Introduction: Food Processing and Food Trading Business in India

There’s a saying that everything is possible in this world except the separation of a food connoisseur from the delicious smell of food and this becomes true more than ever when India comes into the picture. Here, we don’t need to give any reasons for this as Indian food is famous all over the world for its colors, incredible taste and last but not least, for the wide variety of options it offers to the people. Not just that, even as per the economic aspect, the food business in India always keeps at boom as the demand for it never goes down considering the massive population of the country. In this article, our focus is going to be on the food processing and food trading business in India, which is involved in the activities of making food materials ready for the consumption of the general public. We will discuss with you all the compliance required to start a food processing business in India, alongside the documentation. 

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Food Processing Business in India

The food processing industry of India stands as one of the largest in the world, and with the positive trends it has been showing over the years, many think it will touch a whopping sum of USD 535 billion by the end of 2025-26. Their significant presence can also be acknowledged by the roles they play in linking farming communities of the country directly to the consumer based in both domestic and international markets. With the continuous support of the Ministry of Food Processing (MoFPI) in attracting investments across the value chain, the food processing businesses amount to 1/8th of all the employment generated in the country’s registered manufacturing sector, which is around 1.93 crore. 

The unregistered food processing sector is also not behind in the race as more than 50 lakh laborers are working for it as per the 73rd Round Report of NSSO (National Sample Survey Office).  Sugar, grains, edible oils, beverages, and dairy products are some of the categories that constitute the majority of India’s food processing industry. 

Read Our Blog: How to Start Food Processing Company in India

Government Initiatives to Promote Food Processing and Food Trading Business

• Pradhan Mantri Kisan Sampada Yojana

A significant portion of the credit for the massive infrastructure on which India’s food processing industry is working today goes to Pradhan Mantri Kisan Sampada Yojana. Even though this yojana was initially applicable only from 2015 to 2020, the steps taken under this by the Ministry of Food Processing Industry for the creation of technically advanced infrastructure with effective management of supply chain from farm gate to retail outlet can’t be undervalued. Considering this, the Indian government has approved its continuance till the year 2026 with an additional allocation of Rs 4600 crores.

To understand its significance, we can look at the schemes that have been going under this yojana.

1. Mega Food Parks
2. Integrated Cold Chain and Value Addition Infrastructure
3. Infrastructure for Agro-Processing Clusters
4. Creation of Backward and Forward Linkages
5. Creation/Expansion of Food Processing & Preservation Capacities 
6. Food Safety and Quality Assurance Infrastructure 
7. Human Resources and Institutions. 

• Pradhan Mantri Formalisation of Micro Food Processing Industry

In collaboration with the State/UT governments, the Ministry of Food Processing Industry has launched the Pradhan Mantri Formalisation of Micro Food Processing Enterprises, shortly known as the PMFME scheme. With an outlay of Rs. 10,000 crores, this centrally sponsored scheme aims to offer technical and financial assistance for the upgradation of the unorganized food processing and food trading business in India. Not just that, it also intends to give branding and marketing support. 

• Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

To boost India's food processing businesses, the Production Linked Incentive Scheme for Food Processing Industry (a centrally sponsored scheme) has been launched with an outlay of Rs. 10,900 crores. Its objective is to create a suitable environment that can build Indian food processing key players in the international markets. It intends to help Indian food products get a better visibility and acceptance rate in the market of other countries. 

Reasons to Start Food Processing and Food Trading Business in India

• Stability of the Indian Economy

Ask yourself a simple question, ‘when does a business thrive?’ We mean what it takes to run a business continuously on the right track. Well, one factor that matters for sure here is the stability of a country’s economy and India proves to be providing that. Being the fifth largest economy in the world, India is among the most preferred destinations for foreign investment. With over USD 84 billion, India's FDI inflows reached record levels during 2020-21. As per IMF, India will remain one of the world’s fastest-growing economies for several upcoming years as the ease of doing business gets better. 

• Evolving Indian Market

India rules the world when it comes to the livestock population and massive production of materials like milk, spices, fish, fruits, and vegetables. All this indicates the favorable ecosystem conditions that the country has to offer to the food processing business. Not to forget the government support that is there, India’s food processing sector has been showing positive growth over the past years. And, with the growing household incomes, urbanization, and organized retail sector, it has nothing to lose but everything to gain. 

• Human Resource

The success of any business also depends on the people that are involved in it and having one of the youngest populations in the world, India has more than enough human resources to supply. With a higher enrollment rate in educational institutions, the country is also filling the demand gaps for a skilled workforce. To make it better further, the Indian government has also been taking initiatives on its part, such as the Skill India Mission, to impart market-relevant skills and technical knowledge to unskilled workers, hence optimizing their efficiency and productivity.

Compliance Required for Food Processing and Food Trading Business in India

• FSSAI License

Every food business operator engaged in manufacturing, storing, processing, and distributing food products must register under the FSSAI and obtain an FSSAI license to operate as a legal entity. FSSAI, which stands for Food Safety and Standards Authority of India, issues three types of licenses, which are as follows:-

1. Central License of FSSAI:- Every food processing business with a yearly turnover of over Rs. 20 crores must obtain it.
2. State License of FSSAI:- Applicable to all food business operators with a yearly turnover of between Rs. 12 lakhs to Rs. 20 crores. 
3. Basic Registration of FSSAI:- Every food business operation with a yearly turnover of up to Rs. 12 lakhs must obtain it. 

• Pollution NOC

As per CPCB, the food processing business falls under the category of ‘polluting industry,’ and therefore, is required to get Pollution NOC (Consent to Establish (CTE) and Consent to Operate (CTO)) from their respective State Pollution Control Boards. First, they need to apply for CTE to get approval for the establishment of the processing facility, and after that comes the requirement of CTO, which is mandatory for commencing business operations. 

• GST Registration

As per the taxation regulatory framework, every business with aggregate turnover crossing the prescribed limits must register for GST and obtain a unique 15-digit GSTIN. The threshold limit of aggregate turnover is Rs. 40 lakhs for normal category states and Rs. 40 lakhs for the special category states. 

• Health Trade License

Health Trade Licenses are issued by the State Municipal Corporations and act as mandatory approval for businesses to manufacture, store, process, and trade food products for public consumption in a particular location/area. It ensures compliance with health and safety guidelines at the facilities.

• Shops and Establishment Registration

Shops and Establishment registration in India is mandatory for every business operator who is into trading or any business with a commercial entity or business premise. Under the regulations and norms, the applicant company must apply for it within 30 days of starting its business. The registration is valid for five years and can be renewed further.

• Fire NOC

Every food trading business must get a Fire clearance certificate or Fire NOC (No-objection-Certificate) to carry out its activities. Issued by the State Fire departments, Fire NOC ensures the installation of Fire Safety Equipment and measures in a facility as per National Building Code (NBC) norms. 

Conclusion

Given India's growing food retail market and the proactive government policies and fiscal incentives, the food processing and food trading business show very promising prospects for expansion and advancements in the years to come. Now the question arises when hundreds and thousands of entrepreneurs are making their moves toward it, then why do you stay behind? If the requirement of compliance worries you, then leave that responsibility to Corpseed, which can help you get rid of all your compliance concerns with its teams of experts.