Complete Guide to Start a Spice Business in India

Last Updated on December 14, 2024 by DesignerPeople

We Indians are crazy when it comes to food, our every festival, events and even day to day lifestyle is highly influenced by spices. We divide by states, but one thing which keeps us connected is “Spices”. India is known as “home of spices”, an Indian spice is sought after globally due to its texture, aroma, taste and medicinal properties. India is the world’s largest consumer, producer and exporter of spices. We produce around 75 of the 109 varieties listed by the International Organization for Standardization and accounts for almost half of the global trading in spices.

Starting a spice business in India is an exciting opportunity to contribute to this heritage while building a profitable venture. This comprehensive guide will walk you through every step of starting your own spice business.

Why Start a Spice Business in India?

The spice industry in India offers immense potential for budding entrepreneurs. With a domestic market worth ₹70,000 crore and exports reaching ₹30,000 crore annually, the demand for both branded packaged and loose spices is skyrocketing. Moreover, as Indian cuisine gains global recognition, opportunities in international markets are also expanding.

Starting a spice business allows you to:

• Tap into an evergreen market.
• Cater to both domestic and global audiences.
• Leverage government subsidies and support.
• Combine tradition with innovation through creative branding and unique blends.

The Rich History of Indian Spices

From various ages, spices have always been a crucial component of India’s external trade with foreign countries unlike Arabia, Sumeria, Mesopotamia, China, Egypt and, along with textiles and perfumes.

The giant history of spices includes in its place in each holy book. The Ramayana also in the writings dating back to the Roman Empire in the first century AD. The caravans of camels moved regularly from Calicut, Goa and the Orient. They even transport these spices to distant destinations such as Carthage, Alexandria, and Rome.

From Ayurveda to modern gastronomy, Indian spices have remained indispensable. This heritage provides a strong foundation for any new business in the sector, as customers associate Indian spices with authenticity and quality.

Indian Spice Market: Stats and Future Potential

1. Market Overview

• Current Market Value: ₹70,000 crore (both packaged and loose spices).
• Branded Spices: Branded spices make up 35% of the total market, indicating a shift toward organized and packaged products.

2. Future Trends

• By FY2030, 15 spice companies are projected to exceed ₹1,000 crore in revenue, with four reaching ₹5,000 crore in annual turnover (Source: Avendus).
• The rising global demand for organic and Ayurvedic spices is fueling further growth.

3. Top Importers of Indian Spices

India exported 1.4 million tonnes of spices in FY2023, with the top importing countries being:

• United States
• United Kingdom
• United Arab Emirates
• Saudi Arabia
• Canada
• European Union
• Japan
• Australia

This robust demand highlights the vast export potential for new entrants in the industry.

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How to Start a Spice Business in India

1. Market Research & Competition Analysis

Understand the demand for specific spices in your target market. Analyze competitors’ pricing, branding, and product range to identify gaps you can fill.

2. Determine the Costs Involved

Costs typically include raw materials, machinery, packaging, labor, licensing, and marketing. On average, starting a small spice manufacturing business may require an investment of ₹10-15 lakh.

3. Licensing Requirements

To legally operate, obtain the following licenses:

• FSSAI License
• GST Registration
• Trade License
• Udyog Aadhaar for MSMEs
• Spice Board Registration for exports

4. Source Raw Material Vendors

Partner with trusted farmers or wholesale vendors for high-quality raw spices. Establish relationships with vendors for consistent supply and better pricing.

5. Invest in Machinery

Essential machinery for spice manufacturing includes:

• Cleaning machines
• Dryers
• Roasting machines
• Grinders
• Sieving and packaging equipment

6. Focus on Product Branding & Packaging

Your branding and packaging should be eye-catching and communicate quality. Use creative logos, eco-friendly materials, and transparent labeling to build trust.

7. Position Your Products

Decide whether you want to target premium customers or compete in the mass market. Your product positioning will influence branding, pricing, and marketing strategies.

8. Calculate Profit Margins

Profit margins in the spice business can range from 30% to 50%, depending on your efficiency and market strategy.

