Indian Spices have always been in great demand since the very beginning. Their aroma, spiciness, tanginess, and marvelous quality define the legacy of Indian Spices worldwide. Out of 109 different varieties of spices listed under the International Organisation, India solely produces 75 of them. As per the data of the state-run Spices Board, India exported 11,83,000 tonnes of spices and spice products in FY20, worth Rs 21,515.4 crore. In dollar terms, the export value stands at $3,033.44 million.
Why does this matter?
Well, it matters because spices have always been in great demand nationally and internationally and business related to spices in India could lead you to a way ahead in the business industry. However, nothing comes easy, and starting a business is no exception. Starting any new business requires a lot of planning, effort, implementation, licenses, and many more, which come in during the process.
But knowing all about the business (which includes government schemes, market demand, initial steps for entering a business, all the licenses and registrations, and others) can significantly decrease the time and effort required. It’s much easier to run a business legally when you know all the aspects involved in running an export business.
This article contains all the nitty-gritty details of starting a spice export business in India. Go through the entire post to learn about the benefits, licenses, Registrations, Customs process involved in the export of indian spices.
Why export spices from India?
The stats justify the profitability of the spice export business in India. Let’s have a look.
India is the largest spice exporter, consumer, and producer of Spices in the world. Out of 75 of the 109 kinds listed by the International Organization for Standardization (ISO), India contributes more than half of the trade of Spices globally.
The Spice Board of India is a government regulatory and export promotion agency for Indian Spices. The Board promotes the export of Indian Spices in the global market and provides many government benefits for those who start their business in the export of spices in India. Some of those benefits are provided below:
- The Board proposes to assist in establishing primary processing facilities for spices in the NE (North Eastern) region. All registered exporters are eligible to avail of the scheme.
- It proposes reimbursing the courier charges for sending the business samples abroad to develop the exports. It is proposed to provide 50% of the cost of courier charges subject to a maximum of Rs.1.00 lakh as a grant in aid per annum.
- It proposes to assist all registered exporters in improving the existing packaging and developing modern packaging to increase shelf life, reduce storage and better presentation of Indian spices in the markets abroad.
- The scheme aims at scientific validation of nutritional / nutraceutical / cosmetic /medicinal and intrinsic properties of the spices and /or the development of new products based on this validation.
- The scheme aims to assist exporters in penetrating Indian brands in identified overseas markets with a clear mark of traceability and food safety.
These are some of the schemes that are aimed at the expansion of Indian exports globally. There are many more promotional schemes that one can easily access through the government portal.
Step by Step process to Start Spice Export Business in India?
Now, if you have set your mind and are willing to proceed with your decision to start an export business in India, specifically spice export, then here are some things that need to be taken care of before the registration and licenses step.
Step 1: Find a Business Name
Choosing a unique name for your business/brand is the first step toward starting a business. This is the first basic step for starting any business. But also the difficult task. Selecting a name that is perfectly unique, suited to your business, and taken by none other usually takes a lot of time to find. One of the most common problems most startups face is finding a unique brand name. Every name they select belongs to someone else already.
Professional Tip: You can utilize Trademark Search Tool to know the status of your business name (already taken, applied for registration, or free to opt).
Step 2: Select the type of Spice Export business
While planning to start an export business, you must be aware of the types of businesses that deal with the export of spices if we try to explain it in simpler language. There is a manufacturer who produces spices, and then a merchant comes to play who trades the spices. Wholesalers are those who make spices available to retailers for packaging, distribution, and for sale. Third-party manufacturers are those who help in the production of spices. Supplier Exporter exports the spices to foreign countries.
- Spices Manufacturer
- Spices Merchant
- Further, spices Wholesale Trader
- Spices 3rd-Party Manufacturer
- Spices Supplier Exporter
Step 3: Select the Location/Warehouse
Any new business must prioritize location above all else. And on-ground reality, it is the company’s prime priority. When launching a new business, there are a few crucial considerations to keep in mind. The following are some of the key choosing criteria:
- Well Connected to all transportation routes
- Availability of Good Transportation Services
- Accessibility to electricity, water, and other basic needs of a business.
