Top 15+ Profitable Business Ideas Under ₹5 Lakhs in India (2025)

There is a wave of entrepreneurial spirit in India. It is growing stronger not just in urban cities, but in TIER 2 and TIER 3 cities, as well. There are currently over 4.77 crore MSMEs in India registered on Udyam Portal. These days, starting a business does not require crores of rupees. The good thing for new-age entrepreneurs is that they can start business with 5 lakhs.

All you need is ₹5 lakh, and you can create a business that is demanding, profitable, and sustainable. Whether from a Tier 1 metro that never sleeps or a Tier 3 town that’s comfortably small, you can find growth in India’s domestic and digital markets. Here are the best small business opportunities India that you can grab with just ₹5 lakh.

Key Factors to Consider Before Starting a Low-investment Business

Whether you want to make good use of the money sitting idle in your bank account or build a profitable business, the current market provides many low-investment business opportunities. Also, 32.5% of students in India want to start a business or startup upon graduation. It shows that the entrepreneurial spirit is stronger in both students and professionals.

As fit as the market is right now, the success of any business lies in its strong fundamentals. These fundamentals are the key things to consider before starting a business. They range from business ideas and conducting thorough market research to crafting a business plan and securing funding. Here are some of the most useful low-investment startup tips you can follow:

1. Market Demand

Before starting a business, you must analyse the demand for your product or service in your target area. Understand local consumer preferences, competition, and spending habits to validate your business idea and know if it’s a perfect fit. A product that performs well in metropolitan areas may not have the same success in smaller towns, and vice versa.

2. Location & Scalability

Find a location that fits your business model. You can open either an in-person physical store or an online website. The location of a business matters because it impacts accessibility for customers. Eg a stationary shop works best where there are schools and colleges nearby. It also maintains scalability and long-term growth without needing significant reinvestment.

3. Legal & Registration Requirements

Depending on the types of businesses you are opening, you will have to get legal registration for compliance. You must confirm that your business adheres to legal norms, such as obtaining GST registration, an FSSAI license (for food businesses), or shop establishment certificates, depending on your industry.

4. ROI Expectations

You must establish realistic return-on-investment (ROI) goals. It helps you plan strategically, allocate resources wisely and remain grounded in financial reality. Identify your break-even point and estimate how long it will take for your business to become profitable.

5. Working Capital Planning

You have many opportunities to start business with 5 lakhs, but unlike deep-pocketed corporations, you have no scope to waste or misallocate it. You must maintain your working capital and distribute your ₹5 lakh investment wisely across essential areas to maintain steady cash flow and prevent early burnout. It includes setup costs, inventory, marketing, and operational expenses.

Top 15+ Business Ideas Under ₹5 Lakhs in India

The key benefits of low budget business ideas are that they are easy to break even and carry less financial risk. They are ideal for you if it is the first time you are starting a business. Here are the best small scale business under 5 lakh:

A. Manufacturing & Production Ideas

1. Agarbatti/Incense Stick Manufacturing

India is a culturally and religiously rich country where there is always a need for agarbatti and incense sticks. The Indian agarbatti & dhoop market is itself big and stands at $1.2 billion. Whether visiting a temple or performing morning prayers, agarbatti is part of it all. This is why starting an agarbatti business is a very profitable idea due to the constant demand for incense in religious rituals, aromatherapy, and decorations of homes.

• Setup Cost Estimate: ₹2-3 lakhs (for machinery and raw materials & rental space)
• Profit Potential: High. The market for incense sticks is vast, with margins of 30-50%.
• Skill/Resource Requirements: Knowledge of agarbatti production processes, raw material sourcing, and basic machinery handling.

2. Homemade Pickles or Spices Unit

Homemade pickles have traditionally been popular in India for a long time. There is now a growing demand for traditional homemade pickles and spices, especially organic and specialty varieties. You can start business with 5 lakhs and find growth quickly.

