India is the world’s leading producer and exporter of spices, which is also the source of India’s competitive edge. In the year 2023-24, India exported spices worth ₹1.25 trillion and weighing over 15 million tonnes.
At first glance, these numbers seem mind boggling. And yet, India continues to import various high valued spice extracts, oleoresins and spices of these derivatives.
In turn, India loses valuable foreign currency and increases its reliance on foreign suppliers for value added products like curcumin, chilli oleoresins, pepper extracts, and essential oils.
With the current system, there is significant potential for establishing manufacturing facilities. In addition, the demand for clean label, naturally sourced and functional ingredients continues to grow.
There is then the positive balance of payments opportunity which propels the need for these extracts at foreign exchange.
Market Scenario – India’s Untapped Segment
Although India exports spices worth ₹1.25 trillion, the country still imports speciality extracts. Therefore, new businesses can establish oleoresin and extract manufacturing plants to cater to the domestic and international markets.
Moreover, this sector has the potential for scalable investments due to government assistance, access to relevant technology, and a high availability of raw materials.
The Spice Extract Manufacturing – Why Does It Even Matter for Startups
High Profit Margins: The oleoresins and extracts range earns 25-40% profit margins, unlike raw spices which earns 5-10%.
Reduction of Imports: Domestic plants alleviate the dependence on expensive imports.
Export Potential: These international markets are looking for natural colorants, flavor enhancers, and nutraceutical ingredients.
Government Support: Support from MoFPI and subsidies from MSME along with APEDA cover for plant installation, technology and even promoting exports.
Read More: 10 Business Development Strategies for Industrial Startups to quickly scale
Business Potential in Oleoresins and Extracts
Chilli Oleoresin
Reason: Chilli oleoresin contains orange pigment capsanthin and capsorubin, and the pungent capsaicin. It is being employed in food products, sauces, snacks, nutraceuticals, beverages, and even in poultry feed.
Due to the growing inclination for natural colorants, the demand is increasing in Europe, USA, and East Asia.
Possibility: Start-up companies can establish a solvent extraction unit with chilli drying and evaporation equipment.
Andhra Pradesh and Karnataka are leading producers of chilli in India and, with support through the PMKSY, NABARD and APEDA, the company will be able to offer services to local processors and nutraceutical companies worldwide.
Turmeric Curcumin Extract
Reason: Curcumin is used in nutraceuticals, pharmaceuticals, food supplements, cosmetics and functional food products due to the anti-inflammatory and anti-oxidant properties it possesses. The demand is increasing rapidly due to the focus towards preventive healthcare.
Possibility: India produces 80 per cent of the world’s turmeric; however, the demand for high-purity curcmin (>95%) is still unmet.
Start-ups can establish plants in Tamil Nadu, Andhra Pradesh and Odisha for curcumin, oleoresin, and oil extraction from turmeric and, with the support and export incentives from the MoFPI, target lucrative markets in the US, EU and Japan.
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Pepper Oleoresin
Reason: Gaining popularity in the nutraceutical and bioactive supplement industry, pepper oleoresin is used for its volatile oils and piperine, adding flavor and pungency to sauces, meats, food supplements and even medicinal products.
Opportunity: The olive resin extraction derivative market from pepper plants located in the pepper clusters of Kerala and Karnataka holds value as extraction plants can be developed in the said clusters.
The wellness and pharmaceutical industries in North America and Europe are the biggest consumers of high-piperine oleoresins.
Cardamom and Clove Essential Oils
Why Attractive: Clove oil is vital for oral care and pharmaceutical aromatherapy and cosmetics, and cardamom oil is also highly used in bakery, confectionery and beverages. Both have a high market value for the fragrance and flavor industries.
Opportunity: The domestic breeze from steam distillation at the mini plants located in Kerala, Karnataka, and Tamil Nadu serves small units steam distillation units as a raw material and can later serve other units for export.
Start up companies with the help of APEDA and the MSME schemes can specialize to create specially blended oils for export to other countries.