Step 4: Selection of Spices
This is, however, not any specific point that needs to be mentioned separately. When you plan to enter into the spice export business, you already have some idea of your business’s core product. Some people specialize in a single spice, while others work with various spices.
If you have not yet decided on the type of spices you will be dealing with, Here are some suggestions on the most exported spices in India.
India exported the largest amount of Chilli to Vietnam at the cost of Rs 95929 lakhs, while India exported Rs 96101 lakh worth of chilli to Thailand. The export growth is positive as it is more than the previous year’s export. Indulging in Chilli Export is one of the best export spices to deal with.
Mint Products Export
India is also a leading exporter of mint products to the world. India exported 22300 tons of mint in FY 2016-17 to many countries with a total worth of Rs 252750 lakh. China, the United States, Netherlands, Germany, and France are the leading importers of Indian mint. If not chilli, then mint can definitely be a good spice to export from India.
Other Spices that are readily exported from India are, turmeric, coriander, cumin, celery, fennel,pepper, cardamom, ginger, fenugreek, garlic, curry powder, spice oils and oleoresins.
Licenses/Registration for Spice Export Business?
Now, you have all the prior planning for starting the spice export business. After that, you must obtain all the certifications for starting the spice export business. Here is an insight into all those licenses you will need for the spice export business in India.
In India, every business must register itself as a legal entity. Choosing the proper company structure is the most critical business-related decision. Doing so would allow your business to operate smoothly and meet legal requirements. There are numerous benefits of registering a company. There are different types of companies that you can register in India. To know more about them in detail, click on the particular type of business registration.
2. Limited Liability Partnership
Fssai Central license
The Food Standard and Safety of India (FSSAI) is the legal authority responsible for regulating food security in India. All the FBOs must get a 14-digit FSSAI registration/license number according to their business activity and turnover and publish it on the food packages to overcome the impurity in the food products. The FSSAI issues the Central License to all the large FBOs in India. It is the main requirement of the food businesses dealing in the manufacturing, storage, distribution, transportation, or retailing of food products.
Import Export Code
Import Export Code is a ten-digit unique code assigned to an entity by the Director General of Foreign Trade(DGFT). It is required for every import/export operation. You must register for the Import Export Code(IEC certificate) before exporting goods from India.
GST refers to Goods and Services Tax which subsumes all taxes such as Sales tax, Service tax, Excise duty, etc. into GST. GST registration is required primarily if your annual sales are more than Rs. 20 Lakh. Even if your sales are less than Rs. 20 Lakh, we suggest that you voluntarily opt for GST registration because:
- You will not get any tax refunds on purchases (e.g. if you buy goods worth Rs 1 lakh in a year, and the tax rate is 28% – you will lose a tax refund of Rs. 28,000).
- You cannot sell outside your state.
Spice Board Registration
Manufacturers and merchants who deal with the export of Indian spices must register with the Spice Board (particularly 52 scheduled spices). On completion of registration, the manufacturer or merchant receives a Spice Board Registration Certificate known as CRES (Certificate of Registration as an Exporter of Spices).
ISO stands for International organization for Standardization. It is a non-governmental organization that promotes global Standardization for specifications and requirements for materials, products, procedures, formats, information, and quality management. ISO is recognized globally, creating a sense of trust among customers. It is mainly to focus on the quality of the products.
ISO certification is a mark of quality. Therefore it satisfies the customers. They provide standard values for particular objects, which the companies are bound to follow to protect themselves from violation.
On an endnote
Starting a new business and creating your separate identity in the market is a very challenging task in itself. We have tried creating a guide to help you in the process of setting up a new spice export business in India. In case you face a problem in obtaining licenses, then you can avail all the registration/licenses related services of Professional Utilities in one simple call. We will be more than happy to have your thoughts on this guide. Has it helped you or not?