• Setup Cost Estimate: ₹1.5-3 lakhs (raw materials, production space, packaging)
• Profit Potential: High. With proper marketing and brand positioning, margins of 40-60% are achievable.
• Skill/Resource Requirements: Expertise in recipes, food safety regulations, packaging, and distribution.

3. Paper Bag or Eco-Friendly Packaging Business

There is a growing demand for paper bags and eco-friendly packaging solutions in the market. With India heading towards sustainability, retail and grocery outlets require eco-friendly packaging solutions such as paper bags in big numbers.

• Setup Cost Estimate: ₹2-4 lakhs (machinery, raw materials, rental space)
• Profit Potential: Moderate to high. Margins vary between 30 and 40%, and demand is rising because of the eco-relevant consumer attitude.
• Skill/Resource Requirements: Awareness of eco-friendly materials and the manufacturing process.

4. Candle or Soap Making

The candle market in India stands at $796.1 million and is expected to grow to $1.3 billion by 2030. Even in the crowded market, there is a place for low budget business ideas of making candles and soap. These are popular for their aesthetic appeal and use in gifting and personal care.

• Setup Cost Estimate: ₹1-2 lakhs (raw materials, moulds, equipment)
• Profit Potential: High. It can be 100-200%, depending on the quality and design of handmade products.
• Skill/Resource Requirements: Ability to create candles and soaps using crafting techniques.

B. Retail & Franchise Ideas

5. Mobile Accessories Store

There are currently 112 crore active mobile connections in India. All these mobile phones require accessories to charge them, protect them, and carry them. This is why opening a mobile accessories store is the best small scale business under 5 lakh. Starting a store that provides mobile cases, chargers, earphones and more.

• Setup Cost Estimate: ₹3-5 lakhs (inventory, store rent, display)
• Profit Potential: Moderate. A well-located store can achieve margins of 20-30%.
• Skill/Resource Requirements: Inventory management, customer service skills, and understanding of popular mobile accessories.

6. Tea/Coffee Kiosk or Food Cart

India loves chai all throughout the country, and now there is also an audience for coffee. With the already popular chai and rising coffee culture in India, a small tea and coffee kiosk or food cart presents an affordable and profitable business opportunity.

• Setup Cost Estimate: ₹2-5 lakhs (equipment, raw materials, rent)
• Profit Potential: High. Profit margins of 50-60% are possible, especially in high-foot traffic areas.
• Skill/Resource Requirements: Knowledge of beverages, customer service, and efficient operations.

7. Franchise (Cloud Kitchen, FMCG Mini Store) 

Starting a franchise under ₹5 lakh allows you to leverage an established business and brand model. These businesses are already known to consumers and there is also a high demand for the products. This is why opening a franchise is one of the safest low budget business ideas you can pursue. Options include cloud kitchens, snack franchises, or FMCG mini-stores.

• Setup Cost Estimate: ₹3-5 lakhs (franchise fee, setup, and initial inventory)
• Profit Potential: Moderate to high. Franchise models typically have a proven track record with a steady return.
• Skill/Resource Requirements: Adherence to brand guidelines, strong operational management, and marketing skills.

C. Service-Based Business Ideas

8. Digital Marketing Agency (Freelancer to Agency model)

Digital marketing is important for businesses because it enables them to reach a wider audience, engage customers cost-effectively, and measure performance in real time to drive growth. The digital marketing industry is one of the fastest growing industries in India. You can start and scale the agency from a freelancer to an agency with minimal investment.

• Setup Cost Estimate: ₹1-2 lakhs (computers, software tools, marketing)
• Profit Potential: High. With the right clients and strategies, profit margins can reach 50%-60%.
• Skill/Resource Requirements: Experience in SEO search engine optimization, social media, content marketing, and digital advertising.

9. Accounting or GST Consultancy (with CA support)

There is a high spirit among Indians to start a business, but the tax system is still complex and not so friendly. This is why accounting and GST consultancy services are in high demand, especially among small businesses and TIER 2 and 3 cities. You can start a consultancy that manages a business’s financial records, filing and compliance.

