Starting a textile mill in India sounds like a solid bet-cheap labor, huge domestic demand, and government support. But is it actually profitable? The answer isn’t yes or no. It’s textile mill profit India depends on scale, location, machinery, and how well you avoid the traps most new owners walk straight into.

What’s the real cost to start a textile mill in India?

A small spinning unit with 10,000 spindles costs between ₹8 crore and ₹12 crore (about $95,000-$145,000 USD). That’s just for the machines-ring frames, carding units, drawing frames. You still need to pay for land, building, power backup, water treatment, and labor. If you’re buying used equipment from China or Turkey, you might cut that by 30%, but maintenance costs jump. One mill owner in Coimbatore told me his old Italian machine broke down three times in six months. Repairs cost more than the original spare part.

Power is another hidden bill. Textile mills use 200-400 kW per hour. In Gujarat, industrial electricity runs ₹7-₹9 per unit. In Tamil Nadu, it’s ₹5-₹6. But if your area has load-shedding, you’ll need diesel generators. A 500 kVA generator costs ₹25 lakh upfront, plus ₹40-₹50 per liter of diesel. That’s ₹1.2 lakh a month just for backup power if you run 12 hours a day.

How much can you actually earn?

Let’s say you run a 10,000-spindle unit. You produce about 12-14 tons of yarn per month. The selling price? ₹220-₹280 per kg, depending on fiber quality and twist. Cotton yarn is volatile. In early 2025, prices dropped 18% after a good monsoon boosted cotton output. That wiped out two months of profit for several small mills.

Raw material is your biggest risk. Cotton prices swing with weather, global demand, and government stockpiles. In 2024, cotton cost ₹68 per kg. In early 2025, it jumped to ₹85. That’s a 25% spike in your input cost. If you’re locked into a contract with a buyer at ₹240/kg, you’re eating the loss.

Profit margins? Most small mills make 8-12% net profit after all costs. That sounds fine until you realize it takes 18-24 months to break even. And that’s if you don’t get hit by a machine breakdown, a labor strike, or a buyer delaying payment.

Who’s making money in Indian textiles right now?

The big players-Arvind, Welspun, Trident-are profitable because they control the whole chain. They grow cotton, spin yarn, weave fabric, dye it, and sell to global brands like H&M and Zara. They get bulk discounts on power, chemicals, and shipping. They also get subsidies under the Technology Upgradation Fund Scheme (TUFS).

Small mills survive by specializing. One mill in Surat runs only 100% organic cotton yarn for eco-brands. They charge ₹320/kg-50% more than regular yarn. They don’t compete on price. They compete on certification. Their profit margin? 22%. But they need a ₹15 lakh certification cost upfront and a full-time person just to manage paperwork.

Another success story: a mill in Ludhiana that only makes elastic thread for underwear. They supply 40+ local garment units. No export hassle. No currency risk. No long payment cycles. They make ₹18 crore a year on ₹12 crore investment. That’s 50% ROI. But they’ve been doing it since 1998. They know every buyer, every machine quirk, every local inspector.

The hidden costs no one talks about

Textile mills don’t just need machines. They need:

• Water treatment: You can’t dump dye waste. In Maharashtra, the pollution board fined one mill ₹42 lakh for illegal discharge in 2024.
• Labour turnover: Spinning workers leave every 6-8 months. Training a new operator takes 3 weeks. That’s 15-20% of your monthly payroll lost to inefficiency.
• Compliance: Factories need EPF, ESIC, factory license, fire safety, pollution control. One owner in Ahmedabad spent ₹7 lakh just on legal paperwork in 2024.
• Working capital: Buyers pay in 60-90 days. You pay suppliers in 15 days. You need cash to bridge that gap. Most small mills run out of money before they get paid.

Government schemes that actually help

India has over 20 textile schemes. Most are useless. But three actually move the needle:

• TUFS: Gives 15-30% subsidy on new machinery. You get ₹1.5 crore back on a ₹10 crore machine. But you need to apply 18 months in advance. Paperwork takes 6 months.
• PM MITRA: New textile parks in five states (UP, Telangana, MP, Gujarat, Tamil Nadu). They offer land, power, water, and common effluent treatment. Rent is ₹15-₹25 per sq. ft. per year. But you need to invest ₹50 crore minimum to join.
• Export Promotion Council (EPC) grants: Up to ₹50 lakh for participation in international fairs. You pay ₹12 lakh to attend, they give back ₹50 lakh if you land three export deals.

One mill in Tiruppur used TUFS to upgrade to automatic winding machines. Their output jumped 40%. Defects dropped 60%. They paid off the loan in 14 months.

Who should avoid this business?

Don’t start a textile mill if:

• You think you can compete on price with China or Bangladesh. You can’t. Their labor is half the cost, and their power is subsidized.
• You don’t have access to capital. You need ₹20 crore minimum to survive the first two years.
• You’re relying on government help alone. Subsidies are slow. They won’t save you if your machines break or buyers disappear.
• You don’t have a buyer lined up before you start. No order = no cash flow = no business.

Who has a real shot at success?

You have a real chance if you:

• Specialize. Don’t make generic yarn. Make high-twist denim yarn. Or organic cotton for premium brands. Or technical textiles for medical use.
• Partner with a local garment unit. They’ll give you steady orders. You’ll get paid faster.
• Use digital tools. Install IoT sensors on machines. Predict breakdowns before they happen. One mill in Coimbatore cut downtime by 35% using a ₹3 lakh sensor system.
• Start small. A 5,000-spindle unit costs ₹5 crore. Test the market. Prove you can deliver. Then scale.

Textile mills in India aren’t dying. They’re changing. The winners aren’t the biggest. They’re the smartest. They know cotton prices will rise again. They know buyers want traceability. They know power will get more expensive. And they’ve built their business around those facts-not wishes.

What to do next if you’re serious

Don’t buy machines yet. Do this first:

1. Visit five small mills in your target state. Talk to owners-not sales reps. Ask: "What broke? What cost more than expected? Who paid late?"
2. Get a buyer to sign a letter of intent. Even if it’s just for 2 tons a month. No order? No business.
3. Apply for TUFS subsidy now. The process takes 6-8 months.
4. Calculate your break-even point: If you sell yarn at ₹250/kg, and your cost is ₹210/kg, you need to sell 16.7 tons a month just to cover fixed costs. Can you realistically sell that?
5. Build a 3-year cash flow model. Include machine repairs, wage hikes, and cotton price spikes. If you run out of cash before month 20, don’t start.

Textile mills in India aren’t dead. But they’re not a lottery ticket. They’re a marathon. The ones that win aren’t the ones with the most machines. They’re the ones who know their numbers, their buyers, and their limits.