Paper Bag Making Business
पेपर बैग बनाने का व्यवसाय · कागदी पिशवी उद्योग
Make kraft paper grocery bags on an automatic machine and supply shops, sweet marts, pharmacies and restaurants that can no longer use plastic.
Investment
₹11.3 lakh
Profit a month*
₹54,000
- Space
- 1,000 sq ft
- Staff
- 4 + you
*Operating profit before the loan instalment in year 2, at the assumed sales level. Change the assumptions in the calculator below.
Plastic carry-bag bans in Maharashtra and many other states created steady demand for paper bags from grocery shops, sweet marts, pharmacies, bakeries and food-delivery kitchens. A small unit uses a roll-fed automatic machine that cuts, folds and glues kraft paper into V-bottom bags, with one operator and two helpers. Margins depend on buying paper well and keeping the machine running, because paper is about two-thirds of the cost. Selling is the real job: you need a list of shops, wholesalers and restaurants who reorder every week or two. Custom printed bags for brands earn more but need a printing unit and design work.
Skills needed: No formal qualification. The operator needs a few days of training from the machine supplier; the owner should be comfortable selling to shops and wholesalers.
Profit calculator
Change the numbers to match your town175 kg/day: Plain kraft paper bags (V-bottom, assorted sizes)
Total investment
₹11.3 lakh
Your own money
₹1.13 lakh
Subsidy
—
Bank loan
₹10.1 lakh
Mudra Tarun Plus
A typical month in year 2
| Sales | ₹4,28,750 |
| Raw material & packing | −₹2,76,937 |
| Electricity | −₹7,800 |
| Salaries | −₹53,550 |
| Rent | −₹21,000 |
| Other running costs | −₹15,750 |
| Operating profit | ₹53,713 |
| Loan instalment (EMI) | −₹23,666 |
| You keep each month | ₹30,047 |
After the loan is repaid, the EMI becomes your income too. Your own salary is not counted as a cost: the profit is your income.
- Loans above ₹10 lakh under Mudra (Tarun Plus) are only for borrowers who have repaid an earlier Tarun loan.
Need this for a bank loan?
Turn these numbers into a full project report: cost of project, means of finance, 5-year profit and loss, balance sheet, repayment schedule, DSCR and break-even.
Make my project reportInvestment breakdown
| Machinery & equipment | Price |
|---|---|
| Automatic roll-fed paper bag machine (V-bottom)Roll-fed, cut-fold-glue, 3–5 HP, three phase | ₹5,00,000₹3.25 lakh–₹6.5 lakh |
| Electrical panel, three-phase wiring and stabiliser | ₹40,000 |
| Roll handling trolley and core shafts | ₹15,000 |
| Weighing scale (100 kg) and table scale | ₹12,000₹8,000–₹18,000 |
| Packing tables, racks and office furniture | ₹25,000 |
| Inline flexo printing unit (1–2 colour)add-on | ₹2,00,000₹1.5 lakh–₹4 lakh |
| Semi-automatic handle-pasting / square-bottom machineadd-on | ₹1,50,000₹65,000–₹4.5 lakh |
| Machinery & equipment (without add-ons) | ₹5,92,000 |
| Machine installation and operator training | ₹15,000 |
| Three-phase electricity connection | ₹20,000 |
| Udyam, GST and local registrations | ₹5,000 |
| Trial runs and paper wastage | ₹15,000 |
| Working capital 20 days of raw material, 21 days of credit to buyers, 1 month of expenses | ₹4,80,760 |
| Total project cost | ₹11,27,760 |
Typical market prices as of October 2026, from supplier listings. Prices vary by brand, capacity and city; always get 2–3 quotes.
Cost and margin per unit
| Plain kraft paper bags (V-bottom, assorted sizes) (per kg) | ₹ |
|---|---|
| Kraft paper roll (1.05 kg at ₹56/kg, incl. wastage) | 58.80 |
| Glue / adhesive | 3.00 |
| Bundling and packing | 1.50 |
| Material cost | 63.30 |
| Selling price | 98.00 |
| Margin before running costs | 34.70 (35%) |
Bags are commonly sold by weight to wholesalers and by piece to shops. Printed bags fetch more.
Space, power and staff
1,000 sq ft
Rented shed · rent ≈ ₹20,000/month
About 300 sq ft for the machine and 700 sq ft for paper rolls and finished stock. Needs a three-phase connection and road access for roll delivery.
7.5 kW, three-phase
Bill ≈ ₹12,000/month at full capacity
4 staff + you
- 1 × Machine operator: ₹16,000
- 2 × Helpers (counting, bundling, packing): ₹11,000
- 1 × Sales and delivery: ₹13,000
Licences and registrations
Udyam registration
recommendedWhen: Before applying for a loan · Cost: Free
GST registration
recommendedWhen: Before your first big order · Cost: Free
Mandatory only above the turnover limit, but most wholesalers and restaurant chains want GST invoices. Confirm the GST rate for your bag type (HSN 4819) with a CA.
