Handmade soaps, herbal shampoos, hair oils, face creams, lip balms and natural skincare have become popular in India, sold through Instagram, marketplaces, gift shops and salons. Many small brands start in a kitchen, but making cosmetics for sale is regulated, because these products touch skin, hair and eyes. Doing it properly protects customers and lets your brand grow without legal trouble. This guide explains how to start a soap making business in India, from licences and costs to finding your first customers.
This guide explains the licence you need, how to set up production, labelling, GST and how to build a brand.
Key points
Table of Contents
- Manufacturing cosmetics for sale needs a licence from your State Licensing Authority (usually the state drugs control department) under the Cosmetics Rules, 2020, made under the Drugs and Cosmetics Act, 1940.
- Toilet soap, shampoo, hair oil, creams, lotions and similar products are cosmetics. Laundry soap and detergents aren’t cosmetics, but have their own standards and rules.
- You need suitable premises, equipment, testing arrangements and a competent technical person to get a licence.
- Labels must carry the required information, including ingredients, batch number, manufacturing and expiry dates, and your licence number.
- Under GST 2.0, toilet soap, shampoo, hair oil, toothpaste and talcum powder moved from 18% to 5% from 22 September 2025. Check each product’s rate.
The market in numbers
Soap and cosmetics manufacturing falls under what MoSPI’s surveys call chemicals and chemical products. In 2023-24 there were about 0.4 lakh small unincorporated establishments in this activity, with average value added of ₹6,48,800 a year in urban areas. Units with hired workers added ₹14,15,884 on average, against ₹1,42,674 for one-person units.
Step 1: Choose your products
- Handmade soaps: cold process, hot process or melt-and-pour, with natural oils and essential oils.
- Hair care: herbal hair oils, shampoos and conditioners.
- Skincare: creams, lotions, face packs, scrubs and serums.
- Lip and body care: lip balms, body butters and bath products.
- Ayurvedic cosmetics: note that products sold as Ayurvedic medicines are regulated differently, under the Ayush licensing system, so don’t make medical claims for cosmetics.
Start with a few products you can make consistently and test thoroughly.
Step 2: The manufacturing licence
Under the Cosmetics Rules, 2020:
- apply to your State Licensing Authority for a licence to manufacture cosmetics for sale, listing the products you’ll make
- premises: a clean, suitable manufacturing area separate from living space, with proper lighting, ventilation, water supply, and storage for raw materials and finished goods
- equipment: suitable for the products, kept clean and maintained
- technical staff: a competent technical person with qualifications in relevant subjects, such as chemistry or pharmacy, as the rules require
- testing: arrangements to test raw materials and finished products, in your own lab or an approved testing lab
- records: batch manufacturing records for every batch
- inspection: the licensing authority may inspect your premises before granting the licence
If you don’t want to set up your own unit, you can get products made by a licensed manufacturer under a loan licence arrangement, where your brand uses the manufacturer’s licensed facility. Check the current forms, fees and requirements with your State Licensing Authority and on the CDSCO website.
Step 3: Ingredients and safety
- use ingredients permitted for cosmetics, from reliable suppliers with documentation
- follow BIS standards for cosmetics where they apply, which set requirements for many products and ingredients
- avoid banned or restricted substances, and follow limits for preservatives and colours
- lye (sodium hydroxide) for soap is corrosive; handle it with gloves, goggles and ventilation, and cure soaps properly
- stability and safety: test that products stay stable and safe through their shelf life
- no animal testing: India prohibits testing of cosmetics on animals
- patch test advice on labels for sensitive skin where appropriate
Step 4: Labelling
Cosmetic labels in India must generally include:
- the product name
- the manufacturer’s name and address, and the manufacturing licence number
- a list of ingredients
- batch number, date of manufacture and expiry date or "use before" date
- net quantity and MRP, under Legal Metrology rules
- warnings and directions for use where needed
Don’t make medical claims, such as "cures acne" or "treats hair fall". Cosmetics can claim to cleanse, beautify or improve appearance, but not to treat disease. Misleading claims can also breach advertising rules; see social media marketing for local businesses for ASCI’s rules.
Step 5: Other registrations
- Udyam registration: free, and useful for loans. See our Udyam guide.
- GST registration once turnover crosses the threshold, or earlier to sell on marketplaces. See GST registration for small businesses.
- Trademark for your brand name. See trademark registration.
- Legal Metrology registration as a packer, if required.
- Plastic EPR, if you use plastic packaging as a brand owner under the Plastic Waste Management Rules.
