Oil holds a fundamental place in people’s daily lives, with an increasing demand for a variety of oils. Presently, the extraction of oil from seeds has gained considerable traction in the country. India boasts unique natural conditions ideal for cultivating a range of oil crops, including mustard, soybean, cotton, peanuts, among others. Starting an oil mill business is an attractive entrepreneurial concept due to the profitability of vegetable oil production. In this blog, we shall explain how to start an oil mill business in India.
Understanding the Oil Mill Business
Before going into the details of how to start an oil mill business in India, let us first understand the basics of oil mill business. Engaging in the oil mill business entails the grinding of seeds to extract oil, subsequently packaging and distributing it in bottles. Nevertheless, aspiring entrepreneurs must carefully deliberate on several aspects before delving into this venture.
This includes making a thoughtful choice regarding the kind of oil mill they aim to establish. In India, cooking oils manifest in diverse forms like refined oil, mustard oil, sesame oil, olive oil, and others. Moreover, entrepreneurs possess the flexibility to kickstart their oil mill business at varying scales, be it small, medium, or large.
Small Scale Oil Mill Industry
In the small-scale oil extracting mill industry, the daily extraction of oil typically ranges from 5 to 10 metric tons. This scale of operation is suitable for individuals or entrepreneurs who are starting with limited resources and production capacity.
Medium Scale Oil Mill Industry
The medium-scale oil extraction mill industry involves the extraction of 10 to 50 metric tons of oil daily. This scale of operation offers a balance between small-scale and large-scale production and is suitable for entrepreneurs with moderate resources and production capabilities.
Large Scale Oil Mill Industry
In the large-scale oil extracting mill industry, more than 50 metric tons of oil are extracted daily. This scale of operation is suitable for established businesses with significant resources and extensive production capacities. Large-scale oil mills cater to high-demand markets and require substantial investments in machinery and infrastructure.
By understanding these different scales of operation and the variety of oils available for production, entrepreneurs can make informed decisions on how to start an oil mill business in India and tailor their venture to their specific goals and resources.
Steps on How to Start an Oil Mill Business in India
Learning how to start an oil mill business in India involves several steps to ensure a successful and sustainable venture. The major steps to follow to start an oil business in India are:
1. Analyse the Market
- Conduct market research to understand the demand for edible oils in various regions of India.
- Consider factors such as income levels, population, and regional preferences for edible oils.
2. Create a Business Project Report
- Prepare a comprehensive business project report that includes financial and technical analyses.
- Include details on manufacturing technologies, plant capacity, raw materials, and the production process.
- Clearly define business objectives and focus on financial aspects, including working capital, fixed costs, expected sales revenue, and return on investment.
3. Arrange Financing
If you don’t have sufficient self-owned funds, explore options to obtain financing from banks or local venture capital firms to start your oil mill business. This marks an important milestone in the process of learning how to start an oil mill business in India.
4. Choose a Suitable Location
Select an appropriate location for your oil mill business, considering factors like accessibility, infrastructure, and proximity to raw material sources. Oil mills typically do not require extensive space. Yet, this choice must be made after taking into consideration all relevant factors.
5. Decide on Oil Production Process
Choose the most suitable oil production technology based on the oil content of the seeds you’ll be processing. Mechanical pressing is suitable for seeds with high oil content, while solvent extraction may be necessary for oil cake residual. This must be carefully thought through when undergoing the process of how to start an oil mill business in India.
6. Procure and Install Machinery and Establish Oil Mill Plant *
- Research and select a reliable supplier for oil extraction machinery.
- Purchase the necessary machinery to set up your oil mill processing plant.
- Once you’ve acquired the machinery, install it and set up your oil mill plant. You may need assistance from the machinery supplier for installation.
7. Register Your Business
- Comply with legal requirements by registering your oil mill business. Obtain the necessary licences and permits, including a trade licence and a PAN Card.
- Open a dedicated bank account for business transactions.
8. Hire Workers
- Employ skilled workers to operate the machinery and manage the production process.
- Hire personnel for distribution and other operational tasks to ensure smooth business operations.
By following these steps, you can concretely learn how to start an oil mill business in India and lay a strong foundation for your oil mill business in India to increase your chances of long-term success in the competitive edible oil industry.
Certification and Licences For Starting an Oil Mill Business in India
After successfully learning how to start an oil mill business in India, securing essential licences and certifications is also a vital prerequisite. This is imperative as the sale of oil in the market is permissible only after obtaining the necessary licences and certifications for the business.
In India, two crucial types of licences pertaining to food items are mandated and must be acquired by oil mill businesses. The first is issued by the Bureau of Indian Standards, ensuring compliance with specific standards. The second is granted by the Food Safety and Standards Authority of India or FSSAI registration or FSSAI licence, assuring adherence to food safety regulations. Additionally, it’s essential to obtain other requisite licences from the respective state government where the oil mill business is established. These licences encompass various aspects essential for conducting a legal and compliant operation.
Final Thoughts
The oil mill business in India presents a profitable opportunity driven by the growing demand for edible oils. With India’s favorable agricultural conditions, entrepreneurs can tap into various oilseed sources. By learning how to start an oil mill business in India right from market analysis to obtaining licences, entrepreneurs can ensure a strong foundation for success.
Also, compliance with BIS and FSSAI standards is imperative for legality and safety of the business in India. As India’s edible oil demand continues to rise, a well-executed oil mill business not only offers profitability but also contributes to food security and economic growth. By adhering to industry best practices and maintaining a commitment to quality, entrepreneurs can establish a thriving presence in this vital sector.