• Setup Cost Estimate: ₹1-3 lakhs (marketing, office setup, software)
• Profit Potential: Moderate to high. GST filings can range from ₹5,000 to ₹50,000 per client.
• Skill/Resource Requirements: Knowledge of accounting or tax regulations, office setup basics, and GST compliance.

10. Home Tuition or Coaching Center

Education remains a constant demand in this world. This makes a home tuition service or small coaching centre a lucrative business with low overhead. You can share your knowledge and assist students in reaching their academic objectives in a customised environment by opening a home tutoring or coaching centre.

• Setup Cost Estimate: ₹50,000 to ₹2 lakhs (advertising, educational materials)
• Profit Potential: High. With a solid student base, you can charge ₹5,000 – ₹15,000 per student per month.
• Skill/Resource Requirements: Knowledge of the subjects taught, teaching skills, and marketing skills.

D. Online & Tech-Enabled Businesses

11. Dropshipping or E-commerce Reseller Store

E-commerce continues to thrive in India. It is simple to establish and grow a dropshipping or e-commerce reseller shop since it involves little capital and no inventory management. Online shopping has grown in popularity because it provides a flexible, low-risk means of reaching a broad client base and generating consistent revenue.

• Setup Cost Estimate: ₹1-2 lakhs (website setup, marketing, product sourcing)
• Profit Potential: Moderate. Profit margins range from 10-30% depending on the product niche and sales volume.
• Skill/Resource Requirements: Knowledge of e-commerce platforms, marketing, and supply chain management.

12. YouTube/Content Creation Studio

With the surge of digital content consumption, a YouTube channel or content creation business focused on a niche can be very profitable. It costs very little to start a YouTube channel or video production company, and it gives you creative flexibility. It’s a versatile approach to expanding your internet audience, making money, and enhancing your personal or professional brand.

• Setup Cost Estimate: ₹2-3 lakhs (equipment, software, marketing)
• Profit Potential: High. Monetization through advertisements, sponsorships, and affiliate marketing can yield significant income.
• Skill/Resource Requirements: Skills in video editing, content creation, and social media marketing.

13. Affiliate Marketing or Blogging Business

Blogging or affiliate marketing allows you to promote products or services and earn commissions. Establishing a blog or affiliate marketing company is inexpensive and enables you to share worthwhile material or promote items to generate passive revenue. It also provides freedom and the chance to create a devoted following while making money online.

• Setup Cost Estimate: ₹50,000 to ₹1 lakh (website hosting, content creation, marketing)
• Profit Potential: Moderate to high. Successful affiliate partnerships can lead to steady earnings.
• Skill/Resource Requirements: SEO, content writing, and digital marketing.

E. Women & Rural-Focused Ideas

14. Tailoring & Boutique Setup

Tailoring and boutique businesses are in high demand, especially in rural areas and Tier 2/3 cities, where custom clothing is preferred. Starting a boutique and tailoring company is inexpensive and meets the increasing need for personalised apparel. It also offers an innovative and lucrative chance to provide customised fashion solutions to local clients.

• Setup Cost Estimate: ₹1-3 lakhs (sewing machines, materials, shop setup)
• Profit Potential: High. Margins can reach 50-70%, especially for custom-made clothing and bridal wear.
• Skill/Resource Requirements: Tailoring skills, knowledge of fashion trends, and local marketing.

15. Papad/Pickle/Snack Production Unit

Papad, pickle and snack production unit is another great idea for small scale business under 5 lakh. The market for traditional food items like papads, pickles, and snacks remains stable, especially when they are homemade and organic. It is an accessible business idea that satisfies the growing demand for traditional and home-cooked foods.

• Setup Cost Estimate: ₹ 1.5 to 3 lakhs (for raw materials, packaging, and production equipment).
• Profit Potential: High. With proper marketing, these items can achieve profit margins of 40-60%.
• Skill/Resource Requirements: Expertise in food production, packaging, and distribution.