Step 6: GST
Under the GST 2.0 changes from 22 September 2025:
- toilet soap (bars and cakes), shampoo, hair oil, toothpaste, talcum powder and shaving products moved from 18% to 5%
- other cosmetics and beauty products are taxed at the rates for their categories, many at 18%
Check each product’s HSN code and rate on the CBIC website. Make invoices with Advanton’s free GST invoice generator.
Step 7: Pricing
Cost each product from:
- oils, butters, fragrances, actives and other ingredients
- packaging: bottles, jars, wraps, boxes and labels
- labour, including curing time for soap
- testing and licence costs spread over batches
- marketing, marketplace commissions and shipping
An illustrative example: handmade soap
These figures are illustrative. A batch of 100 bars of 100 g cold-process soap might need oils and butters costing ₹2,200, essential oils and additives ₹800, and lye and other materials ₹200, or ₹3,200 for ingredients. Add labour (₹1,000), packaging and labels (₹1,200), testing and licence costs spread per batch (₹600) and other overheads (₹500), and the cost per bar is about ₹65. Selling at ₹180 to ₹250 a bar online, after marketplace fees and shipping, gives a healthy margin, but only if the brand can command those prices.
Step 8: Sell and build a brand
- Instagram and WhatsApp: show ingredients, the process and results (honestly)
- marketplaces and ONDC; see selling online in India
- gift shops, salons, spas, hotels and organic stores
- exhibitions and craft fairs
- corporate and wedding gifting
- Google Business Profile and the India Business Directory: list your brand free
Costs to plan for
- licence fees and premises preparation
- equipment: moulds, mixers, scales, heating equipment and storage
- testing costs
- raw materials and packaging stock
- a technical person’s salary or fees
- branding, photography and marketing
- marketplace fees and shipping
A getting-started checklist
- Choose a small range of products and develop stable formulas.
- Prepare suitable premises and equipment.
- Engage a competent technical person and testing arrangements.
- Apply for the manufacturing licence, or arrange a loan licence with a licensed manufacturer.
- Design compliant labels.
- Register Udyam, GST and your trademark.
- Launch online and through local retailers.
Developing stable formulas
- start with proven formulas from training, and adapt them carefully
- record every ingredient and its percentage, with supplier details
- test small batches for texture, fragrance, pH where relevant, and stability over time in heat and cold
- check preservative systems for water-based products such as creams and lotions, which can grow bacteria and mould
- keep samples of every batch for the shelf life of the product
- don’t change formulas without testing, since small changes can affect safety and stability
Your first 90 days
In the first month, finalise two or three formulas and test them for stability. In the second month, prepare premises and apply for the licence, or sign a loan licence arrangement. In the third month, design labels, register your trademark, photograph products and launch with a small batch online and through a few local shops.
Common mistakes
- Selling cosmetics without a manufacturing licence.
- Making medical claims on labels and social media.
- Missing label information, such as batch numbers and expiry dates.
- Skipping stability and safety testing.
- Poor lye handling and uncured soap.
Frequently asked questions about starting a soap making business in India
What’s the shelf life of handmade soap?
Often a year or more if properly cured and stored, but test your own products.
Can I sell on marketplaces without a licence?
No. Marketplaces increasingly ask for licence details, and selling unlicensed cosmetics risks penalties and delisting.
Do I need BIS certification for soap?
BIS standards apply to many cosmetic products and ingredients; follow those relevant to your products, and check current requirements with your licensing authority.
How do I find a licensed manufacturer for a loan licence?
Contact licensed cosmetics manufacturers in your area, agree terms for making your products, and apply for the loan licence with their details.
Do I need a licence to sell handmade soap in India?
Yes. Toilet soap is a cosmetic, and manufacturing cosmetics for sale requires a licence from your State Licensing Authority under the Cosmetics Rules, 2020.
Can I make cosmetics at home for sale?
The manufacturing area must meet the licence requirements, which generally means a separate, suitable space, not a domestic kitchen.
What GST applies to soap after GST 2.0?
Toilet soap, shampoo, hair oil, toothpaste and talcum powder moved to 5% from 22 September 2025.
What is a loan licence?
An arrangement where your brand’s products are made at another licensed manufacturer’s facility, under a licence granted for that purpose.
Can I call my products Ayurvedic?
Products sold as Ayurvedic medicines need Ayush licensing. Cosmetics with herbal ingredients can describe their ingredients, but shouldn’t make medical claims.
Is animal testing allowed?
No. India prohibits testing of cosmetics on animals.
Sources
- Central Drugs Standard Control Organisation
- MoSPI, Annual Survey of Unincorporated Sector Enterprises 2023-24, full report
- Central Board of Indirect Taxes and Customs, GST
- GST portal (Goods and Services Tax Network)
- Bureau of Indian Standards
- Ministry of MSME, Udyam Registration portal
Last reviewed November 6, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
