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Pankaj Tyagi
| Updated: 18 Jun, 2021 | Category: FSSAI License

How to Setup a Profitable Food Packaging Business in India?

Setup a Profitable Food Packaging Business in India

There are good numbers of people out there who prefer quality over anything else when it comes to buying packaged foods. Packages are the potential indicator of the quality because they enclose vital details like the composition of ingredients and preservatives. People do check these parameters before making payment for a particular packaged food. Mediocre packaging often leads to a poor sale, and that’s why most FBOs considered it as a unique selling proposition (USP). Presently, the food packaging sector is evolving rapidly and there is a lot of potential in it. Therefore, it is a good time to start a food packaging business in India.

Underlining the growth prospect in Food Packaging Industry

The repercussion of noble Cornavirus on the packaging industry has been moderate based on the portfolio of different consumer industries. The Indian packaging sector, even in the pre-Covid era, has been seeing steep growth owing to increased globalization of trades in commodities & services, and materialization of new trade models like organized retailing & e-commerce.

The Indian packaging industry is envisioning growth at a CAGR of @ 18% during 2016-21. Covid-19 might have hampered this growth significantly; but, certain sectors like packaged food and beverages, pharmaceuticals, functional food, and hygienic products have remained unaffected by the crisis, and have witnessed an optimal growth both in demand as well as production, proliferating the demand of packaging.

People, especially from the metropolitan areas are more inclined towards prompt solutions for everything, including foods. Consequently, the demand for packaged food or so-called “ready to eat food” is increasing rapidly. This, as a result, is compelling the food packaging industry to speed up the operation.

Read our article:Food Packaging and Labelling Regulations: The Complete Guide

An Overview on Types of Packaging used in Food Industry

Basically, there are three types of packaging which are prominently used in the consumer and business landscape. These are as follow

Primary

Primary packaging refers to packaging in direct connection with the product itself. As the name suggests, it is the first layer that wraps around the finished products, including foods. This type of packaging is meant for the customer. One can found such packaging on commodities like rice, chocolates, and other edible items.

Secondary

Secondary packaging is mainly used by organized wholesaler and e-commerce platform.  Technically, such packaging refers to a SKU (stock-keeping unit).  Customers do not usually have direct confrontation with these packaging since it is being utilized in producer-seller domain. 

Tertiary

This form of packaging refers to a bulk or transit packaging.  Such packaging is need where there is a requirement of grouping large amounts of SKUs for the purpose of transportation. Tertiary packaging largely utilized in the distribution stage.

Eco-friendly Packaging

While the growth potential is endless, you may also intend to look out for the trends. For most customers, non-plastic packaging is the new normal and a way to ensure a healthy lifestyle[1]

Since plastic is often considered a potential deterrent to human life, it would be no surprise if it gets obsolete in the near future. Like we said, that packaging plays a vital in sales boost, being wise while choosing the packaging materials could make a huge difference for you.

Importance of Packaging for Small Businesses

The increasing use of the internet and digitization has led to the growth of small businesses in India. The concept of a home-based business is no more a fantasy for entrepreneurs. The leverage of internet power has enabled many food startups to transform into prominent contenders in the food industry. However, this itself cannot ensure sure-shot success unless business owners start showing admiration for quality packaging. You can hardly pinpoint any popular food brands that discourage attractive packaging. The demand for packaging is all-time high and it will increase as more startups step into the food sector. And therefore, small businesses can tap into this opportunity by establishing a food packaging business.

A Guide to setup food packaging business in India

Here’s the brief guide which will act as a blueprint for setting up a profitable food packaging business in India.

setup food packaging business in India

Step 1: Underpin a business plan

A business plan is a reflection of your plans and ideas about business. For setting up a growth-driven food packaging business plan, you need to take given stages into account.

  • What is the current trend in the packaging industry?
  • What type of packaging is reaping popularity among end-users? (This is something called- Consumer’s preference”).
  • What kind of packaging you will be preferred to manufacture?
  • What are your investment capabilities?
  • What type of equipment will ensure the best fit for your production and their cost?
  • What is the exact costing of specific packaging in a wholesale and retail domain?
  • Who will be your potential clients?
  • What will be a spot-on location for your manufacturing unit?
  • What type of business structure would be the best fit for your establishment?

Answering these questions is compulsory for you to create a concrete business plan.

Step 2: Procure Required Equipment and Machines

Once you have prepared a concrete business plan, the next step should be the procurement of the essential machinery and equipment. While doing so, you have to take the size of the manufacturing unit into account to get a clear picture. But before you rushed to the vendor for such supplies, make sure you have a viable list of prospective clients at your disposal, or else you may run into trouble.

Step 3: Legalize your business

Apparently, this would be your third and most vital step because here you will be going to choose a legal business structure among options like LLP, private limited company, public limited company, OPC, and partnership firm. Let’s simplify how you can pick the right business structure that will give you the best fit as per your requirement.

Suppose your proposed business framework entails Directors and shareholders managing your operation. In such a case, you will have to choose the structures like a private limited company or a public limited company as per the bylaws. The same concept applies to LLP and partnership firms where there is a cap on how many members can be part of a specific entity. And don’t forget about One-Person Company, a unique form of business structure that is preferred by many Startups. Hop on to the CorpBiz’s helpdesk to get more information about that.

Please note that every business structure comes with a different set of legal compliances, which may reduce as you move toward the less flexible structure. So be wise and give more thought to the pros and cons of having a specific business structure.

Step 4: Get the FSSAI registration

It’s worth noting that the Food Safety and Standards Act, 2006 (FSS Act), regulates all the FBOs, including the food packaging business in India. The businesses under this Act are liable to obtain food licenses from FSSAI through online applications. FSSAI issues the food license under a 3-tier system: Basic, State, and Central FSSAI license. The applicability of these licenses depends on the annual turnover of the entity. Once you determine which license is suitable for your business, you can visit the FSSAI’s portal and make an online application. The application for a food license goes along with mandatory documents.

Step 5: Commence your Business operation

After fulfilling the above requirements, you can proceed to start your business operation. Remember that this is a lawful way to commencing food-related business in India. Don’t strive to skip any of the above requirements since this can lead you to legal trouble. Stay in a complaint with underlying norms, and everything would be fine.

Every business journey encounters a lot of complications and legal hassle, which is apparent. So, do not get discouraged if you see your business hassling up with the specific legal requirement. In such an event, make sure connect with a subject-matter professional or expert’s firm like Corpbiz to contain the situation.  

Conclusion

The demand for packaged food is rising exponentially, and it’s likely to touch newer heights in near future, thereby creating growth potential for packaging industries. The Food Packaging business can leverage this opportunity to reap more revenue by scaling up its operation to meet steep demand. Hence, it can be concluded that the food Packaging business is a win-win proposition for aspiring entrepreneurs and start-ups.  

Read our article:Starting an Organic Food Business in India

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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