Vegetable Oil Production Business – In India

How to Start Vegetable Oil Production Business


Vegetable edible oil is the oil extracted from oilseeds and nuts using an extraction process. Since there has been an advancement in people’s living standards, therefore consumption of edible oils is also rising. Therefore, the extraction of vegetable oil is a money-spinning venture that in most cases brings profits to manufactures.

Vegetable oil is extracted through various oilseeds such as mustard, peanut, soybean, rapeseed, sesame, cottonseed, etc using a pressing process. People use cooking oils for different purposes, including cooking, and the preparation of plastic and soap. The waste generated after cooking oil production is also used to fuel the diesel engine.

A step-by-step guide to Vegetable Oil Production business, plan, investment, license, permissions, and profit

Guide to Vegetable Oil Production business
Guide to Vegetable Oil Production business (Image credit: pixabay)

Business plan to start Vegetable Oil Production Business

Create a plan, including proposed location, capital start-up, target market, operating expenses, and other costs. Get the necessary capital for your business. Before identifying a place for your edible oil processing unit, you have to think about the market, the availability of raw substances, and the mode of transport. A good location is the one that is close to the targeted market and raw material location, which will decrease supply and transportation costs.

Create Business Project Report for Vegetable Oil Production Business

Preparing the project report will be significant if you want to get the amount from banks and other financial agencies. Such a project report must have technical analysis and financial factors. While creating the technical section, think about the unit capacity, manufacturing technologies, and raw materials you need, and the entire organization of the production process. Showcase your business objective with proper proof. Working on the financial aspects, especially the fixed cost, your working capital, the estimated sales revenue, and ROI are crucial in the report.

So, if you desire to start a small business, the cooking oil production business is considered to be a perfect choice to consider.

Market potential of Vegetable Oil Production Business

According to the market professionals, the vegetable oils market is about to attain USD 13.94 billion by 2024. Consumer interest is rising very rapidly. And there are several factors behind it. Increasing awareness and inclination to purchase organic and natural products are major factors contributing to the growth of the vegetable oils industry. Additionally, the changing of focus from synthetic to natural products is even driving the market growth.

License, permission, and registration required for Vegetable Oil Production Business in India

For starting a vegetable oil production unit, you should get several license and registration approvals from different government organizations.

Primarily, you must define the management design of your organization. And then as per the design, register your business.

  • Firstly, apply for MSME Udyog Aadhaar which is available as online registration.
  • Then, the important trade license from the local municipality should be applied.
  • The business comes under the food Industry category and requests consent from FSSAI which is also done online.
  • Nowadays it is a must to apply for GST registration.
  • Try to create a current account in any of the nearby banks.
  • Then it is important to apply for the BIS certification. The product must also conform to the PFA Act, guidelines
  • Moreover, it is essential to check the tax liabilities as well for this business.
  • AGMARK certification
  • Fire license
  • Mandi Act
  • Labor Laws such as the following: ESIC, EPFO, etc. 
  • CLU – for land
  • Electricity Bills
  • FSSAI: The Food Standards and Safety Rules, 2011, and rules made under IS 544: 1968 permit the inclusion of antioxidants in vegetable oil for an increased shelf life of the oil. However, under the scheme of labeling of environment-friendly products, the occurrence of antioxidants in a prescribed limit is a need as per notification of the Ministry of Environment and Forests. These are the basic license and certification requisites. Check out the same with your local DIC authority about any other needful formalities.

Steps in Vegetable Oil Production business in India

The following are the few guidelines you require to plan an edible oil manufacturing business:

Step 1: Learn more about the Vegetable Oil Production business

Gathering more information about the business is the initial step while starting an oil mill venture. Know about the requirements of the cooking oil manufacturing business in terms of finance, technology, market, and competition. Go through some of the online websites to obtain knowledge on the economic analyses and statistics of the industry in your region. Study the operation of already existing industries to get an awareness of their functioning.

Step 2: Craft your business plan for Vegetable Oil Production

Before initiating a new business, preparing a business plan is similar to having a compass before going on a tour. This gives you the ideas and projections on almost everything you will need to set-up and run a venture without any hassle.

Step 3: Raw materials required to start Vegetable Oil Production

You have two ways to procure the raw materials required for vegetable oil extraction. You can either purchase oil seeds from the supplier or keep your farm for the cultivation of oil seeds like soybean seeds, walnuts, peanuts, rapeseed, cast, sesame, etc.

