§1What this business is
Lac is a resin made by tiny insects living on host trees such as ber and palas. Growers 'inoculate' trees with brood lac, then cut and scrape the lac-coated sticks at harvest. India is a major producer and lac is an important side income for tribal families. Baisakhi and Aghani are the two main commercial crops. The KVIC scheme is meant for people already experienced in this line.
Capacity: 370 quintals of lac a year at ₹2,600 a quintal; value printed as ₹9.86 lakh.
§2Is it right for you?
Who it is for
Tribal and forest-belt families or groups already growing lac (Jharkhand, Chhattisgarh, Madhya Pradesh, Odisha and nearby).
Who it is not for
Someone with no host trees or experience — the profile itself says it is for those traditionally experienced.
Advantages
- India is a leading lac producer — the profile puts it at 70–80% of world output
- Uses trees that already stand on farm bunds and forests
- Low investment
- Lac sells to shellac, varnish, food-coating and cosmetic industries
Drawbacks
- Crop depends on weather and insect health
- Prices swing sharply year to year
- Needs traditional know-how
- The profile's equipment list (bottle washing, cap sealing) does not match lac work — get a proper quotation
Skills you need
- Brood lac inoculation
- Host-tree pruning and care
- Harvesting and scraping
- Grading and selling to processors
Why difficulty 3/5: Low cost, but success rests on traditional skill and a weather-dependent crop.
§3Market
Who buys
- Shellac and seedlac factories
- Lac traders and state minor-forest-produce agencies
- Bangle and handicraft makers
How it sells
- Weekly haats and lac markets
- Direct sale to processors
Good to know
- The profile says Baisakhi and Aghani crops together give 85% of annual lac production, and ber and palas are the two common hosts.
§4Raw material & machinery
| Item | Qty | Cost |
|---|---|---|
| Stainless-steel top working table | 1 | — |
| Two-head bottle washing machine and cap sealing machine (as listed in the profile) | 1 each | — |
| Plastic drums and aluminium vessels | 1 set | — |
| Stainless-steel knives, ladles, small utensils and balance | 1 set | — |
| Equipment total in the profile | 1 set | ₹1,50,000 |
From: KVIC Project Profile — Production of Lac (PMEGP)
- Brood lac (seed lac sticks) for inoculationraw material ₹3.50 lakh a year in the profile
- Host trees: ber and palasthe profile says an average family has 6 ber and 23 trees
- Bags and packing₹1.00 lakh a year in the profile
From: KVIC Project Profile — Production of Lac (PMEGP)
In our raw material database
§5Licences & registration
- Udyam registration
- GST registration
- Forest-department permits if lac is collected from forest trees; some states buy minor forest produce through state agencies — check local rules
- Mandi or trade registration where lac is a notified commodity
§6Schemes & subsidies
- PMEGPCentralActive15–35% subsidy
- MudraCentralActiveLoan up to ₹20 lakh, no collateral
- CGTMSECentralActiveNo collateral, up to ₹10 crore
PMEGP fits (KVIC forest-based industry); MUDRA and CGTMSE cover a loan of this size.
§7Money
How the investment is worked out: KVIC profile: building shed 1,000 sq ft ₹2.00 lakh + equipment ₹1.50 lakh + working capital ₹1.64 lakh = ₹5.14 lakh. Land not costed.
Working capital: Working capital ₹1.64 lakh (₹1,64,387 per cycle). Raw material ₹3.50 lakh and labels/packing ₹1.00 lakh a year.
Year not printed on the KVIC profile — check current machinery prices.
§8Export potential
Confirm the HS code in the DGFT ITC(HS) lookup before you export
Export council / board: Shellac & Forest Products Export Promotion Council (SHEFEXIL)
- 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
- Crop loss from heat, cold or pests
- Price crash
- Theft of lac from trees
- Dependence on a few traders
§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 lac production unit, ask 10 buyers about price and quantity, and get quotations from 3 suppliers.
- Days 31–60: Udyam and the licences you need (Udyam registration, GST registration), 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 Lac Production?
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.