India is known as the spice bowl of the world. The presence of ample cultivating land and favorable climatic conditions makes India the best avenue for spice production. The global demand for Indian spices is escalating every passing year and will likely excel further in the near future. Even in the COVID-era, where businesses were struggling to save their existence, Spice businesses, in particular, have excelled seamlessly and witnessed consistent demand worldwide. In this write-up, you will learn about prevailing legalities linked with the establishment of the Spice business in India.
An Outlook on the performance of Spice Exportation in recent years
- Despite the Cornovirus pandemic, the exportation of spices from Indian has continued to grow at a healthy rate and crosses the 3.5 billion US $ mark.
- Estimated spice exportation from India during 2020-21 stood at 15,65,000 tons, equivalent to the total valuation of Rs Rs.27193.20 crores (the US $3624.76 million). This figure was better than the preceding year’s figure, where the total valuation of export was accounted for Rs.27193.20 crores (the US $3624.76 million).
- Exportation of spices set a new record in terms of value and volume in the year, posting an increase of 30% in vol, 23% in Indian currency, and 17% in terms of dollars when contrasted with the preceding year records.
These figures clearly suggest that setting up a spice business is a profitable proposition for startups in India.
Read our article:Spice Export from India: Know the Legalities
Typical machinery required by the Spice Business
Equipment used to get the powder form of the spices
- Heat sealing machine
- Packaging machine
- Spice grinder
- Weighing scale
Licenses & Registration for establishing Spice business in India
Irrespective of the fact that your establishment is small or big, you have to obtain the following licenses and registrations to operate in a legalized manner
Company Incorporation/ Company registration
Every new start-up that seeks to operate in a legalized manner need to registered their establishment under one of the following business forms
- Partnership Firm
- Sole Proprietorship firm
- One Person Company
- Private Limited Company
- Public Limited Company
The incorporation formalities relating to the last four business forms are handled by the Ministry of Corporate Affairs, aka MCA. There is no need to opt for an offline mode to engage with the registration process. Presently, MCA facilitates an online process of application filing for company incorporation.
Businesses intending to function as a partnership firm needs a draw a partnership deed that usually entails the following information.
- Detail of the firm
- Duration of the deed
- Partners’ information
- Profit-sharing ratio
- Arbitration clause
- Stipulates to be followed in case of firm’s dissolution
Factory license is a legal mandate for entities involved with the manufacturing or processing of commodities in India. However, it is required by those establishments whose total workforce is greater than ten and where power is used to propel the manufacturing process. Moreover, it encompasses those firms where the manufacturing process is carried out without the aid of power. Spice business that leverages different equipment and machinery to aid production is mandated to get this license.
Factory License is issued under the ambit of Factory Act, 1948, and its issuance is done by the labor department of the respective state. Contact CorpBiz to get this license in a hassle-free way.
FSSAI food license is mandatory for every food business operator in India, including the spice business. Spice manufacturers are too required to obtain this license before initiating their business operation.
The Food FSSAI license is primarily available under the following heads
Basic Registration: It is mandatory for small business owners who are earning less than Rs 12 lakh of annual turnover.
State FSSAI license: State FSSAI license is a mandate for businesses whose yearly income falls within Rs 12 lakhs-Rs 20 crores
Central FSSAI license: Central FSSAI license encompasses FBOs with a bigger footprint and which are reaping more than Rs 20 crores of annual turnovers.
Firms that intend to operate in a legalized way also need to address tax liabilities without exception. And it is needless to mention that breaching such a requirement can endanger the existence of any establishment. Businesses that deal with inter-state transactions or earning income more than the threshold limit are mandated to register under GST. However, that is not the only criteria that decide the imposition of the GST framework.
Import Export Code (IEC)
Import Export Code is a legal compulsion for a manufacturer , including spice businesses that seek to ship their offering to overseas clients. DGFT, i.e. Directorate General of Foreign Trade, has been vested with rights to grant this license to importers and exporters. An applicant seeking an IEC license can visit the DGFT’s online portal and apply for the same via e-form.
Consent from Spice Board
The consent of Spice board India becomes mandatory in cases where the spice business deals with the exportation of scheduled 52 spices and Cardamom. Spices Board India works under the ambit of the Ministry of Commerce, GOI. It is being referred to as a premier institution that predominately works for the worldwide promotion of Indian spices. Further, the board fosters extensive guidelines related to the quality and hygiene of the Indian spices being produced and processed for the foreign market.
Here’s is the typical process of spice board registration for exporter and manufacturer cum exporter.
- Visit the Spice Board online portal. Log in or create an ID on the portal after providing basic details such as contact number and email id.
- Wait until you are routed to the e-form window.
- Enter the relevant detail in the e-form and then note down the unique identification number generated by the portal
- Use the number mentioned above to re-login to the portal.
- Upload the requested documents along with the photograph in the prescribed format
- Make online payment regarding the registration fee.
- Application scrutiny will be conducted in the head office.
- Grant of Spice Board Certificates, broadly known as CRES
Most overseas nations prefer to import Indian spices because of their unparalleled quality and taste. In the light of the market and export data mentioned above, it seems that the spice business will continue to remain the primary choice for every start-up that is expecting long-term sustainability and profitability from a business form.
Read our article:A brief Outlook on FSSAI license for Spices in India