How to Start an Oil Mill Business in India? Startup Business Ideas

Start an Oil Mill Business in India
Japsanjam Kaur Wadhera
| Updated: Feb 26, 2021 | Category: Startup

Oil is used extensively in day to day life of the people due to which there is an increasing demand for different types of oils. Presently, the business of extracting oil from the seeds is becoming popular in the country. India has a unique natural condition for growing various oil crops, including mustard, soybean, cotton, peanut and more. Starting an oil mill business is one of the profitable business ideas as vegetable oil production is profitable. This article will discuss about how to start an oil mill business in India.

Understanding Oil mill business

In an oil mill the seeds are grinded and oil is extracted and then packed and sold in bottles. However, before starting a mill, many types of machines are to be bought and also a startup business has to decide which oil mill he wants to start, such as mustard oil, sesame oil, olive oil and etc. In India various types of oils are used for cooking such as refined oil, mustard oil, sesame oil, olive oil and etc. a business can be started either as a small scale, medium scale or large scale industry.

  • Small scale industry: In small scale oil extracting mill industry, 5 to 10 metric tons of oil is extracted every day.
  • Medium scale industry: In medium scale oil extracting mill industry, 10 to 50 metric tons of oil is extracted every day.
  • Large scale industry: In large scale oil extracting mill industry, more than 50 metric tons of oil is extracted every day.

Also, Read: What are the Categories and Standards of FSSAI Milk Products?

Steps to Start an Oil Mill Business in India

Some of the steps to be followed to start an oil mill business in India are mentioned below:

Steps to Start an Oil Mill Business

Analyze the Market

It is important to study the demand for the edible oils in different parts of India, as it greatly depends on the income and population in different regions.

Creating Business Project Report

Further a business project report must be prepared that would help to get finance from banks and other financial institutions. The report must include financial aspects and technical analysis. The technical analysis must include the manufacturing technologies, plant capacity, raw material that will be used and the production process of the entire organization. The business objectives must be stated clearly and to focus on working on the financial aspects that includes, working capital, fixed cost, expected sales revenue and ROI.

Arrange the Finance

If the oil mill business cannot be started with the self owned funds, then in order to start such business the funds can be obtained from the banks or local venture capital firms.

Choosing Location

To start an oil mill business it is important to search for location for setting up the business which would be successful. Oil mills do not need much space.

Decide Oil Production Process

There are many oil production technologies available in the market today to maximize the extraction of oil out of various oil seeds. If the oil seeds have high oil content, the mechanical pressing will extract about 85% of the oil. So to extract most of it, solvent extraction method must be used for oil cake residual. One must adopt an oil production process that fits his/ her business demands.

Getting Oil Mill processing machinery

Machinery is the main requirement in the oil mill business. There are many companies supplying oil extraction machinery in the world. A proper research must be made to choose the most reliable company from where an oil mill processing machinery can be bought.

Install machinery and establish Oil Mill Plant

Once the oil processing machinery is purchased, install the machinery and complete the setting up of oil mill business. The oil mill machinery supplier shall install the machinery and the oil mill plant will be established.

Finding raw Material

It is important find the regular source of raw materials for the business. Therefore, the business must find a source from where regularly the raw material can be supplied.

Registration of Business

It is mandatory to get registered for starting an oil mill business in India. Business registration is obligatory. Once the registration is completed, the business is granted the trade license as well as business PAN Card. A bank account is required to be opened for the necessary transactions.

Hiring Works

Oil mill business required workers to operate machinery as well as distributing the products. Therefore, hiring works is necessary for the successful operation of the oil mill business in India.

Licenses and Certification to Start an Oil Mill Business in India

It is necessary while starting an oil mill business in India to obtain necessary licenses and certification, because the oil can be sold in the market only after obtaining the license and certification by the business.

There are two types of licenses related to the food items which are provided by the government of India and is required to be obtained by the oil mill business. One license is given by Bureau of Indian Standards and the other license is given by FSSAI. Other than this, other types of licenses are required to be obtained from the government of that state where the oil mill business is set up.


In order to start an oil mill business in India, it is necessary to follow all the steps mentioned above in this article for successful establishment of oil business. It is important for the oil mill business to ensure high quality of oil to be supplied in the market. Also, necessary license is required to be obtained to start this type of business. A proper strategy and plan must be adopted to start an oil mill business that may include investment cost, processing equipment, labours required, and various the necessities in starting up this business

It is much easier to start an oil mill business since establishing this type of business requires low investment cost, has a reduced entry and is easy to operate and generates large profits.

Also, Read: All You Need to Know About FSSAI Allows Bromates in Drinking Water

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Japsanjam Kaur Wadhera

Japsanjam Kaur Wadhera is an Advocate and has completed her BA.LLB (Hons) and has experience of writing various research papers during her college time. Earlier she was working as an Associate Advocate in a reputed Law Firm. She has an extreme interest in writing legal content and her core area falls under legal enactments, tax and finance.


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