The Spice Manufacturing Process

1. Cleaning

It is a very initial process for spice making in which the ungrounded spices are clean manually by removing impurities like stones, dust, and husks using cleaning machines.

2. Drying

After cleaning and washing process display them in sunlight so that they dry, the quality of the spice powder will depend on the well-dried spice. If proper cleaning and washing do not take place, it will lead to the growth of bacteria, which will poison food. Sun-dry or use mechanical dehydrators to remove moisture, ensuring long shelf life.

3. Roasting

Once spices are dried, they are going through the roasting process, the roasting of the spices is essential because it will help to give the aroma, colour and good taste to spice powder . Roast spices to enhance their flavor and aroma.

4. Grinding

Grinding machine is used for pulverizing to convert the spices into powder form. Pulverize spices into powder or desired consistency using grinders.

5. Grading

The grading is a process which is the basis of the inclusion and proportion of spices mix with their raw material used, also depends on the type of spices (flavour), size, shape, density, and colour. Sort spices based on quality, texture, and size for uniformity.

6. Sieving

Use sieves to eliminate coarse particles, ensuring a polished final product.

7. Packaging

Seasoning and spices add massive flavour to your favourite dishes, but to work their magic, they must be fresh; hence correct packaging is mandatory.

Protect and preserve your spices and seasonings with stand up pouches with zip locks and such packaging bags will give you the flexibility to choose the best size, style, and features for your spices. Choose from options like gas release valves, tear notches, heavy-duty zipper tops, hang holes, pour spouts, and, as well as different styles that give you plenty of room to bring your brand to life.

Once spice is converted into powder form, then the spice powder weighted as per quantity that needs to pack. The spices are then wrapped in a polythene bag and sealed with the help of the sealing machine.

Spices Packaging will protect your spices from issues such as moisture, puncture, odour, and more. You are hence guaranteeing that your seasonings and spices make it safely from the warehouse to your customers’ taste buds.

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Benefits of Starting a Spice Business in India

1. Indian Spices Board

Provides training, quality testing, and export support.

The Indian Spices Board was built on 26th February 1987. This autonomous board was established under the Spices Board Act 1986, and the board is responsible for the entire export promotion and product development of Indian Spices across the country! Here five Commodity Boards are actively functioning together under the Ministry of Commerce & Industry. 

2. Subsidy for International Sample Shipping

Covers costs of sending samples to potential overseas buyers.

Suppose you manage to own a Spice House Certificate or Brand Registration from the Spice Board. In that case, you are eligible to avail of various government subsidies for sending the spice samples abroad to foreign consumers. You also get the assistance of Rs. 50,000 INR for exporting your spice samples to foreign buyers.

3. Marketing Assistance

Subsidies for creating brochures, videos, and other promotional materials.

Apart from the subsidies mentioned above, every registered Spice exporter with a Spice House/Logo and Brand Recognition with the Spice Board can avail of additional assistance through this scheme. Here you can avail of a subsidy of up to 50% of the cost of the promotional material used, which accounts for a maximum of Rs. 2 lacs for every promotional material, which is quite a significant assistance when it comes to spice exporters.

4. Export Promotion Subsidies

Financial incentives for promoting Indian spices in global markets.

Indian spices are no longer limited to the ethnic Indian population. With these schemes, you can take your promotional strategies further with new, sophisticated and affluent variations to the foreign markets. 

You get an interest-free loan of up to 100% for this effort’s listing/slotting and promotional measures. You also get 50% of the cost of product development, which is a maximum of Rs.2.50 crore for every brand. 

All you need is a Spice factory/Logo and Brand Recognition with the Spice Board, and you are all set to promote your spices in the foreign market under this scheme.

5. North-Eastern Region Processing Subsidies

Special financial aid for spice processing units in North-East India.

This scheme is directed to spice production cooperatives, farmer’s associations, NGOs representing spice producers, and individual spice entrepreneurs in India’s North Eastern and hill states to promote primary processing facilities for spices. Here you do not require high investments and even support large-scale wastage of locally grown spices for the ease of spice producers of India.