Shop and Establishment registration
mandatoryWhen: When you rent the shed · Cost: Small fee; varies by state
Pollution control consent
if applicableWhen: Before production · Cost: Varies
Paper bag conversion is usually in a light category. Check with your state board (MPCB in Maharashtra).
Fire NOC / local body trade licence
if applicableWhen: Before production · Cost: Varies by municipality
Paper stock is a fire load; keep extinguishers and clear exits.
Factory licence
if applicableWhen: If you employ 10 or more workers with power · Cost: Varies by state
How it works
- Buy kraft paper rolls (usually 60–90 GSM) in the widths for your bag sizes.
- Load the roll; the machine forms a tube, glues the side seam, cuts to length and folds and glues the bottom.
- Bags dry for a few minutes, then are counted and bundled in 50s or 100s.
- Check bottom strength and glue lines from each batch.
- Pack in bales, label sizes and dispatch.
Loan route
Mudra loan (Tarun Plus)
Own money ₹1.13 lakh · Loan ₹10.1 lakh · EMI ≈ ₹23,666
No collateral, no subsidy. Only if you have taken and fully repaid an earlier Tarun loan.
How Mudra worksPMEGP (new units)
Subsidy ₹1.69 lakh (general, urban) to ₹3.95 lakh (special category, rural). EMI ≈ ₹19,721–₹15,777.
Own money 5–10%. Applicant must be at least 8th pass for this project size. Subsidy is held as a 3-year deposit, then adjusted against the loan.
How PMEGP worksAssumes 10.5% interest, 5 years including a 6-month moratorium. PMEGP was approved up to FY 2025-26. Check on the KVIC PMEGP portal that applications are open before you plan around the subsidy.
No collateral and no third-party guarantee (covered by the Credit Guarantee Fund for Micro Units).
Who buys and how to sell
Buyers
- Grocery and kirana shops
- Sweet marts and bakeries
- Pharmacies
- Restaurants and cloud kitchens
- Wholesale packaging traders
- Fruit and vegetable vendors
Ways to sell
- Visit shops and markets with a sample kit
- Supply packaging wholesalers in bulk
- Tie up with restaurant and pharmacy chains
- B2B marketplaces
Season: Steady, with peaks before Diwali and the wedding season (sweet marts, gift shops).
Competition: Other small paper bag units and large converters. Reliable supply, correct sizes and credit terms win repeat buyers.
Risks and how to handle them
Kraft paper price swings
Track paper mill prices; keep 2–3 weeks of stock and pass on price changes promptly.
Machine downtime
Buy from a supplier who services locally; keep spare blades and belts.
Long credit to buyers
Fix 15–30 day terms, prefer wholesalers who pay faster, stop supply to defaulters.
Plastic ban enforcement weakens
Build buyers who prefer paper for branding (sweet marts, bakeries, cafés) rather than only ban-driven demand.
Tips from the trade
- Start with the 3–4 sizes your local market buys most and add printed bags later.
- Ask the machine supplier for references and visit a working unit before buying.
- Printing a shop's name on bags is the easiest upsell once you have regular buyers.
Questions people ask
Is a semi-automatic machine enough to start?+
Semi-automatic machines cost less but need more labour per bag. If you already have buyers for a few thousand bags a day, an automatic roll-fed machine usually pays back faster.
What paper is used for grocery bags?+
Brown or white kraft paper, usually 60–90 GSM, depending on the bag size and load it must carry.
How much investment is needed to start a paper bag making business?+
About ₹11.3 lakh for a small unit: ₹5.92 lakh for machinery and equipment, ₹55,000 for set-up costs and ₹4.81 lakh as working capital (stock, credit to buyers and one month of expenses). Prices as of October 2026.
How much profit can a paper bag making business make per month?+
At 50% of capacity, sales are about ₹4.29 lakh a month and operating profit about ₹53,713 before the loan instalment. After an EMI of about ₹23,666, the owner keeps about ₹30,047 a month until the loan is repaid. These are estimates; your prices, rent and sales decide the real figure.
Which machines are needed for paper bag making?+
Automatic roll-fed paper bag machine (V-bottom) (₹3.25 lakh–₹6.5 lakh).
Can I get a Mudra loan or PMEGP subsidy for paper bag making?+
With a project cost of about ₹11.3 lakh, the bank loan of about ₹10.1 lakh falls under Mudra Tarun Plus. Mudra has no subsidy. As a new unit you may instead apply under PMEGP, where the subsidy is 15–35% of the project cost (up to about ₹3.95 lakh here for a special-category applicant in a rural area). PMEGP was approved up to FY 2025-26. Check on the KVIC PMEGP portal that applications are open before you plan around the subsidy.
What licences are required for paper bag making?+
Mandatory: Shop and Establishment registration. Depending on your set-up you may also need: Udyam registration, GST registration, Pollution control consent, Fire NOC / local body trade licence, Factory licence.
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Sources
Prices as of October 2026. Prices here come from online listings and published guides and have not yet been confirmed with local suppliers. Profit figures are estimates from the assumptions above, not a promise of income.
Spotted an outdated price? Tell us. Data for this page: HowIndiaEarns.