On a global scale, India is the sixth largest food and grocery market and the fifth largest retail market. The food processing industry is developing and is expected to be the leading industry in the near future.
Looks like you are looking to venture into the ever-blooming food manufacturing industry! As an essential commodity, food is something for which the demand will only ever go up. Until the day we can get all our food in pills, that is!
But since that isn’t going to happen anytime soon, you can happily set up your food processing business in India. The demand is great, the possibilities of expansion and diversification are tremendous and the industry is profitable. As long as you can come up with products that satisfy the appetites of the large majority of people and a company that satisfies government regulations, you should be golden.
So, let’s get you up to speed on how to start a food processing business in India.
Food Manufacturing Business Ideas in India
As far as ideas on the kind of food manufacturing businesses you can open, the list could be endless if we include every single idea possible. However, we are going to keep it short here by listing major heads:
- Cereals, pulses, and beans processing.
- Dry fruits and nuts
- Ready to eat foods
- Snacks and namkeens
- Baked goods
- Tinned goods
- Frozen foods
- Ready to cook packages
This includes everything from rice milling to frozen meat.
Once, you have decided what you are going to manufacture, you need to do the following 7 things to get your business up and running.
7 Things to Do Before Starting the Food Business
Remember the 2 elements you need to satisfy for succeeding in this industry:
- Satisfying customers
- Satisfying legal requirements
Apart from coming up with amazing products, you need to do the following to fulfil these two requirements.
1. Decide the Business Structure
The next step is setting up a company that is in accordance with the specifications of the law. You can choose among the alternatives of a private limited company, partnership firm, limited liability partnership (LLP), etc. These decisions should be taken on the basis of the scale and the type of management you need to have for your manufacturing business.
Once you have decided on the structure of your manufacturing business, you need to register under relevant laws.
2. Research the Market Well
‘Know thy customer’ and ‘know thy market’ are two commandments if you are entering any industry. Gone are the days when manufacturing on a big scale was enough to run a successful business. These days, the market and the customers determine whether you succeed or not.
So, before starting a business you must conduct research on the market. You should answer the following questions to know if your business idea is viable:
- Who is your target market?
- Who are your competitors?
- What are the entry barriers?
- Is there a demand for your product?
- What are the trends in the food industry?
- What is the market selling price for similar products?
- How long will it take to break even?
- What is the cost of manufacturing your product?
- How can you procure raw materials?
- What will be your distribution channels?
These are some of the many questions you need to ask while doing market research.
3. Get FSSAI License/Registration
As per the Food Safety and Standards Act, 2006 (FSS Act), it is mandatory for all food providers to get the FSSAI registration done.
Under FSSAI, major registrations include:
Basic registration: This registration is required for all small businesses or startups that have an annual turnover of INR 12 lakh and above. If sales increase, it is possible to upgrade the basic registration to a state license.
State FSSAI license: The state license is required for mid-sized companies with an annual turnover of INR 12 to 20 crores.
Central FSSAI license: Central licenses are typically required for large enterprises with an annual turnover of over and above INR 20 crores. This is also required for the supply, import, and export of food products to government offices for goods and services.
4. Apply for the Trademark
Your brand is an important aspect of your business. It is necessary to protect it by trademarking. As an industry heavily relying on repeat customers, you need to make sure that people can identify you correctly in the competitive market.
Take KFC, for example, another restaurant might make something very similar but people are unlikely to view it as KFC. KFC is a brand, fried chicken is a product.
5. Take Water Testing & an Organic Testing Certificate
The quality of the products you sell is of the most importance. To make sure you are making high-quality products, the water and ingredients you use need to be good.
There are food inspection labs and water testing facilities that help you test the materials. Whenever needed and, if possible, get quality certificates to build up trust with your customers. Whether you are manufacturing refined sugar or juice tetra packets, you need to ensure that they are free of chemical and microbial pollutants.
6. Verify Your Nutrition Chart
People are becoming more health-conscious in recent years. Do you know there are trending videos and courses on how to read food ingredients charts?
Hence the need for a nutrition chart; a health-conscious customer will always double-check the nutritional facts on food items. So, first, make sure you create a good product with healthy ingredients. Then, ensure that it is clearly displayed on your product.
This way, people can see for themselves that your product is good for them.
7. Location of the Organisation
The location of the manufacturing unit must be at a place away from the city but close to the resources in order to reduce the logistics cost. Similarly, it must also be close to the place where you will be selling your products.
Once all these things are in order, you can start manufacturing. All the legal tasks might sound a little intimidating, but don’t be demotivated by them. You can always reach out to Vakilsearch for any of these, and also if you need help in registering for GST once your business is running.