How to Start A Bakery Business in India with Low Budget

The bakery business is one of the largest industries in the food processing sector in India. Moreover, the domestic demand for bakery products is huge throughout the country. The bakery is one of the most profitable food processing business opportunities one can initiate by having owned or rented space.

Selecting the right product and proper marketing strategy is the major deciding factor in getting success in the bakery business. According to the demand and financial aspect, you will need to choose the specific products for your bakery business.

Bread and biscuits are the most common products but other items like cakes, pastries, cream-rolls, cookies, etc. are also very popular in India.

10 Steps to Start Bakery Business in India

Here are the basic steps to follow to start a bakery manufacturing business:

1. Why Start a Bakery Business? 

Though there are sufficient automatic and semi-automatic bread as well as biscuit manufacturing units in India there are still a number of people who prefer fresh bread and other products from the local bakery.

Bakery products are an item of mass consumption in view of its low price and with rapid growth and changing eating habits of people. The bakery industry has achieved the third position in generating revenue among the processed food sector.

The per capita consumption is very high in industrialized states like Maharashtra, Andhra Pradesh, Uttar Pradesh, Gujarat, and West Bengal. The Biscuits are becoming quite popular in rural areas as well. Generally, rural sectors consume around 55% of the biscuits.

The shining star of the sector remains the biscuits industry, which is expected to outperform the growth of the sector overall. Thus, opening a bakery business is considered a promising and profitable business venture for new startup entrepreneurs.

2. License & Registrations Required to Start a Bakery Business in India

In starting a bakery business, you will need to register the business first with ROC (Register of Companies). You have to apply for a food business operating license from FSSAI (Food Safety & Standards Authority of India). Additionally, you will need to require individual licenses from FSSAI for the delivery boy or delivery vehicle.

You will need to ensure compliance with all the fire safety guidelines. You may also register your bakery unit as SSI from the local DIC office. Obtain Vat Registration. You also need to have clearance from the Pollution Control Board.

3. Decide the Business Structure

You must register your business.  You can form a sole proprietorship, OPC, LLP, or Pvt Ltd. company as per your requirement.

In addition, open a current Bank Account. You can also apply for a loan for machinery and working capital. You can register your business as SSI Unit also.

Apply for GST Registration.

If you are looking forward to building a brand of your bakery items. registering Trade Mark must be considered.

4. Arranging Finance to Start Small Scale Bakery Manufacturing Unit

In initiating a bakery business, you will need to arrange two types of capital.

One is fixed capital for setting up the unit and purchasing machinery.

The second one is working capital. Hire purchase leasing is available from banks for machinery purchases. You can avail of cash credit or overdraft account to serve the requirement of working capital.

5. Develop a Bakery Business Plan

It is always recommended to have a customized business plan in hand. It helps not only in arranging finance but also in preparing the unit, purchasing and installing the right machinery, and in other operational aspects. Before installing the machinery, having a layout plan and implementation schedule is essential.

6. Calculate Cost of Starting a Bakery Business

The minimum cost of starting bakery products making business on a small scale is expected to be in the range of Rs. 15 Lacs to Rs. 20 Lacs. However, the cost will increase if the production output increases.

Most of the cost will be in buying equipment and machinery. Other expenses include legal costs, space rent, manpower costs, and procuring raw materials.

7. Bakery Manufacturing Business Machinery

According to the desired product and production output, you can establish a bakery unit in two ways. One is a fully automatic setup and another one is a semi-automatic setup. Generally, you will need to have the following basic machines for making biscuits, wafer, bread, etc.

  1. Wafer biscuit making machine.
  2. Butter Mixing Machine
  3. Sugar grinding machine
  4. Planetary mixer machine
  5. Sealing machine
  6. Working table with S.S./Aluminium top
  7.  Weighing Balance platform type
  8. Aluminum vessels, Mats, cups, Mugs, ladle, spoons, gloves, etc.

Apart from these, you will need to arrange electrification and water supply.

8. Raw Material & Production process of Bakery Business

The major required raw materials are wheat flour, sugar, eggs, and ghee. You will need to procure other items like milk powder, yeast, salt, assorted fruits, baking powder, caramel colour, vanilla, butter, cream, etc. in small quantity.

If you are starting on a small scale, you can procure all the raw material from the local wholesale market. For a medium scale unit, you can procure major raw material from direct manufacturers.

If you are planning to start a large scale bakery business, you can also set up your own flour mill.

In making biscuits, mix the calculated amount of maida, starch, vanaspati, water, etc. in a mixer to form a paste. Then pour the paste into the pre-heated mold to bake the wafer sheet.

Additionally, mix the other ingredients like sugar, vanaspati, colors, the essence in a planetary mixer to form the cream. Then apply the cream to the sheets to form sand witch. Thereafter, cut the sandwich into biscuits and pack in pouches.

To make cakes, mix thoroughly wheat flour and baking powder along with cream, sugar, and ghee till it becomes fluffy. Then add the mixture of beaten eggs to it along with caramel colour and chopped fruits. Mix it before pouring the mixture into cake pans. Thereafter, bake it for around 30-40 minutes. a

You can produce pastries in different shapes like square, rectangular, etc. from thick cake sheets, buttercream, jam, etc. is placed between layers of cake. Then chill the layered cake and cut with a sharp knife into the required shape and size.

Sides of the pieces are iced with buttercream or fudge and topped with finely ground cake crumbs or pieces of fruits or chocolate strips and decorated with proper design, colour, and garnish.

This is a semi-automatic process, You can also go for a fully automatic bakery business production setup. 

9. Manpower Recruitment

Keep in mind, manpower recruiting is a critical aspect to be successful in this business. You need to have skilled manpower especially in the production process of bakery items.

10. Promote your Bakery Business

You can sell bakery items broadly in two ways.  One way is to create a distribution network catering to local retailers. The other way is selling online.

For physical distribution, you must contact retailers and local dealers and ask them to promote your brand of bakery products. You can go through our detailed article low-cost marketing ideas for startups to learn more.