Step 4: Area required to start Vegetable Oil Production

The location of your business is another significant aspect that can make your business more effective. It’s best to identify the location which is near your source of raw materials. For instance, if you will be planning for mustard oil production, you should locate your extraction plant close to the mustard oil plantation. This will decrease transportation expenses, which could be reduced several times.

Step 5: Finance required to start Vegetable Oil Production

If you need finance for purchasing material, products, and other stuff, then start approaching. If your business plan depicts your business as an excellent venture and lucrative one, you will easily get the attention of investors or avail loans from banks or other money lending organizations.

Step 6: Machinery required to start Vegetable Oil Production business

Vegetable oil processing line is having all the required machines for oil extraction with solid and durable structures, fine characteristics, and good compatibility. The plant is nominated as safe, with reasonable cost, excellent standard, high-level automation, continuous operation, and advanced techniques.

Step 7: Employees required to start Vegetable Oil Production

By using various channels, you have to advertise vacancies for staff in the oil extraction process, and you have to select the best staff to work along.

Step 8: Plan the packaging and distribution of Vegetable Oil Production

The oil is accumulated in the storage tank and then it is verified, if it’s found clean and has passed all the particulars, then the oil is moved to the packing stage for packing and distribution. When the oilseeds are processed, we will obtain some of the waste, known as pressed cakes. Oil Cakes normally have little oil in them and they are employed to prepare animal feeds using a step called distillation.

Investment required to start Vegetable Oil Production business in India

To start the Vegetable Oil Production business, you need to arrange the finance from Rs. 2 lakhs to Rs. 5 lakhs.

The Vegetable Oil Extraction machine price ranges from Rs. 80,000 to Rs. 2,00,000 depending upon the capacity.

The raw materials cost is Rs. 1 lakh.

So, the total amount required to start Vegetable Oil is Rs. 2 lakhs if you plan it on a smaller scale.

Profit in Vegetable Oil Production business in india

In case if you miss this: Ideas To Make Money In India.

Profit in Vegetable Oil Production in India.
Profit in Vegetable Oil Production in India.

You can earn good profits in Vegetable Oil making business. You can make 35 to 40% of profits in the Vegetable Oil production business, after deducting the total expenses from the capital amount. Then the leftover amount will be your profit, so you need to minimize the expenses incurred accordingly. You can also plan for used machines so that it will reduce your fixed capital investment.

How to sell your Vegetable Oil

You can sell your Vegetable Oil in local markets or you can even sell it in online stores. You can also register in B2B websites and B2C websites in online markets to promote Vegetable Oil products.

You can also sell your products in supermarkets, small stores in shopping malls, etc. Advertise your product through social media to get a huge number of clients in this way you can increase and promote your business. There are very limited Vegetable Oil manufacturers in India, but the demand for encouraging the new product is also high because of its medicinal properties. So, you need not worry about the market. You can sell your product based on the Vegetable Oil wholesale price in India.

Important points to be noted before starting a Vegetable Oil Production business

  • Commercial vegetable oil extraction needs a strategic economic and marketing plan. You must focus on production, marketing, distribution, and sales promotion.
  • Secondly, it is important to do market analysis at the beginning. Identify the local requirement for the specific vegetable oils. Also, recognize the basis of raw materials.
  • Vegetable oil extraction is a capital-intensive business. So, it is recommended to start the business by availing a loan from a bank or lending money to other financial institutions.
  • Check your state’s legal guidelines carefully. Obtain the mandatory licenses and permissions from the concerned authority. Moreover, detect the upcoming tax liabilities.
  • Begin the vegetable oils manufacturing plant judiciously. If you have an extra area, you can begin the business from home.
  • Prudently select the machinery. Procure the appropriate machinery according to the required production output and standard.
  • Investment, transportation, and labor concerns (cost and availability) drive the vegetable oils production industry. Therefore, properly calculate the break-even and predicted ROI.
  • Finally, get the manufacturing technology from reliable places. Generally, Government Research centers provide manufacturing technology in return for some costs.

Conclusion of starting a Vegetable Oil Production business

Vegetable oils have a perfectly soothing and calming effect on the nervous system and are also advantageous in blood circulation stimulation. Asia Pacific vegetable oil market is anticipated to grow at a projected CAGR of 9.0% from 2019 to 2024 to appear as the fastest developing regional market.


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