How to start Food Processing Unit?

Business research and market analysis

Understanding the market and choosing the product to be manufactured is the most crucial part of starting any business. While choosing the product, the investor must keep in mind the viability of the product in the market. It is also important to research the economic and industrial outcomes of the current food processing industries, which will be useful in determining the market size, competitors and their trends. Once the basic market research is done, the business must be structured according to the needs to make it legally stable. There are options such as Private Limited Company, Public Limited Company, Partnership Firm, Limited Liability Partnership (LLP), etc. with their own pros and cons. These choices can be made on the basis of the size of the manufacturing industry and the yearly turnover and other mandatory criteria. It is recommended to seek legal professionals who can advise on the types of companies.

Location of the factory

Deciding the market size is necessary to find a suitable location for the factory. It is advisable to determine a location that has feasible and easily accessible resources such as manpower, raw materials, electricity sources, transportation facilities, etc. Another important factor to consider is the government provided subsidies and tax exemption in some states of India. An ideal location can be derived by analysing these factors along with the availability of raw materials in a certain location. The perishable nature of food and duration must be taken into consideration in order to maintain good produce throughout the year.

Business plan and strategies

All the research and analysis made at the beginning must then be streamlined as per the requirements of the processing units. New policies and strategies must be formulated for the company to generate a blueprint of how the company should function and the future plans must be roughly decided. In the case of food processing units, one needs to bear in mind the future outcomes of the industry and the growing trends too.


Every business needs to be funded for bringing in the materials and maintaining the value chain once the industry grows. The funds also tend to vary according to the size and nature of the industry. So it is important to have shareholders and to find a constant source of funding for the company.

Legal implication

Once a company is formed, it has to be registered with the relevant authorities before the business gets into motion. The Companies Act 2013 specifies that companies must be registered in India by submitting certain documents and necessary forms to register themselves as a company. The company should also be registered for various taxes like PAN, TAN, sales tax, excise and customs registration, service tax, etc. Trademarks must also be protected from being claimed by others, hence an IPR registration which includes patent, Copyright included etc. is mandatory.

Other Acts must be followed under the Food Safety and Standards Act, 2006 and the Standards and Weight Measurement Act and various licenses, such as business licenses, food licenses, industrial licenses, etc. are required for operating in India.


With all the necessary steps to start a food processing unit ready, it is important to strategically implement all the mandatory requirements. Everything needs to be put into place. The human resources and infrastructure must be regulated and separate divisions of workers must be used to improve the sales and quality of the product.

Incentive for Food Industry by the Government

Subsidy by Central Government (MoFPI)


•Ceiling upto 5 Crore

•35% for General Areas

•50% for Himalayan States

•50% for North Eastern India

•50% for SC/ ST

•Under the Pradhan Mantri Kisan Sampada Yojana

Subsidy by State Government


•From 25 to 50%

•Capital Subsidy

•Interest Subsidy

•Air/ Sea Freight Subsidy

•GST Incentives

•Electricity Rate and Stamp Duty

Our Services

•Detailed Project Report

•Assistance for Bank Loan

•Project Planning and Feasibility Study

•Project Implementation

•Monitoring and Evaluation Services

•Supply Chain Management

•Agriculture Advisory Services

•Product Development

•FSSAI License Service

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