Licenses Required to Start a Food Business in India, Permits, Registrations, Taxes, Types of Licenses
Starting a food business in India requires compliance with various regulatory requirements to ensure food safety, hygiene, and legal standards. The Food Safety and Standards Authority of India (FSSAI) governs the food industry, mandating licenses and registrations for all food-related businesses. From obtaining FSSAI registration to securing health/trade licenses and GST registration, navigating the regulatory landscape is essential. This introduction outlines the fundamental licenses necessary for initiating a food business in India, providing a roadmap for entrepreneurs to navigate the complex regulatory framework and establish their ventures in compliance with the law.
Licenses Required to Start a Food Business in India
Starting a food business in India involves obtaining various licenses and registrations to ensure compliance with food safety and hygiene standards set by the Food Safety and Standards Authority of India (FSSAI) and other regulatory bodies. The licenses required depend on the scale and nature of the food business.
FSSAI License/Registration
The primary requirement for commencing a food business in India is acquiring a food license issued by the Food Safety and Standards Authority of India (FSSAI), which covers activities such as food preparation, manufacturing, distribution, and transportation. FSSAI serves as the apex body responsible for overseeing food safety regulations in the country. The licensing and registration procedures are governed by the Food Safety & Standards (Licensing and Registration of Food Business) Regulation, 2011. The FSSAI registration certificate is obligatory for all food business operators, regardless of their scale, ensuring the quality, purity, and safety of food products for consumers. This certification process can be completed offline by submitting an application to the Licensing Authority along with the requisite fees or online via the FSSAI Food Safety Compliance System (FoSCoS). The type of license required depends on the annual turnover of the business:
- Basic FSSAI license: Annual turnover less than Rs. 12 Lakhs.
- State FSSAI license: Annual turnover between Rs. 12 Lakhs to Rs. 20 Crores.
- Central FSSAI license: Annual turnover more than Rs. 20 Crores.
Upon registration, a fourteen-digit FSSAI license number is issued to the food business operator. FSSAI licenses have varying validity periods ranging from 1 year to 5 years, and failure to register can lead to penalties under the Food Safety and Standards Act, 2006.
Health/Trade License
A health/trade license is essential for food businesses, ensuring compliance with hygiene and safety standards. Obtained from local municipal authorities or health departments, it permits the operation of restaurants, eateries, and food establishments. The application process typically involves submitting necessary documents and paying applicable fees. Inspections may be conducted to verify compliance before issuing the license, which must be prominently displayed at the premises.
GST Registration
Tax registration holds significant importance for any business endeavor. Initially, a business must secure a Permanent Account Number (PAN) and Tax Account Number (TAN) for income tax purposes, either under the business’s name or the owner’s name in the case of sole proprietorships.
Furthermore, Goods and Services Tax (GST) registration is obligatory for all businesses engaged in trade, commerce, manufacturing, including food businesses, regardless of their legal structure (sole proprietorship, partnership, LLP, company, or firm), size, or frequency of operations. GST registration becomes mandatory when the business’s aggregate turnover exceeds Rs. 20 Lakhs in a financial year (Rs. 10 Lakhs for special category states). This turnover encompasses taxable supplies, exempt supplies, exports, and inter-State supplies. However, there are scenarios where GST registration is compulsory regardless of turnover, such as interstate supply, reverse charge mechanism transactions, and operations on e-commerce platforms.
The GST registration process involves submitting the GST REG – 01 registration form and necessary documents online through the GST portal.
Food Establishment License
An eating house establishment license is necessary for various food businesses, including restaurants, food trucks, street shops, canteens, and residential hotels, as per the Shops and Establishment Act. To acquire this license, applicants must submit an online application on the website of the police department of the respective state, along with documents such as the FSSAI license, GST certificate, and other necessary paperwork.
