Clothing is one of India’s biggest retail categories, from everyday wear to festive outfits, school uniforms, workwear and wedding collections. Every town has garment shops, and well-run ones with the right range, fair prices and good service can grow steadily. Online selling has added new opportunities for small shops to reach customers beyond their street. This guide explains how to start a readymade garment shop in India, from licences and costs to finding your first customers.
This guide explains how to start a readymade garment shop: choosing customers, sourcing, stock planning, GST, pricing and selling online.
Key points
Table of Contents
- Know your customers: men, women, children, ethnic or western, budget or premium, everyday or festive. A focused range sells better than a little of everything.
- Source from wholesale markets, manufacturers and distributors, comparing quality, prices, credit terms and return policies.
- Plan stock around seasons and festivals, which drive a large share of sales.
- Under GST 2.0, garments priced up to ₹2,500 a piece are taxed at 5%, and above ₹2,500 at 18%, from 22 September 2025.
- Clear exchange policies and good trial rooms reduce returns and build trust.
The market in numbers
Garment shops are part of retail trade, which in 2023-24 had about 1.99 crore small establishments, with average value added of ₹3,13,011 a year in urban areas. Shops with hired workers added ₹7,46,950 on average, against ₹1,60,797 for one-person shops.
Step 1: Choose your customers and range
- Women’s ethnic wear: kurtis, salwar suits, sarees, lehengas and dupattas.
- Men’s wear: shirts, trousers, jeans, T-shirts, kurtas and ethnic sets.
- Kids’ wear: fast-growing, with frequent purchases as children grow.
- Family stores: a broad range for all ages.
- Specialist: school uniforms, sportswear, innerwear, winter wear or wedding wear.
Visit competitors, note what sells and what’s missing, and choose a clear position on style and price.
Step 2: Location and store
- Location: a market, high street or busy residential area where your customers shop; footfall matters most.
- Store: good lighting, organised displays by category and size, mannequins, mirrors, clean trial rooms and a comfortable space.
- Storage: for back stock, organised by size and style.
Step 3: Sourcing
- Wholesale markets: India has major garment hubs and wholesale markets, such as Surat for sarees and ethnic fabrics, Tiruppur for knitwear, Ludhiana for winter wear, and large wholesale markets in Delhi, Mumbai, Kolkata, Jaipur and other cities. Visiting them lets you compare designs and prices.
- Manufacturers and brands: buy directly from manufacturers, or become a franchise or authorised retailer of a brand. See how to evaluate a franchise.
- B2B platforms: online wholesale platforms offer a wide range, often with smaller minimum orders.
- Local tailors and boutiques for custom or exclusive pieces. See how to start a tailoring or boutique business.
Check quality carefully: stitching, fabric, colour fastness and sizing. Negotiate credit terms, and ask about exchanges for defective or unsold stock.
Step 4: Registrations
- Shops and establishments registration and a trade licence. See shop and establishment registration and trade licences.
- GST registration once turnover crosses ₹40 lakh for goods in most states, or earlier if you buy from other states or sell online. See GST registration for small businesses.
- Legal Metrology: pre-packaged garments must carry the required details, such as MRP and size.
- Udyam registration: free, and useful for loans. See our Udyam guide.
Step 5: GST on garments
Under the GST 2.0 changes from 22 September 2025:
- garments with a sale value up to ₹2,500 a piece are taxed at 5%
- garments above ₹2,500 a piece are taxed at 18%
- most fabrics are taxed at 5%
The rate depends on the value of each piece, so price carefully around ₹2,500 and make sure your billing software applies the right rate. Check the CBIC schedule for your products. Make invoices with Advanton’s free GST invoice generator.
Step 6: Stock planning
Stock is where garment shops make or lose money:
- plan around seasons and festivals: Diwali, Eid, Durga Puja, Pongal, Onam, Raksha Bandhan, weddings, summer, monsoon, winter and the school year
- order in a size ratio that matches your customers; running out of popular sizes loses sales
- track what sells: by category, style, colour, size and price point, using billing software
- avoid overstocking fashion items that date quickly
- clear old stock with end-of-season sales, before buying the next season’s stock
- reorder fast movers during the season
Step 7: Pricing
- Markup on cost varies by category and market, and must cover rent, staff, discounts, unsold stock and your margin.
- Price points: offer a clear range, such as good, better and best, in each category.
- GST: remember the ₹2,500 threshold when setting MRPs.
- Discounts: use them for planned sales and slow stock, not every day.
See how to price your products and services.