You get a whopping 33% aid for the cost of all types of primary processing facilities that are subjected to about Rs.25 lakh per beneficiary. Furthermore, the farmer groups receive about 50% of the primary processing facilities’ cost, which is up to Rs. 35 lakh for every farmer group.

6. Financial Assistance for Trade Shows

Grants to participate in international trade fairs and meetings.

India is a common participant in multiple international trade fairs and exhibitions wherein the Spice Board offers a reimbursement of 50% of airfare. Furthermore, if you own an independent stall in the trade fairs, you also get the assistance of 50% of the total cost, which ranges up to Rs. 1 lakh per exporter.

Even if you are a participant at the trade fair, you can avail of financial assistance to up to 50% of the airfare on the economy class subject to Rs. 1.5 lakh per year for every exporter.

Spice Branding: Building a Strong Identity

1. Brand Identity

IIn the spice business, brand identity is the visual and emotional representation of your company. A strong identity includes an attractive logo, vibrant color palette, and memorable tagline that reflects the essence of your spices. For instance, a premium brand might use earthy tones and elegant fonts to emphasize quality and authenticity, helping customers instantly recognize and trust your products.

Everest punchline- Taste Mein Best Mummy aur Everest
MDH : ASLI MASALE SACH SACH MDH MDH

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2. Brand Story

Your brand story is the narrative that connects your spices to customers emotionally. Share your journey-whether it’s sourcing organic spices directly from farmers or reviving traditional spice blends from your grandmother’s recipes. A compelling story creates trust, builds loyalty, and highlights what makes your brand unique, resonating deeply with today’s conscious buyers.

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3. Brand Guidelines

Brand guidelines ensure consistency across all touchpoints, from labels to digital ads. For a spice business, this includes standardizing logo placement, font styles, packaging design, and even the tone of your communication. 

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4. Product Packaging

Creative packaging design is crucial in the spice business to grab customer attention and preserve freshness. Use high-quality, eco-friendly materials with visually appealing graphics and clear labeling. Highlight key attributes like “organic,” “hand-picked,” or “export quality.” Packaging that blends practicality with aesthetics enhances shelf appeal and reflects your brand’s promise of quality.

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5. Brand Positioning

Brand positioning determines how your spices are perceived in the market. Whether you position your brand as premium, organic, or cost-effective, it must resonate with your target audience. For Example MDH is known for its ASLI MASALE ( Pure Spices).

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Spice Marketing: Promoting Your Brand

1. Digital Marketing

• Use social media platforms like Instagram and Facebook.
• Optimize your website for SEO to attract organic traffic.

2. Trade Fairs and Food Expos

Showcase your products at national and international events.

3. Traditional Advertising

Use newspaper ads, TV commercials, and radio spots to reach diverse audiences.

4. Sponsorships

Collaborate with chefs, influencers, or cooking shows to boost visibility.

Challenges Faced by Spice Businesses in India

1. Labor Issues

The pungent odor of spices which gives sharp sensation is not suitable for health if exposed for a more extended period. Hence there is always a significant issue of discovering working labour in the Indian spice industry. Retaining skilled workers for manufacturing and packaging is challenging.

2. Market Credit

The credit market risk with distributers or mediators in the spice industry is always at high, and hence this leads as a significant challenge.

 Delayed payments from distributors can strain cash flow.

3. Packaging Leakage

There are many small scale industries in India where still hand-made packaging is done due to budget constraint, which results in packaging leakage. If they plan to opt hi-tech types of machinery, then costing is increased; hence this has always been the point of concern.  Poor-quality packaging can harm your product’s reputation.

4. Expensive Machinery

Each day innovation is introduced, to keep updated and in trend, companies have to adapt to each change. For SME’s, it is challenging to expand themselves due to the introduction of new technology and this act as a challenge for brands. Advanced equipment requires significant upfront investment.

5. Intense Competition

The spice industry faces intense competition since the concentration of suppliers is more Its competition is often at the regional level. There are also many small local companies often operating in a specific location, and as the demand for authentic organic spices increased the demand for maintaining the quality of the product raised. Standing out in a saturated market demands consistent innovation and branding.

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Author: Anush Malik