KVIC portal, since subsidy rates and project ceilings are revised, and see our MSME schemes page for other support.
Frequently asked questions about gunny bag manufacturing
What is the price of 1 kg of jute?
The 2026-27 support price for TD-3 grade raw jute is ₹5,925 per quintal, which is ₹59.25 per kg. Market rates vary by grade and season, and a stitching unit pays for cloth, not raw fibre.
How long does it take to set up a gunny bag unit?
The PMEGP profile allows 5 to 6 months for implementation. Machine delivery, the shed, the power connection and any BIS licence set your own pace.
Can I make gunny bags for export without a BIS licence?
The licence requirement does not cover bags meant for export, because the Jute Bags (Quality Control) Order, 2022 excludes them. Bags you also sell in India still need it.
Is a carry bag or paper bag unit the same business?
No. A gunny bag unit stitches woven jute cloth. Carry bag and paper bag units use other machines, materials and buyers, so those costs do not carry over. For printed shopping and promotional jute bags, see our jute bag manufacturing guide.
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