Overview of the Paddy Processing Industry

Rice is one of the staple food throughout the country. It is obtained from paddy, a mixture of bran, husk, and rice grain. Paddy itself cannot be consumed in its natural form and needs to be processed into rice to become fit for human consumption. Today, paddy undergoes mechanised processing through various machines to produce rice grains. This makes the paddy processing industry a thriving business. Rice forms the primary processed product obtained from paddy. This may further be processed into various secondary and tertiary rice-related products. Usually, the farmers, after harvest, sell their products to traders without any further processing. Of the total quantity of rice available in the country, around 10% is further processed into rice products like beaten rice, puffed rice, puffed paddy and deep-fried products.

In India, paddy hulling and milling is the oldest and largest agro-processing activity. Under this, hulls and barns are removed from paddy grain to convert it into polished rice. But with the advent of food processing technologies, the demand for processed rice has increased. This is true for many other kinds of cereal, but the paddy processing industry occupies the most significant chunk of the grain processing market. Primary processing like cleaning and grading gives higher prices to the farmers. The paddy processing industry takes this further using value addition through various physical techniques for processing. Famous examples include brown rice, puffed rice, flaked rice, ready-to-eat, and extruded foods.

The processing of rice has many advantages associated with it. The processed rice items are easy to digest and add different textures and palatability to regular rice. Other factors like easy availability across India, negligible moisture content and nutritious paddy processing make it a profitable food processing business option. Read on to know what makes rice or paddy processing businesses a preferred choice among entrepreneurs.

Advantages of setting up Paddy Processing Business

In India, modern rice mills process about half the entire paddy output yearly, while traditional hullers-type paddy processing units process the rest. Because of using traditional and outdated methods of drying and milling processes, there is enough scope to augment growth in the paddy processing industry. Furthermore, the growth is not only limited to milling but can diversify into other activities too. This is because secondary and tertiary processing of rice into items with demand promises greater profit when compared to processing of other grains. The stages of processing include -

Cleaning: Efficient cleaning and aspiration of rice are essential in any processing operation. Milling begings with the cleaning of paddy rice. This is a multi-step procedure in which foreign materials such as straw, mudballs, treads, stones and metal particles are removed. This stage is carried out in the paddy processing industry to help maximise yields.

Hulling:  To produce rice, one needs to hull the paddy rice first and remove the husk. This is done by the gentle action of rubber rollers applied to the paddy. Subsequently, the husk aspirators separate the husk from the rice using air aspiration.

Rice whitening and polishing: Another vital step in the paddy processing industry is rice whitening and polishing. To whiten rice, the unit uses specialised machines to remove the bran from brown rice. After that, polishing rice by gently rubbing the rice kernels against each other takes place. This process removes the loose bran and leaves a smooth surface with a silky lustre.

Sorting: In many cases, sorting rice is done. It helps you meet the food safety requirements and increase the purity of the product.

Packaging: Finally, the product is packed, branded and sent to the market for consumption.

Licenses and Permissions required to set up Paddy Processing Industry

Factory License: The Factory Act 1948 mandates that all paddy processing industry owners register their premises with the local governing authority. This must be done before starting the operation if their setup falls under the definition of "factory" under the Act.

 Documents required for a Factory licence are -

1. Duly filled and signed application form by occupier and manager
2. Existing building plan
3. List of partners/directors with their residential address
4. NOC from other partners for the nomination of the occupier as per sections 2(n) and 7 of the Factories Act, 1948
5. Proof of occupier as partner/director/proprietor
6. Copy of electricity bill (as proof of the sanctioned load of electricity)
7. Proof of occupancy (copy of rent agreement/ownership proof)
8. Flow chart of manufacturing
9. List of raw materials used
10. List of machinery installed on the premises
11. Other particulars as the Chief Inspector/Director (ISH) may require

Consent NOC:A Pollution Under Control (PUC) consent certificatewill be required by the paddy processing industry to release the waste generatedinto the environment. This consent is awarded in two stages, i.e. Consent to Establish(CTE) and Consent to Operate (CTO). Both of these certificatesareissued by the concerned State Pollution Control Board(SPCB) after stringent scrutiny of the declaration by the applicant and conducting a site inspection of the facility.

Document Required for Consent NOC are

• Duly filled application form
• Signed undertaking
• Site plan along with a roadmap 
• Detailed project report
• Land documents such as rent/lease agreement
• Industry registration documents
• Details of finished products
• Balance sheet
• Copy of CTE issued
• Details of water pollution control/air pollution control devices and solid and hazardous waste management means provided
• Copy of land-related documents
• Consent fee (as applicable)
• Laboratory analysis report of the trade effluent and emissions
• Copy of any other permission required from the State Government
• Any other document specified in the application

Additional Licences required by Paddy Processing Industry

Apart from the one mentioned above, thepaddy processing industry needs the following licenses also -

• Company registration or registration of proprietorship or partnership firm
• Udyog Aadhaar MSME registration
• PFA and ESIC registration
• IEC (Import Export Code), in case of export of rice
• GST registration

License under Rice-Milling Industry (Regulation) Act, 1958

Market Overview of the Paddy Processing Industry

Paddy or rice milling is the country's oldest and largest agro-processing industry. It gives a turnover of more than 25,500 crores per annum. The Paddy processing industry processes about 85 million tonnes of paddy annually. Furthermore, it provides staple food grain and other valuable products required by over 60% of the population. Paddy grain is milled in raw condition after parboiling, primarily by single hullers. Some 82,000 such hullers are registered in the country. Apart from that, many unregistered single hulling units are also in India. A good number (60%) of these are linked with parboiling units and sun-drying yards.

Most tiny hullers of about 250-300 kg/hr capacities are employed for custom milling paddy. Apart from that, double hulling units number over 2,600 units, under-run disc shellers-cum-cone polishers numbering 5,000 units and rubber roll shellers-cum-friction polishers numbering over 10,000 units are also present in India. Further, over the years, there has been steady growth in the improved paddy processing industry in the country. Most of these mills have capacities ranging from 2 tonne/hr to 4 tonne/hr. Currently, over 1,30,000 rice mills, including modern ones, are available in India.

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