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How To Start A Small Scale Paneer Manufacturing Business

Cottage cheese or paneer manufacturing is a profitable and lucrative business. It comes under milk processing activity. Here in this article, we intend to explore how to start a small scale paneer manufacturing business.

Paneer is a fresh cheese.  It is an unaged, acid-set, non-melting farmer cheese or curd cheese. Generally, paneer is famous in almost Asia Pacific countries like India, Bangladesh, Pakistan, Afganistan, etc. However, the production of paneer is now spreading throughout the world.

In the Indian market, we find paneer in two different categories. One is for fresh selling and another is packaged paneer. However, fresh paneer has a small shelf life compared to packaged paneer. Any individual can start a paneer manufacturing unit with a moderate startup capital investment. Also, the manufacturing process is simple.

Paneer Market Potential

South India is the biggest market for paneer. However, paneer is popular in almost every state in the country. Industry insiders reason that paneer may be finding acceptability because more people are eating out and traveling a great deal within the country. However, Amul sells 65% of the branded paneer in the country.

Hotel industries are the major consumer of the paneer. Besides, paneer consumption is growing in India by 25%-30% yearly. Therefore, starting a small scale paneer manufacturing project is highly lucrative for new entrepreneurs, if you are already in the dairy business, you can also consider starting a small unit with the existing one.

Popular Dishes With Paneer

In India, paneer is an essential ingredient in so many veg and nonveg recipes. However, some of the most popular dishes are Sandesh, Chhena Murgi, Mattar paneer (paneer with peas), Saag Paneer, Shahi paneer (paneer cooked in a rich, Mughlai curry), Paneer tikka (a vegetarian version of chicken tikka, paneer placed on skewers and roasted), Paneer tikka masala, Kadai Paneer, Palak Paneer, Chili paneer (with spicy chilies, onions and green peppers, usually served dry and garnished with spring onions), Paneer Pakora (paneer fritters), Rasmalai, Rasgulla, Paneer capsicum, Khoya paneer, Paneer bhurji, etc.

Legal Compliance For Paneer Manufacturing

According to the PFA (2010), paneer means “product obtained from cow or buffalo milk or combination thereof, by precipitation with sour milk, lactic acid, or citric acid.

It shall contain no more than 70% moisture and the fat content should not be less than 50% expressed on the dry matter”. Milk solids may also be used in the preparation of paneer.

So compliance with the PFA Act is mandatory in the paneer manufacturing business. It is advisable to check your state law. However, here we put some of the basic requirements.

  • First of all, register your business with ROC.
  • Apply for Trade License from the local Municipal authority.
  • Obtain MSME Udyog Aadhaar online registration
  • Apply for FSSAI registration.
  • Also, you must apply for BIS certification.

Related: Small Business Registration In India | Basic Guide 

Paneer Manufacturing Plant Setup & Machinery

In starting a small scale paneer manufacturing unit, you must secure a space for the operation. And an area of 1000 Sq Ft is sufficient for starting the operation. However, you must specify the space for processing area, storeroom, packing material storage, finished goods storage, and washing. Also, you must provide utilities like electricity and water. It is advisable to have a paneer manufacturing project report in hand before commencing the business.

Generally, semi-automatic manufacturing units are more successful in this field. However, the use of a modern mechanized process offers advantages of uniform quality, improved shelf life, increased yield, and a nutritionally better product. Some of the basic required machinery is the following:

  • Aluminum cans for storage of milk
  • Stainless steel precipitation tank
  • Filter press manual
  • Deep freezer
  • Weighing scale
  • Cream separator
  • Stainless steel vessels
  • Laboratory equipment

Related: 10 Things To Consider In Starting Product Based Business

Paneer Making Process

First of all, you will need to process the milk for skimming in a cream separator. Then heat the skimmed milk to about 60 degrees centigrade. Then add a few drops of lime extract or citric acid to split it. After that, filter the coagulated mass through a muslin cloth and filter press when the cake is obtained. Then slice it manually to the desired weights, pack in wax paper and store under refrigerated conditions.

Raw Materials 

Paneer is a highly perishable product. It was reported that the freshness of paneer remains intact only for 3 days at refrigeration temperature. At room temperature, paneer does not keep good for more than one day. To increase the shelf life of paneer, additives, modification in the paneer manufacturing process, surface treatments, and quality packaging materials are essentials. The major required raw materials are milk and Sodium hypochlorite.

Related: 20 Profitable Cooking Oil Manufacturing Business Ideas


The type of packaging materials plays an important role in increasing the shelf life of paneer. Besides, the use of packaging significantly increases the shelf life of paneer. Normally, you can pack the paneer blocks in polyethylene pouches. In this case, you must apply the heat seal process and store under refrigeration conditions.

Alternatively, you can opt for vacuum packaging in laminated or co-extruded films.

Use of saran-coated packaging films (saran is a polyvinylidene chloride which is a synthetic polymer having low permeability to a wide range of gasses and vapors thus making it most valuable for use in food packaging) helps in enhancing the shelf life of paneer to a great extent. However, according to the requirement, you must procure the packaging consumables.