§1What this business is
Fresh-cut Java citronella grass is wilted in shade for a day, packed into a mild-steel still and steamed; the oil-and-steam vapour is condensed and the oil floats off the water. The oil goes to perfume, cosmetic, soap, detergent and mosquito-repellent makers, and the report also plans small bottles (30, 60, 100 ml). The still must sit close to the grass fields.
Capacity: 1,000 kg of grass a batch, 3 batches a day in 2 shifts, oil yield 0.8% → 24 kg of oil a day, 6 tonnes a year (250 days). Needs about 750 tonnes of grass a year.
§2Is it right for you?
Who it is for
A farmer, FPO or rural entrepreneur in an area where Java citronella is grown, or who can contract growers.
Who it is not for
Someone far from the fields — carrying bulky grass over long distances kills the margin.
Advantages
- Simple, proven steam distillation
- Grass gives about six cuttings a year for around 5 years
- Oil keeps well and travels easily
- Good fit for farmers or FPOs already growing aromatic grass
Drawbacks
- Needs about 750 tonnes of grass a year within easy reach
- The report says a few big buyers control procurement, so they set the price
- Synthetic substitutes can cap prices
Skills you need
- Running a still and boiler safely
- Planning grass harvest with growers
- Oil quality testing and grading
- Dealing with perfumery and chemical buyers
Why difficulty 3/5: The plant is simple, but steady grass supply and a fair price from a few buyers are hard.
§3Market
Who buys
- Perfume and cosmetic makers (the report names Mumbai, Bengaluru and Chennai)
- Soap, detergent and polish makers
- Mosquito-repellent makers
- Aroma chemical makers (citronellal, citronellol)
How it sells
- Direct sale to bulk buyers
- Essential-oil traders
- Small bottles sold through retail
Good to know
- The report says procurement in India is in the hands of four big buyers.
- It names Germany, Spain and France as the largest importers of citronella oil.
- It says the process technology is available from the Regional Research Laboratory, Jorhat.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Distillation plant with steam generator | 1 set | — |
| Lid lifting gear | 1 | — |
| Furnace and accessories | 1 set | — |
| Separator | 1 | — |
| Centrifugal pump | 2 | — |
| Chimney | 1 | — |
| Water storage tank | 1 | — |
From: PMEGP sample project report — Citronella Oil (prepared by Udyami/Samadhan)
- Java citronella grass750 tonnes a year for a 6-tonne oil plant; about six cuttings a year; a planting lasts about 5 years; wilted in shade for 24 hours before distillation
- Water and fuel for the furnaceabout 8,750 cubic metres of water a year
From: PMEGP sample project report — Citronella Oil (prepared by Udyami/Samadhan)
Suppliers in Building Business Bazaar
Fragrance & Flavour Development Centre (FFDC), Kannauj · Kannauj →MSME Technology Centre, Imphal · Imphal →
In our raw material database
§5Licences & registration
- Udyam
- GST
- Pollution consent from the state board (furnace smoke and wastewater)
- Boiler registration if the steam generator falls under the Boilers Act
- Trade licence from the local body
§6Schemes & subsidies
PMEGP (the report was made for it, with KVIC margin money) and CGTMSE fit.
§7Money
How the investment is worked out: Building & civil work (2,000 sq ft) ₹4.00 L + plant & machinery ₹10.60 L + furniture ₹0.74 L + pre-operative ₹0.50 L + working capital ₹9.16 L = ₹25.00 L. Finance: term loan ₹14.26 L, working capital loan ₹8.25 L, own ₹2.50 L.
Working capital: Working capital ₹9.16 L in the cost (bank limit ₹8.25 L) — large because grass is bought through the cutting season.
Year not printed on the report — check current machinery prices.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
Export council / board: CHEMEXCIL
- HS codes are from the WCO HS 2022 list; confirm the 8-digit ITC(HS) line with DGFT or your customs broker.
- You need an Import Export Code (IEC) from DGFT before the first shipment.
§9Risks — where people fail
- Short grass supply or poor oil yield
- Buyer-driven price falls
- Boiler and fire safety
§1030 / 60 / 90-day plan
A general plan that applies to any business. A plan for this business will be added after research.
- Days 1–30: Visit a working citronella oil distillation unit unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Udyam, GST), a project report (DPR), and the scheme or loan file.
- Days 61–90: Space and machines, trial production, and first deliveries to 10 customers.
§11Who to connect with
Associations, clusters and training institutes — the directory is being built. Connect
§12Watch
There is no episode on this business yet. Shows are coming soon on the Podcast page.
Want to start Citronella Oil Distillation Unit?
DPR, loan file or registration — ask us on WhatsApp.
¶Sources
Data review: 6 October 2026. Spotted a mistake? Report it. For information only — not legal or financial advice.