It is a known fact that the majority of the spices that are marketed in the world are produced in India. India is the biggest importer of spices in the world, contributing to almost 70% of the spices made around the globe. Indian cuisine is incomplete without its spices, due to which the demand for powdered spices in the market is always high as people are on the lookout for ready-to-mix spices. There is a huge demand for Indian spices not only in the local markets but also in the international markets. India is the largest exporter of spices around the world and generates revenue of up to ₹40,000 crores annually. To advance the development and promotion of Indian spices across the world, the Indian government constituted the spices board in 1987. It was established under the Ministry of Commerce and industry, under which spice exporters are registered. Registered spice exporters with brand registration or spice house certificate with the spice board or organic certificates are granted subsidies for exporting spices across the globe. In this blog, we are going to discuss how to start a Powdered Spice Business in India.
Establishing or investing in a powdered spice business can be highly lucrative to entrepreneurs once they find their niche in the industry. It is a highly profitable business that can be started with little money due to changing lights lifestyles and change in food habits, the use and demand for powdered spices.
Legal and Regulatory Requirements for a Powdered Spice Business
It is essential to obtain specific registrations and licenses in order to start a powdered spice business in India.
- FSSAI License or Food Business License
- Food Operator license
- GST Registration
- A licence under the shops and establishments act
- Registration with the Registrar of Companies if the entity is a company
- Trade licence from the local municipal authority
- Getting an udyog aadhaar and an MSME registration is prudent as it will make the business eligible for availing of various subsidies from the government.
- For businesses looking to export spices, an Import Export Code or the IEC shall be required.
- It is advisable to get an Agmark certification.
- It is essential to get appropriate BIS certifications that are applicable for powdered spices like:
- Coriander powder ISI 2444 1963
- Chilli powder: ISI 2445 1963
- Curry powder: ISI 1909 1961
- Turmeric powder: ISI 2446 1963
- Methods of testing and sampling of spices and condiments: ISI 1997 1961
Steps to Commence a Powdered Spice Business in India
To set up a successful powdered spice business in India, it is imperative to have an action plan in place right from the get go. Even though the demand for powdered spices in the market is high, the competition is higher, and it is important to carve a niche for one’s business in the market to stand out from the competition so that consumers opt for one’s business over others.
- Assessing and Understanding the Market
The very first step towards establishing a powdered spice business is to assess and understand information with respect to the market trends, demands and competitors in the market. It is essential to do your market research and know about the existing spice suppliers, their pricing, and the type of spices there are most in demand. After one has a complete understanding and picture of the spice industry, not only will it be easier to enter the market, but it will also enable one to explore the gaps in the market to one’s own advantage.
- Create a Business Plan
Based on the market research, the next step shall be to draft a comprehensive business plan. It is crucial to prepare a budget plan for your company, charting out the expenditures that may be involved in starting the company along with the fixed capital and working capital costs that may occur. The most significant investment to set up a powdered spice manufacturing unit shall be to buy machinery and hire personnel. The cost of running a spice manufacturing unit varies and depends upon the type of spices being produced and the size of the business. It shall be prudent to hire a business professional to write the project plan to start a powdered spices manufacturing business if the objective of the business is to launch a large scale manufacturing unit because such a business might require funding from investors or financial institutions. However, if one plans to start off with a smaller powdered spices making company, a shorter and succinct business plan shall be enough. Mentioned below are the essential chapters that must be part of a business plan:
- Business name
- The Potential Of The Chosen Business In The Market
- Basis And Assumptions
- Schedule Of Implementation
- Funding And Financials
- Technical Aspects Involved In The Business
- The Manufacturing Process
- Personnel requirements
- Quality Controls
- Details Of Equipment And Machinery
- Information About Machinery Suppliers
- Marketing Plan To Sell The Finished Product
- Decide on the Spice Type
The next step is to decide the type of spices that the business is looking to manufacture. This can be determined after looking at the supply and demand of spices in the market. One can choose to manufacture any of the following spices like chilli, turmeric, cumin, black pepper, coriander, cloves, cardamom, curry masala, sambar masala, garam masala, chicken masala meat masala, among other things.
- Select A Location For Your Manufacturing Unit
It is essential to select a viable location to set up the business and the manufacturing unit that can be divided into sections for manufacturing and processing of spices and for the packaging of the finished product. It is also essential to choose a commercial area where facilities like electricity and water are adequately and readily available. However, to set up a home-based spice business, one can make do with a smaller setup.
- Obtain Registrations And Licenses
As mentioned above, there are specific licenses and registrations that every spice manufacturing unit or business is required to obtain. Even though some registrations and licenses are not mandatory, it is prudent anyway to get additional benefits and subsidies.
