How to Start a Cashew Processing Unit in India

A cashew processing unit buys raw cashew nuts and turns them into graded, packed kernels. Scale decides the budget more than any machine does. The NIFTEM-Thanjavur model project report for a 500 kg a day unit totals ₹43.66 lakh, about three fifths of it working capital margin and only ₹7.75 lakh machinery, while plants processing tonnes a day run into crores.

Before ordering anything, line up three things: a dependable supply of raw nuts, since India's own crop falls short of what its factories process; a food safety registration or licence; and cash to carry stock.

What does a cashew processing unit cost at different scales?

Plant and machinery alone runs from ₹7.75 lakh to ₹2,358 lakh across three published projects, so check what a quoted capacity means.

The two NPCS reports state returns of 31% and 24% and break-even points of 62% and 48%, without saying how they are measured, so use them to compare plants, not to promise profit. In the 20 tonnes a day report, machinery is ₹155 lakh of ₹750 lakh; the rest goes on items such as buildings and working capital. NIFTEM's template assumes an existing site, so read ₹43.66 lakh as a floor.

Is a cashew processing unit profitable at 20, 25 or 30% kernel recovery?

Kernel recovery, the share of a nut's weight that becomes edible kernel, runs at 20 to 30% according to a course module hosted by the Consortium for Educational Communication. Set that against two recent prices in dollars: imported raw nuts at about $1,603 a tonne in January to June 2026 (CMB, a commodity news service) and kernels exported at $7,814 a tonne in May 2026, per APEDA's cashew dashboard.

This is illustrative: it prices every kernel at the average export price, though broken pieces sell for much less, and labour, fuel, packing and interest come out of the gap. A unit stuck at 20% loses money on nuts alone.

Where do you buy raw cashew nuts when the crop falls short?

APEDA estimates India's 2025 crop at 6.2 lakh tonnes, and factories add imports on top: CMB reports 5.76 lakh tonnes of raw nuts in January to June 2026 alone, led by Tanzania (2.13 lakh), Nigeria (1.42 lakh) and Ghana (0.90 lakh).

ICAR's cashew research directorate lists Maharashtra, Andhra Pradesh and Odisha as the largest producers in 2020-21, so local nuts are easiest to find near Maharashtra's, Andhra Pradesh's and Odisha's industrial areas. Near the crop, buy local nuts and hold stock. Elsewhere, plan for import lots, which add freight and shipping time. Either way, cut open a sample from every lot: FAO's cashew production guide notes that nut quality is judged by appearance and cutting tests.

How is cashew processed, step by step?

1. Clean and size. Sieve out stones and dust, then grade by size for even cooking and shelling.
2. Cook the shell. Steam the nuts in a pressure cooker (roughly 40 to 45 minutes a batch) or roast them in a drum or hot oil bath, to loosen the shell.
3. Shell. Hand cutters or machines split the shell. Broken kernels sell as cheaper grades, so whole kernels are won or lost here.
4. Dry in the borma. A hot air oven takes kernels to about 3 to 4% moisture, over several hours at roughly 70 to 90 °C, and loosens the skin.
5. Peel. Remove the skin by hand or machine. Practical Action reports up to 30% breakage with mechanical peeling, so trial any peeler on your own nuts.
6. Grade. Sort by size, colour and wholeness to the Cashew Export Promotion Council's specifications.
7. Pack. Raise moisture to about 5%, then vacuum pack with carbon dioxide.

The shell, 70 to 75% of the nut's weight, holds a caustic oil used in industry for resins and friction powders. Give workers protective gear.

Which machines does a cashew processing unit need?

Which licences and approvals does a cashew processing unit need?

How do you fund a cashew processing unit?

In the NIFTEM model, ₹43.66 lakh is met by a ₹9.60 lakh subsidy, ₹10.91 lakh from the promoter and a ₹23.13 lakh term loan. The unit then needs bank working capital of ₹80.78 lakh in year two, almost twice the project cost.

The subsidy comes from the PM Formalisation of Micro Food Processing Enterprises (PMFME) scheme, which SBI's scheme page describes as 35% of eligible cost, capped at ₹10 lakh per micro unit, with at least 10% promoter margin. Its temporary deadline of 30 September 2026 had passed by October with an extension proposed but unconfirmed, so check the PMFME portal first.

Banks will want a detailed project report, and NPCS has prepared over 5,000 across 40+ sectors since 1994. MSME schemes list other support.

What goes wrong in a cashew processing unit?

• Kernel prices falling while nut prices hold. Export realisation was about $7,802 a tonne in January to June 2026 against $8,347 a year earlier, with import nuts steady near $1,603 (CMB).
• Import dependence. APEDA expects kernel exports to fall as plantations age, freight on imported nuts rises and African countries process more at home.

What should you do before buying the first machine?

1. Fix capacity in kilograms of raw nuts a day and choose local or imported supply.
2. Get written nut quotes and run cutting tests on samples.
3. Rework the cost table for your scale and ask suppliers for trial runs on your nuts.
4. Check Udyam, your FSSAI category, board consent and boiler rules before buying land or a boiler.
5. Visit running units and ask about recovery and broken kernel share. Compare with other food processing business ideas, such as roasted and flavoured nut snacks, and read export business ideas if kernels will go abroad.

An NPCS project report for cashew processing covers the process flow sheet, market survey, machinery with suppliers, raw material costs, manpower and financials with break-even and cash flow, in the format banks and schemes such as PMEGP and Mudra typically ask for. It does not promise a loan or subsidy.

Frequently asked questions

Which kaju is better, 240 or 320?

Neither suits every buyer. The number is whole kernels per pound, so W240 kernels are larger than W320 and usually fetch more. FAO's cashew production guide gives W210 to W240 as 210 to 240 kernels per pound. Choose by what your buyers pay.

What is the cost of 1 kg of cashews?

For a processor the useful figure is the export price, about $7.8 a kilogram in May 2026 according to APEDA. Shop prices vary with grade, brand and city, and broken pieces sell for less. Ask your buyers for current rates.

Can a cashew processing unit start with ₹3 lakh?

Some videos claim so, and hand shelling and peeling do work at tiny scale. The smallest sourced figure here is ₹43.66 lakh. Ask any ₹3 lakh plan what it leaves out: nut stock, licences, a dryer, packing and the cash to wait for payment.

Can the unit run all year when the crop is seasonal?

Yes, if you hold stock or import. India took in 5.76 lakh tonnes of raw nuts from abroad in January to June 2026, according to CMB, so many units run beyond the local season. Holding stock ties up cash, so size working capital first.

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