A Guide to Starting a Spice Processing and Packaging Business in India

Indian cuisine without spices is like a tree without its leaves. Every alley of India is famous for its cultural heritage and every dish is famous for the mouth-watering spices which they are enriched with.

Due to huge demand, the scope of spice business in India is high and is downright fruitful. The profit earned from spice market in India is also credited to the export businesses to various corners of the world.

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Considering such factors, starting a small scale home based spice processing and packaging business is one of the most profitable businesses which witnesses high turnover annually.

The annual sales report and turnover for any kind of business related to spice processing, whether retailing or manufacturing, is considerably high. Hence, for every budding entrepreneur who want to start a spice business, here is a complete guide to begin with.

Before starting a spice processing business, learn about the different types of spices available. Research about the top selling spices to increase the profit margin in spice processing business.

Annual Turnover of Spice Business in India

Spice processing and packaging contributes to the economy of the country to a great extent. The economy has also benefited from exporting spices to the United States leading to a huge success in the spice business.

In 2017, the total amount of spices exported was estimated to be 215,215 tonnes which has increased to approximately 217,265 tonnes at present. The demand for ready-made spices is increasing day by day which has led to a profit of billions in the past decade.

Over the years, the market potential of spice processing business is estimated to yield approximately USD 18 billion by the year 2020. With such great returns, a number of ambitious wannabe entrepreneurs are wondering about how to start a home-based spice business in India.

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Starting a Small-Scale Spice Manufacturing Business in India

1. Spice Processing Business Plan

Having a business plan is the primary requisite for starting a small-scale spice business.

To develop a spice business model, research the market to understand the scope and spice business opportunities.

Make a list of the raw materials for spice processing business, decide the location, marketing outreach and various other factors which are essential to begin the business.

Know about the various pros and cons of the business and what to avoid while beginning with spice processing. Decide the number of employments you will be needing and make a list of the total investment required.

2. License and Registration for Spice Manufacturing Business

Before starting a small scale spice processing business, you will need to register your business first. Registration with the Registrars Of Companies is mandatory. Besides, you will need to apply for a trade license to proceed with the business without any legal hindrance. This can be obtained from the Municipal Corporation in your city.

Since the spice manufacturing and packaging company involves food processing, you will need to obtain permission from the Food Business Operators or FBO and FPO.

Getting the permits can be a cumbersome process, however, these are extremely necessary without which operating a spice processing unit will not be permitted.

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3. Investment Required for Spice Processing Business

To start a small-scale spice processing, the minimum investment required is based on the type of business you want for yourself. The type of machinery for spice processing unit plays a significant role in deciding the amount of investment required.

A small-scale unit usually requires approximately 10 lakhs of investment to begin with. There is nothing to worry if the investment seems over the top, as a number of banks readily provide business loans to the customers.

Learn about the interest rates and go for the most reliable banks which incur the least interest. Check if there are any policies for concession and make use if you are eligible for one.

4. Location for Establishing Masala Processing Unit

The location for the spice processing unit plays an important part in the success in the spice business. Contrary to the scorching heat, a preferably shady area is preferred for setting up a spice manufacturing and packaging company.

To set up all the machinery and store raw materials, a minimum of 150 sq. mtrs. area is recommended with separate storage rooms and processing unit.

5. Machinery for Spice Processing Unit

The required machinery for spice processing unit depends on the type of business you are proceeding with. Apart from the old-fashion manual labour which is physically strenuous and less profitable, owners can opt between semi-automatic and fully automatic machinery.

However, for an approximately small or medium scale spice production unit, the following machinery might be a necessary requirement:

• Spice Grinding Machine
• Machine for Disintegration
• Heat Sealing Machine
• Compressor
• Sieves of Various Sizes
• Roster
• Weighing Scale

A spice processing company needs through marketing because of the competition involved. Invest in marketing your spice processing and packaging company to ensure greater customer indulgence and popularity. Do not hesitate to invest in both online and offline means of marketing.

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6. Raw Materials for Spice Processing Unit

Raw materials are primarily required in huge quantities to successfully run a spice grinding and packaging business.

The top selling spices need the use of high-quality ingredients which will not only be flavourful but should have a rich aroma.

Hence, precise care should be taken while choosing the raw materials. A list of ingredients required for spice manufacturing and processing are:

• Turmeric
• Cumin
• Coriander
• Chilly
• Pepper
• Poppy seeds
• Fennel Seeds
• Mustard
• Methi leaves
• Mixed powder
• Permitted food color and preservative
• Packaging materials such as MET-PET, PET, PP, PPFP, etc.

7. Utilities Required

A number of utilities are necessary for spice processing unit. Among the list of raw materials and storage options, water plays a very important role in the spice grinding and processing process. You will need a continuous supply of water for both washing the raw materials every time before use.

Apart from that, some of the chopped spices might also need to be washed thoroughly to eliminate any kind of impurity being mixed up.

The demand for readymade spices has also led to the mixing of different types of spices and packaging them in the form of a paste. Such packaging also demands huge quantities of water.

Hence, to operate a small-scale spice processing and packaging business, approximately 750 liters of water is required.

Also, a continuous supply of electricity is mandatory. From proper running of the machinery for spice processing unit to the availability of light and other resources, electricity is extremely important. The requirement for electricity to successfully operate a spice processing unit has been estimated to be around 7.5 HP.

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8. Processes Involved in Spice Manufacturing

The spice manufacturing process involves a series of steps which should to be followed in detail. From cleaning to packaging, there are a consecutive set of steps that needs to be wisely adhered to while operating a spice processing unit.

Here is a list you can follow to successfully run your spice processing and packaging unit:

• The first process involves rigorous rinsing of the fresh spices to get rid of mud, dirt or superficial impurity. The spices should be washed two to three times in containers of 15 liters capacity.
• After washing, the spices need to be thoroughly dried under the sun. This also helps in killing germs and bacteria under the rays of the sun. The spices should be completely dry in order to facilitate grinding and processing.
• The solid, large-cubes are subjected to disintegration which ensures even chopping of the spices, e.g. turmeric. These are then pulverised in machinery.
• For pulverising the dried spices, spice grinding machine is required. You can either go for a manual grinder or an automatic grinder for the same. It also depends on the type of business you are establishing.
• The next step is sieving. The ground spices are sieved in order to gather finely ground spices.
• The sieved spices are henceforth packaged and stored.

9. Storage of Spices

Specific care needs to be taken while storing the spices. Different spices need different types of humidity levels, a humidifier is an extremely important part of storage after being subjected to spice manufacturing process.

Know the level of humidity required for the spices and make sure the stored spices are subjected to the necessary temperature.

Keep your storage room safe from rats and bugs. Once infested, these can destroy the packaged spices at an alarming rate.

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Wrapping It Up

Starting a small scale spice processing business is downright profitable. Thanks to the internet which facilitates online selling of spices thereby increasing the annual turnover manifolds.

Internet has not only generated additional income but has made exporting easier by connecting the world via single e-commerce platforms.

Hence, if you are planning to start a spice processing business, think no more and take your first step in one of the most popular business in India.