How to Start a Spice Business In India
India is the biggest producer and exporter of spice in the world. The climate of India is well suited for spice cultivation, and spice has been a trading commodity for the country for millennia, with evidence of spice exports from India to even the ancient Roman empire available. Currently, India produces 75 of the 109 listed spices worldwide, accounting for 70% of global production.
The Indian spice market continues to grow rapidly. The total value of spice exports from India for the fiscal year 2022-23 stood at $3.34 billion. China and USA are the top two destinations for Indian spice exports. Thus, the spice industry offers good opportunities for investments. Here are some basic steps to establish a spice business in India.
Spice Business Plan
Depending on your budget, preference, and other factors, you must select a particular business plan for your spice business. The multiple kinds of spice businesses are as follows
- Manufacturer produces spices on a large scale for selling and export
- Merchant specializes in taking the spices to the markets, and customers
- Wholesale trader purchases spices in bulk to supply them to the retailers who package and sell them
- Third-party manufacturer assists large-scale manufacturers in producing spice in the country
- Exporter supplies spices to the global markets
In addition to the nature of the spice business, you must also decide upon the type of spice to trade. The business can be devoted to whole spices such as cinnamon, cardamom, cloves, and others, general spice powders, or spice powders for specific dishes such as biryani, chicken, rajma, paneer, tandoori, and more.
The suitable area for a spice processing unit is 250 square yards. Moreover, another 100-150 square yards are required for packaging and storing the spices. The required space also depends upon the scale of your business and budget.
The location should be near your suppliers and market. The space should have an assured supply of electricity, water, and other amenities.
Raw Materials and Equipment
A reliable supply of spices is essential regardless of the nature of your spice business. It would help if you had a robust supply chain to get whole spices from farmers, cultivators, or suppliers. The states you need to source the spices from depending upon the specific types of spices as per your business plan.
There are various types of machines required for a spice business. A cleaning machine is required to remove dirt and other impurities from ungrounded spices, which manual washing cannot eliminate. In the case of the spice powder business, you also need a roaster, grinder, and sieve. Roasting is carried out to impart aroma, color, and taste to the spices. The grinder pulverizes all the spices into powder. Sieve ensures that the spice particles are of a uniform size.
A packaging machine is also required to pack and seal whole spices or spice powders. You can select between various kinds of packaging bags, such as heavy-duty zipper tops, tear notches, gas release valves, pour spouts, and more. The packaging should protect the spices against moisture and other external elements besides preserving the flavor and odor.
Registration and Licensing
Depending on the scale and structure, you must register your spice business as a one-person company, private limited, or partnership. Documents required for registration include a PAN card copy, proof of identity of the director, Aadhar card of the director, address proof of the company, and proof of residence of the director.
GST registration is mandatory because operating a business without a GST number is illegal. If your spice business comes under the category of SME, you can get it registered as same to get government benefits.
Since spice comes under the category of food products, you must obtain an FSSAI license for your spice business. Other required licenses are the Shop and Establishment Act and Trade License. In addition, your spice business also requires BIS certification for quality checks and NOC from the state pollution control board.
To determine the initial capital required to establish a spice business, you should consider various expenses for 2 years. The expenses include rent, utility bills, raw materials, machinery, logistics, labor, and general expenses.