An illustrative example
These figures are illustrative. A shop buys a kurti for ₹450 and sells it at ₹999 including 5% GST. GST is about ₹48, leaving about ₹951, and a gross margin of about ₹501 on the piece before rent, staff and other costs. If 20% of the season’s stock doesn’t sell at full price and has to be cleared at ₹600, the margin on those pieces drops sharply. That’s why good buying and stock control matter as much as selling.
Visual merchandising basics
How you display clothes affects what sells:
- window and entrance displays that change with seasons and festivals
- mannequins styled with complete looks, so customers see how pieces go together
- group by category, then by colour and size, with clear signs
- keep shelves full but uncluttered, and fold and hang neatly
- highlight new arrivals and bestsellers at eye level and near the entrance
- good lighting that shows true colours
- clear price tags, with the GST-inclusive MRP
Small changes, such as a fresh window display every fortnight, keep regular customers coming back to look.
Step 8: Service, exchanges and trust
- trial rooms that are clean, private and safe, with no cameras inside
- a clear exchange policy, displayed and printed on bills, such as exchanges within a set number of days with the tag and bill
- alteration services through a tailor
- helpful staff who know the range and sizes
- loyalty programmes and WhatsApp updates for new arrivals (with customers’ consent)
Step 9: Sell online too
- WhatsApp Business catalogue and status updates for local customers.
- Instagram for new arrivals, festive collections and styling ideas.
- Marketplaces and ONDC to reach customers across India. See selling online in India.
- Google Business Profile and the India Business Directory: list your shop free.
Step 10: Grow
- hire sales staff for busy seasons; check costs with Advanton’s hiring cost calculator
- add categories that customers ask for
- open a second store or a larger outlet
- build your own label with local manufacturers, protected by a trademark; see trademark registration
- funding: a Mudra Kishore or Tarun loan for stock and fit-out; see business loans and government schemes
A getting-started checklist
- Choose your customers and range.
- Find a location with the right footfall.
- Visit wholesale markets and select suppliers.
- Register the shop and GST.
- Set up billing software with stock tracking and correct GST rates.
- Fit out the store with good lighting, displays and trial rooms.
- Plan opening stock for the next season or festival.
Costs to plan for
- rent and deposit, often the largest fixed cost in busy markets
- fit-out: lighting, racks, mannequins, mirrors and trial rooms
- opening stock, by category and size
- billing software with stock tracking
- staff wages, especially during festivals
- packaging, carry bags and tags
- marketing and end-of-season sale discounts
Your first 90 days
Open before a festival or season if you can, with a focused range. Track every sale by category, size and price point from day one, reorder what sells, and note what customers ask for that you don’t stock. Build a WhatsApp list of customers who agree to hear about new arrivals.
Common mistakes
- Buying what you like, not what your customers buy.
- Running out of popular sizes.
- Holding old stock instead of clearing it.
- Wrong GST rates around the ₹2,500 threshold.
- No exchange policy, leading to disputes.
Frequently asked questions about starting a readymade garment shop in India
What sizes should I stock most?
Track your sales by size from day one. Middle sizes usually sell most, but your customers’ sizes decide, so reorder based on your own data.
How do I handle festival rushes?
Stock up early, hire temporary sales staff, extend hours, keep popular sizes well stocked, and use billing software that handles queues quickly.
Should I sell only branded clothes?
A mix often works best: some recognised brands for trust and footfall, and good-quality unbranded or own-label products for better margins.
How often should I add new stock?
Add new arrivals regularly, every few weeks if you can, so regular customers have a reason to return, and plan larger buys before each festival and season.
Should I offer credit to regular customers?
Small shops sometimes do, but keep it limited, recorded and settled regularly. UPI and card payments reduce the need for credit.
What GST applies to clothes after GST 2.0?
Garments up to ₹2,500 a piece are taxed at 5%, and those above ₹2,500 at 18%, from 22 September 2025.
Where can I buy garments wholesale?
From wholesale markets and garment hubs across India, manufacturers, brands and online B2B platforms.
How much stock should I start with?
Enough to offer a good range in your main categories and sizes for the next season, without tying up all your cash. Reorder fast movers during the season.
Should I sell online?
Yes, alongside your store. WhatsApp, Instagram, marketplaces and ONDC can add sales beyond your local customers.
Sources
- 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)
- Open Network for Digital Commerce (ONDC)
- Ministry of MSME, Udyam Registration portal
- Pradhan Mantri MUDRA Yojana
Last reviewed November 6, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
