Complete Guide to Start Spice Business in India

Introduction:

We Indians are very crazy when it comes to spices. Our festival, events and day to day lifestyle is highly influenced by the spices. India is home to spices since ancient times. Our spices are known across globe due to its texture, aroma, taste and medical properties. India is the world’s largest consumer, producer and exporter of spices in the world. We produce a lot of variety of spices. 75 out of 109 varieties of spices listed by the International Organization for Standardization and accounts for almost 50% of the global trading in spices.

History of Spices in India:-

From various ages, spices have always been a crucial commodity of India’s external trade with foreign countries like Arabia, Egypt, Mesopotamia civilization, Sumer, China etc. Today Indian spices are available everywhere, but there was a time when people travelled across the globe to come to India for purchase of spices. This was one of the reason for India emergence as golden bird of the world but this lucrative commodity also brought a lot of invaders from century to century. The spice trade prompted the Portuguese to find sea route to the Malabar coast of India and hence it marked the beginning of arrivals of European nations that led to the colonization of Indian subcontinent by the British empire.

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Current Statistics: -

In the fiscal year 2019, the value of the export of spices from India stands at 231 billion rupees. Major destinations for Indian Spices were the US, Vietnam, China, Hong Kong, Thailand, UK, UAE, Malaysia, Bangladesh, and Sri Lanka. Top 10 exported spice commodities in terms of value were Mint products, Turmeric, Cumin, Pepper, Cardamom seeds, Chili, Spice oils & Oleoresins, etc. 

Consumption of spices in an Indian households is also massive and the spice market is growing with an annual turnover of more than 50,000 crores. Spice business is something that anyone can start with low investment also. Hence it attracts a lot of Indians to start dealing in spices from their home and it turns out profitable.

Factors affecting spices business in India:-

1. Costing involved in starting up a spice business:-

The Indian spice market is expected to reach around $22 billion by year 2022, with the growth in the sector expects to be led by branded spice and mixed spices. Powered spices are convenient to use, and it saves time and physical efforts for preparation of different delicious cuisines. Spice powder makes it an easy and profitable business to start and one can easily start dealing in spices with low investment of 50,000 rupees to 1 lakh rupees.

Read Our Blog: FSSAI Specification For Spices

2. Licensing Requirements: -

As spice powder is part of the food category hence, it has to satisfy a lot of regulations from the government such as follows:

• Registration of the firm should be done depending on the scale of operation of the firm.
• GST registration is essential to gain GST number, which is a must to have.
• If it is SMEs, then the firm can apply for MSME registration which will provide a lot of benefits to the firm from the government’s end.
• Obtain Trade License, FSSAI license, Spice Board License. It is also advisable to obtain an AGMARK license.
• BIS Certification. The following ISI specifications are available for ground spices.

a) Black whole and ground ISI – 1798-1961.

b) Coriander powder ISI – 2444-1963.

c) Chili powder ISI – 2445-1963.

d) Turmeric powder ISI – 2446-1963.

e) Curry powder ISI – 1909-1961.

3. Space required:-

No massive space is required to start spice business. Around 250 sq. yard space is required for processing of spices and 250 sq. yard is required for packaging of spices.

4. Raw Materials Required:-

The important ingredients required in spice powder are ungrounded spices, and along with that, one needs proper packaging facility which will act as protection of spice powder. 

5. Machinery Usage:-

Grinding machine is a necessary machine required in spice business. The machineries are also depend on the size of the business and on the scale of operation of the company. Large scale industries use Impact Pulverize machine while small scale industries use Double stage pulverize machine.

Spice manufacturing process:-

• Cleaning

It is a very first step in the process of manufacturing of spices in which the underground spices are clean manually by removing impurities like stone, dust and dirt.

• Drying

Next step after cleaning is to properly drying of the spices in sunlight for converting them in powder form. The quality of the spices depend on the well – dried spices. If proper cleaning and washing do not take place, then it will become prone to bacteria.

• Roasting

After drying of spices, they are going through the process of roasting. The Roasting process is very important as it will give color, aroma and good taste to the spice powder.

• Grinding

Grinding machine is used to convert the spices into powder form.

• Grading

The grading is the process of inclusion and proportion of spices mix with their raw material used, also depends on the type of spices (flavor), shape, density, size and color.

• Sieving

It makes sure that spice powder has a uniform mesh size.

• Packaging of spices

Spices add massive flavor to your favorite dishes but to work their magic, the spices need to be fresh. Hence it is important to have a proper packaging of spices. Proper packaging of spices helps in keeping the spices fresh, bacteria free, germs free, proper shape, easy to carry, etc.

Challenges Faced by Spice Manufacturing Companies in India: -

• Working labor issue: -

The pungent odor of the spices which gives sharp sensation is not suitable for health of the worker if exposed for a more extended period. Hence there is always a risk of health of the worker in the spice industry.

• Market Credit:-

The credit market risk with the distributors and mediators in the spice industry is always high and hence this leads to market credit risk in the industry. It is not easy to get the credit of spice business.

• Packaging Leakage:-

There are many small scale spice businesses operate in the industry where they follow the traditional method of handmade packaging due to their low capital investment. This sometime leads to damage of products, prone to bacteria and germs, etc.

• Difficulties in expansion of business:-

One can start a spice business with low investment but to expand the scale of operation, it takes investment in new technologies. Most of the spice businesses in India are SMEs and it is difficult for them to get access to credit to expand their size of the company.

• A lot of competition:-

The spice industry faces a lot of competition as the number of suppliers of spices is more and also a lot of competition is given by local businesses at the regional level. The low investment to set up business also attract a lot of new companies in the industry.