16. handicrafts or Art-Based Business

India’s rich culture and tradition provide many low budget business ideas and opportunities for handicraft or art-based businesses, such as handmade jewellery, pottery, and paintings. Starting a company centred on art or handicrafts takes little capital and capitalises on the rising demand for one-of-a-kind, handcrafted goods. In addition to addressing specialised customers and maintaining traditional skills, it provides an innovative means of making money. 

• Setup Cost Estimate: ₹1-2 lakhs (materials, tools, marketing)
• Profit Potential: High. Handmade products can have a substantial markup (100-200%).
• Skill/Resource Requirements: Artistic skills, craftsmanship, and an understanding of market demand.

Government Schemes and MSME Loans to Support These Businesses

It is easier to start one’s own small business in India thanks to diverse government programs promoting financial support for low-investment initiatives. These initiatives allow you to get a collateral free loan or a grant to start and grow your enterprise with a capital of ₹5 lakhs.

1. Prime Minister’s Employment Generation Programme (PMEGP)

Prime Minister’s Employment Generation Programme (PMEGP) offers a credit-linked subsidy for individuals looking to establish a micro-enterprise. It provides either ₹25 lakh for manufacturing or ₹10 lakh for service units. The scheme also offers a subsidy of 15-35% (depending on category and location). You can apply for the PMEGP scheme through the KVIC portal or the nearest District Industries Centre (DIC).

2. MUDRA Yojana (Micro Units Development and Refinance Agency)

Small and medium-sized enterprises that often find it difficult to get capital from conventional sources benefit financially from Mudra loans. These are accessible through banks, NBFCs, and microfinance institutions. By providing collateral-free loans up to ₹20 lakhs, the scheme assists people in starting or growing companies such as stores, manufacturing facilities, service centers, or home-based enterprises. Mudra provides three types of loans:

Shishu	up to ₹50,000
Kishore	₹50,000–₹5 lakh
Tarun	₹5–10 lakh
Tarun Plus	₹10–20 lakh

3. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

CGTMSE offers collateral-free loans up to ₹2 crore and covers credit risk by offering to lenders. It is perfect for first-time entrepreneurs. Here is how you can apply for CGTMSE:

• Choose a suitable loan scheme and visit the respective official portals (like udyamimitra.in or mudra.org.in).
• Prepare a detailed project report or business plan.
• Apply through a partner bank or NBFC with your plan and KYC documents.
• Ensure your business is registered under UDYAM for MSME recognition.
• Apply for the scheme and wait for approval.
• These schemes not only eliminate financial barriers but also instil credibility and confidence in first-time business owners.

Conclusion

In today’s rapidly expanding business environment, starting a business with under ₹5 lakhs is not only possible but also practical. This budget covers necessary initial expenditures and provides the groundwork for a successful business with the correct concept and careful preparation. Digital services and small-scale manufacturing are only two examples of the many low-investment, high-potential options available. 

Need working capital to launch your dream business? FlexiLoans offers fast, collateral-free MSME loans to help you get started.

FAQs on Ideas to Start Business with 5 Lakhs

Q. 1 What is the best business to start under ₹5 lakh in India?

Ans: Among the businesses one can start for around ₹5 lakh, a cloud kitchen is the best business. It does not require much investment and provides a high scope for growth.

Q. 2 Can I start a manufacturing business with ₹5 lakh?

Ans: Yes, you can start a small-scale manufacturing business as handmade soaps/candles/paper products for ₹5 lakh.

Q. 3 Are there government loans available for low-budget startups?

Ans: Yes, the Indian government has different loan schemes for low-budget startups, MUDRA loans, and Stand-Up India.

Q. 4 Which business is most profitable under ₹5 lakh?

Ans: The most profitable business is a digital marketing agency or freelancing service because the overhead is minimal, and the demand is high.

Q. 5 What is the most affordable business to start in India from a home under 5 lakh?

Ans: The most affordable businesses you can start from home and under 5 lakh are freelance writing services, coaching and blogging.