- Arranging Capital
It is vital to have a structured business plan to arrange capital for different phases of the business. Entrepreneurs can either use their own savings to apply to banks or financial institutions for loans.
- Obtaining Equipment And Machinery
Depending on the requirement and the size of the business, one should look to obtain equipment and machinery for grinding and processing of the spices. Some of the equipment and machinery that will be required in a spice manufacturing unit are a spice grinder, disintegrator, and pouch sealing machine weighing scale. If the operation is entirely automated, then the entire system shall be connected with a bucket elevator and a conveyor belt. In addition to this, one also needs to make sure that there is a steady supply of electricity and an adequate amount of water. Water is required in small quantities for the purpose of cleaning ungrounded spices and for other portable purposes.
- Procuring Raw Materials
Quality raw materials are central for the success of any spice making business as the quality of raw materials will decide the smell, taste and customer loyalty and reliability of the product. High-quality ungrounded spices like black pepper, turmeric, cumin, red chillies, coriander, mustard seeds, and fennel seeds, among others ones, shall be imperative for any spice manufacturing unit. Moreover, one shall also require materials for packaging the final product and also for the purposes of bulk packaging,
Process of Spice Manufacturing
The process essentially involves cleaning, drying, pulverizing, sieving and packaging of spices either individually or together with other spices:
- Cleaning: Firstly, one of the most critical stages of the manufacturing process is the cleaning stage. It is essential to clean the ungrounded spices properly to produce uncontaminated and hygienic spices. For optimum grinding, spices must be thoroughly washed and cleaned. At this stage, ground spices are manually cleaned to eliminate impurities like stones, dirt, and dust.
- Drying: The next step shall be to dry the spices by placing them in the sunlight or by using any other artificial means to speed up the process. The quality of the powdered spice shall depend on how well the unground spices have been dried.
- Roasting: Then the spices shall be roasted after drying to infuse colour, aroma, and quality taste to the powdered spice.
- Grinding or Pulverizing: This stage involves grinding unground spices into powdered form by running them through the grinding machine. To add more flavour to the finished product, run it through an oil mixer.
- Grading: Grading of spices is done on the basis of the proportions and inclusions are the spice mix weather raw materials. Once the powdered spice is ready, spices are to be mixed according to the quantity, colour and recipe required.
- Sieving: The powdered spice is then sieved to ensure uniformity in texture.
- Packaging and Labelling: After all the above steps are completed, the spices are sent for packaging. Spices are weighed and packed in appropriate packaging as per the decided quantity into and labelled adequately by mentioning all the ingredients used.
- Sealing: It is imperative to seal each packet properly. As improper sealing can lead to wastage of the spice mix and can also make it prone to be affected by moisture or dust, thus affecting its composition or texture, or it may get infected with pests.
- Deciding Upon The Right Market: Once the final product is ready, it is vital to decide where the product shall be sold. There are many options to introduce the final product in the market. Before approaching more significant markets like malls and grocery stores, one can approach local retailers to sell products at local markets or farmers markets or in local cooking schools. One can also choose to sell the product in a wholesale market or sell the finished product online on B2B websites that provide options to sell products in bulk to retailers or B2C websites where one can sell products directly to customers. One can also look for avenues to export the powdered spice as Indian spices are famous worldwide. However, one will need to apply for an import and export licence to do so. The United States of America, Bangladesh, Vietnam, UAE, Malaysia and Thailand are some of the biggest importers of Indian spices.
- Marketing and Advertising: Employing the right strategies to market advertiser products can make a huge difference and be the deciding factor that can make or break your spice business. It is crucial to package your product in a manner that makes it attractive to consumers. Make sure that you optimally use social media for advertising your product using innovative means through various social media platforms. Depending on one’s budget, one can also opt for advertising the finished product in newspapers, hoardings in one’s area or through advertisements on the television. One can also choose to sponsor events on behalf of one’s business and get recognized through them.
The powdered spice business is a highly lucrative and scalable venture both in the domestic and global markets, as Indian spices are highly in demand. India is known as the land of spices for a reason and is the largest exporter of spices across the globe. As an entrepreneur, it is one of the many ways to build a profitable business with low investment. However, it is essential to plan every step of your business venture and be aware of the various aspects of establishing and running a successful powdered spice business. It is imperative to have a business plan with a blueprint that shall have a roadmap to navigate various stages of the business, right from budget planning to marketing and advertising the final product. To make the business profitable, it is crucial to focus continuously on each and every aspect of the business and plan for contingencies.