India is the “Spice bowl” of the world. The ancient spice route is proof that spices were the first commodity that India exported. Even today, India is the largest spice exporter in the world. The Indian spice industry flourishes well within the country and increases with an annual growth rate of 9.4%. The spice industry of India grows at the rate of 19 % within the first half of FY21.
India is the major producer and exporter of spices in the world and produces 75 varieties of spices out of 109 varieties listed by ISO (International organization for standardization). Nearly 70% of total world spices are exported by India. Indian spices are known for their aroma, flavor, and medicinal properties. So, spices will always be in demand in both national and international markets. Hence, starting a spice export business in India will always lead you ahead in making bigger profits. However, starting a spice export business is not an easy task. It involves a lot of planning, licenses, efforts, and implementation. Knowing all about how to start a spice export business including the government schemes, business entry initial steps, market demand, registration, licenses, and other important factors can reduce the pain and effort.
Here, in this blog, we will try to cover all important aspects that are required to plan and start a new spice export business in India.
- Initial Capital for Indian Spice Export Business
Capital is a prominent factor that plays a vital role in any business. Before starting any business, one must determine the capital including all factors like pricing, costing, freight rates, export costing, export price, ground transportation, insurance, warehouse fees, customs clearance, etc.
The exporter must not confuse between the costing and pricing of any commodity as both are different.
Price means what the exporter offers to the customer for a particular product while the cost means what exporter pays for manufacturing the same product/commodity.
Export pricing plays an important role in determining the success of any business. However, there is no such fixed formula to calculate the exporting price.
The spice business flourishes well as people are looking for spice powder for their food as spice powder enhances the taste of their food. Spice powder is daily used by hotels, restaurants, catering businesses, and housewives.
The spice powder business does not require much capital and one can easily start this business with a small investment also.
|Basic Investment||50000 INR to 100000 INR|
|Area required:||250 Sq yard|
|Profit Percentage:||50% to 70%|
|Earning: Average Sale||100Kg /Day, 50000 to 150000 per Month|
- Different Ways to start Spice Export Business from India
One of the straightforward questions that strikes in mind when planning to start a business in India is its scope and different ways to start it. The scope of the Indian spice market is very vast. Thus, it is always a profitable business.
There are different ways to start the spice export business from India. One can easily start the business as:
- Spices Manufacturer
- Spices wholesale trader
- Spices Merchant
- Spices supplier exporter
- Spices 3rd party manufacturer
Spices Manufacturer: Manufacturers are the primary producers as they deal with the production of spices on the large scale.
Spices Merchants: The merchant acts as the middlemen completing the logistics chain. They ensure the manufacturer’s spice product reaches the right market.
Spices wholesale traders: They are responsible for ensuring that retailers who distribute, package, and sell the commodity receive the desired product at the required time.
Third-party manufacturer and supplier: The 3rd party manufacturer helps in the production of spices within the country while the supplier helps in exporting the Indian spices to foreign countries.
- Necessary Documents to start Spice export business
Anyone can start a spice export business in India. However, there is a list of necessary documents that are required to start the new business. The spice export business includes almost the same procedure as other import and export businesses. Following are the list of documents and other formalities that must be fulfilled before setting the new spice export business:
- Company or Firm Incorporation
- Good and service tax registration (GST)
- Spice Board (RCMC)
- Trade Mark Registration
- MSME registration
- BIS certification
- Authorized dealer code
- Phytosanitary certificate
- Licenses needed for export business
As the spices industry is part of the food industry, it is abiding by the rules and regulations. Apart from the above-mentioned documents, some licenses are also required by the firms or organizations. Following licenses are needed by all types of spice firms be it small, medium, or large.
- IEC Code (Import Export Code): This is a 10 digit number issued by DGFT (Director Trade of Foreign Trade)
- FSSAI Registration
- ISO Certification
- CRES: Certificate of Registration as Exporter of Spices (CRES) is issued by the spice board of India. This is mandatory. To obtain the CRES from the spice board of India, one needs the following documents: copy of IEC certificate, confidential bank certificate, DD of Rs. 5000 in favor of “Spice board”, self-certified copies of sales tax registration, PAN card copy, and scanned copy of the photograph of the authorized person with white background.
- How to Obtain Authorized Dealer (AD) certificate
This is a mandatory certificate when you start a new business with a new port. This certificate is issued by the authorized bank and shows the bank’s authorized dealer code of the business. This is a 14 digit number. To obtain the same first open a bank account in an authorized bank and then AD code registration is done with custom. Following documents are needed to obtain the AD certificate:
- Bank Certificate
- Bank Statement
- Voter ID card
- PAN card
- IEC copy
- Sales tax copy
- Sales tax return
- Balance sheet
- Sales Tax + CST
- AD code letter
- Stamped blank letterhead
- Registration charges for each port + service tax
Apart from the documents, to start a spices business, raw materials and machinery are also required.
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