Blended Extract-Based Spice Products
Why Attractive: The blended oleoresins with powders form an intergrating oleoresin and powders of spices with the blended base for instant curries, soups, meals, beverages and functional foods.
Blended supplements such as ancient turmeric with probiotics, and modern pepper with herbal extracts are on the rise for herbal medicine.
Opportunity: The branded chat masala and spices sachets for the B2B and B2C sectors of the market from the value of MSME for packaging grants can be The value of MSME packaging grants, to then export to the Middle Eastern countries, Europe, and the United States of America is very promising.
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Case Studies
Kerala Oleoresin Units
Small enterprises in Kerala commenced with MoFPI subsidies and basic extraction units. They subsequently grew into capsaicin, curcumin and pepper extracts by advancing their technology to solvent and CO₂ extraction. Now, they serve the food, pharma and cosmetic industries around the globe.
Gujarat Spice Blenders
From manual blending units, MSMEs in Gujarat automated blending and installed MSME tech-upgradation-approved hygienic packaging lines. They now provide custom spice blends and oleoresin combinations to global QSRs and food service companies.
Andhra Pradesh Chilli Extractors
Chilli oleoresin plants that Andhra Pradesh MSMEs set up with PMKSY funding, export high-color oleoresin chilies and capsaicin to food and nutraceutical companies in Europe, resulting in the state becoming a centre for chilli extracts.
Emerging Trends
Demand for turmeric with probiotics, pepper with herbal blends, and nutraceuticals with ginger and vitamins is on the rise.
Green Process Innovations
New enterprises are adopting solar systems for drying, energy-efficient extractors, eco-friendly packaging, and zero-residue waste systems.
Verifiable Processing
Employees now farm using blockchains coupled with QR codes, winning export markets for premiums. Firms certify with processed origins, showing them increased value.
Direct-to-Consumer Brands
D2C spice extract and functional blend brands are being launched by Indian startups on wellness platforms like Amazon and Shopify—these startups control both pricing and branding sparingly.
Read More: Nanotechnology in Food: The Next Revolution in Edible Innovation
How NPCS Can Help You
Niir Project Consultancy Services (NPCS) guides entrepreneurs stepwise in establishing spice extract and oleoresin manufacturing units.
We prepare Market Survey cum Detailed Techno-Economic feasibility Reports (DPRs), which compile all details of manufacturing processes, market research, process flow diagrams, plant layouts, product mix and capacity planning, machinery and raw material sourcing, and complete financial forecasts covering ROI and profitability.
We also assist startups in obtaining government subsidies, NABARD loans, APEDA incentives, as well as certifications, plant optimization, documentation, and other investor-ready services.
With NPCS helping you, there are reduced risks, time savings, and undistracted market scaling in both domestic and international spice extract domains.
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Conclusion
India is the largest exporter of spices in the world. However, the specialization of oleoresin and extract imports signifies a gap.
This gap can be filled by startups looking to operate in the field of plant extracts made in India, which helps in decreasing dependency in imports and also exporting high-value derivatives as a byproduct.
There are also strong government subsidies which coupled with global demand and NPCS’s guidance will allow entrepreneurs to elevate the current spice leadership India has, to unmatched self-sufficiency and competitiveness globally.
FAQs About Startups Involving Spice Extracts and Oleoresins
Q1. Is the manufacturing of spice extracts lucrative?
Yes, profits generally hover over 25-40%, which is way higher than what spice exports earn.
Q2. What is the global market craving?
Chilli oleoresins, turmeric curcumin, pepper extracts, some essential oils, and fortified spice blends.
Q3. What support is rendered by the government?
The MoFPI, MSME, and APEDA offer subsidies, technology grants, and assistance in export promotion.
Q4. Is it a must for the startups to have certain licenses?
Yes, FSSAI, HACCP, Organic, and IndGAP certificates are crucial for all premium exports.
Q5. How does NPCS assist spice startups?
NPCS prepares DPRs, models, and guides in subsidies to ensure your project is de-risked and fast tracked.