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Shop and Establishment Act License
A food business operator must secure a trade license by registering the business with the local government in accordance with the Shops and Establishment Act, 1953 (referred to as the S&E Act). This registration is essential to obtain permission for conducting trade and to ensure adherence to ethical business practices, existing rules, safety standards, and regulatory guidelines. To obtain the trade license, a statement along with the required fee and business details (such as name and address) must be submitted to the relevant local municipality or health department (such as the chief inspector of shops or any designated inspector under the S&E Act). Subsequently, the concerned municipality/department will conduct an inspection of the premises where the business operates. Upon satisfactory inspection and verification of necessary documents, a registration certificate/license will be issued, which must be prominently displayed at the establishment.
Environmental Clearance
Environmental Clearance is increasingly vital due to growing environmental regulations. The food industry, contributing to pollution through cooking emissions and food waste, requires environmental clearance for establishment and operation. Obtaining clearance from the State Pollution Control Board (PCB) is crucial. Applicants can apply on the relevant state PCB website, based on establishment categories defined by the Central Pollution Control Board (CPCB). Categories include:
- Hotels (Big): Red Category.
- Medium-Scale Hotels: Orange Category.
- Non-alcoholic Beverages (Soft drink): Orange Category.
- Small Bakery/Confectionery: Green Category.
- Small Hotels: Green Category.
Fire Safety License
An additional requirement for establishing a food business is obtaining a No Objection Certificate (NOC) from the local fire department. To secure a fire security NOC, an application must be submitted to the relevant fire department, accompanied by essential documents such as building plans, architectural certificates, and a completed questionnaire regarding compliance with fire safety regulations. Following the verification of the application, officials from the fire department will conduct an inspection of the premises.
Trademark Registration
To establish a distinctive brand identity and garner customer recognition, entrepreneurs should secure a trademark license, safeguarding their intellectual property and unique identity. A registered trademark expedites business expansion, especially for those aiming to establish food business chains. Trademark registration ensures ownership of created intellectual property and deters competitors from using similar branding. Entrepreneurs can obtain a trademark by registering online on the Intellectual Property India portal, submitting the necessary fee and documents. Following verification, the applicant receives a trademark registration/certificate, affirming their brand’s legal protection.
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Labour Law Registrations
Labour Law Registrations hold significant importance wherever they are applicable, ensuring the protection of workers’ rights. The Shops and Establishment (S&E) Act governs employment conditions in commercial establishments, covering aspects such as working hours, public holidays, and overtime pay. Several key labour laws necessitate registration, including:
- Employees State Insurance (ESI) registration: Required for businesses with over 10 employees earning less than Rs. 21,000 per month. Exempt establishments must obtain an exemption certificate.
- Employees Provident Fund (EPF) registration: Mandatory for businesses with more than 20 employees. Employees earning less than Rs. 15,000 per month must be covered under EPF.
- Contract Labour registration: Essential for businesses hiring over 20 employees from manpower agencies for roles like waiters, guards, and housekeeping.
Signage License
Signage License is also crucial for initiating a food business. Hoardings, signboards, and outdoor advertisements require approval from local municipal authorities. Typically, one standard signboard is permitted in front of the business premises, while additional signage necessitates approval and payment of applicable fees.
Liquor License
Obtaining a liquor license is compulsory for restaurants or eating at house establishments intending to sell, manufacture, distribute, store, or utilize alcoholic beverages on their premises. Various types of liquor licenses are available, including those for mild liquor, wine & beer, and other categories. To acquire a liquor license, applicants must complete an online application form on the state excise department’s website where the business is located, accompanied by the necessary fee and documents. Following application verification, the state authority will publish a public notice, displayed at the establishment’s location.
Conclusion
understand the regulatory requirements and comply with applicable laws and standards to avoid legal repercussions and ensure the smooth operation of the food business in India. Additionally, periodic renewals and compliance with hygiene and safety standards are crucial for maintaining the validity of licenses and ensuring consumer trust and satisfaction.
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